U.S. Senator Urges DOT To Investigate American-JetBlue Alliance
WASHINGTON—U.S. Senator Richard Blumenthal (D-Connecticut) called on Transportation Secretary Pete Buttigieg to investigate the “competitive implications” of the Northeast Alliance (NEA) between American Airlines and JetBlue Airways.
The NEA was approved in January by outgoing former Transportation Secretary Elaine Chao. The two airlines were granted the ability to coordinate their schedules at Boston Logan and New York’s JFK and LaGuardia airports. By working together, the carriers pledged the tie-up would enable them to codeshare on 486 daily flights to 120 nonstop destinations.
The arrangement has generated pushback over its potential for increased consolidation, particularly among smaller carriers and ULCCs. Spirit Airlines, for example, said in a petition filed in July that the partnership—taken together with American’s partnership with Alaska Airlines on the West Coast—created an unacceptable level of overlap between the two alliances.
Spirit, Eastern Airlines and others have urged the DOT to institute an on-the-record proceeding with opportunity for public comments to address the competitive merits of the arrangement—a step that was not taken before the department approved the tie-up in January. Buttigieg, while voicing his strong support for a competitive airline industry, has not publicly endorsed the idea of revisiting the NEA.
In his letter to Buttigieg, Blumenthal urged the DOT to conduct “a full public interest review” of the NEA, which he said is consistent with President Biden’s recent Executive Order on Competition. He also cited “troublesome concentration in the airline industry” caused by previous regulatory proceedings and large mergers that allowed dominant carriers to “box out smaller competitors.”
“The Trump DOT’s decision to terminate its informal review of the joint venture between JetBlue and American was pushed through with only ten days remaining in the administration, without adequately airing the competitive issues raised by the agreement not to compete between two major airlines,” Blumenthal wrote. “What is more, in a highly unusual move, the Department did not afford the public and other industry participants any opportunity to comment on the competitive implications of this agreement.”
American and JetBlue have defended their partnership as a means to enhance connectivity, increase service and provide a viable third competitor to Delta Air Lines and United Airlines in the Northeast. The carriers have argued that the DOT’s review was thorough and that a full public interest review is not necessary given the scope of the alliance.
“For years and years, American had a declining share of originating New York and Boston customers,” American revenue chief Vasu Raja explained at a recent investor conference hosted by Cowen & Co. “Now we’re seeing that start to change, especially as we look out into the fourth quarter and people are starting to fly back in greater numbers.”