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Department of Justice Reportedly Probing American/JetBlue Alliance

By Lou Whiteman - Apr 14, 2021 at 3:54PM

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Regulators are concerned the partnership could stifle competition in the U.S. Northeast.

The U.S. Department of Justice (DOJ) is reportedly probing an alliance between American Airlines Group (AAL -0.70%) and JetBlue Airways (JBLU 0.99%), investigating whether coordination between the two airlines would lead to anticompetitive behavior and higher fares at certain airports.

In January American and JetBlue won Department of Transportation approval for a new alliance covering New York and Boston. The airlines argued that by cooperating and swapping landing rights at New York's many airports, they could offer better options to fliers in the region.

A line of JetBlue tails at an airport.

Image source: JetBlue.

But the DOJ is worried that the alliance could diminish competition in the Northeast, according to a Wall Street Journal report. The report notes that the DOJ investigation is continuing with no final conclusions reached and that any decision could be impacted by input from Transportation.

Spirit Airlines, a competitor to both American and JetBlue, has requested a full and formal investigation of the agreement, according to the report, a move that could allow Department of Transportation officials some leeway to reconsider its views.

American and JetBlue have argued the agreement is pro-competition because it allows them to better compete with Delta Air Lines and United Airlines Holdings, which both have major presences at large New York airports. Prior to the agreement and the pandemic, American had scaled back operations in New York and Boston due in part to the flood of competition in the region.

American and JetBlue agreed to a number of conditions to win approval for their partnership, including putting restrictions on how it operates, and giving up some landing slots in both New York and Washington.

Antitrust regulators have expressed concern about consolidation in the airline industry. American is the product of two recent deals: In 2013 it merged with US Airways, which had previously combined with America West Airlines. Meanwhile, JetBlue in 2016 made an unsuccessful bid at Virgin America, which was eventually acquired by Alaska Air Group.

Lou Whiteman owns shares of Delta Air Lines and Spirit Airlines. The Motley Fool owns shares of and recommends Spirit Airlines. The Motley Fool recommends Alaska Air Group, Delta Air Lines, and JetBlue Airways. The Motley Fool has a disclosure policy.

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