US antitrust enforcers sued American Airlines and JetBlue to unwind their agreement to coordinate flights in the Northeast, saying the pact violates antitrust laws by eliminating competition between them.
The Justice Department and a group of state attorneys general, including Massachusetts Attorney General Maura Healey, filed the lawsuit in federal court in Boston, saying the so-called Northeast Alliance will lead to higher fares and worse service.
“American and JetBlue claim that the Northeast Alliance will result in pro-competitive benefits, but consumers have heard these empty promises before, including from American,” the officials said in the complaint. “Consumers will be better off if American and JetBlue continue to compete for their business.”
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Questions about the alliance have increased since President Biden’s July executive order sought to increase competition broadly. It called out the airline industry, among others, and said the Transportation and Justice departments must consult on how consolidation has affected passengers, as well as review the award of flying rights at congested airports.
The alliance of what are currently the two biggest carriers at Logan International Airport would hurt air travelers to and from Massachusetts, said Healey, who noted that JetBlue in particular has helped to lower airline prices in the Northeast in recent years by competing with older legacy carriers. This move would effectively undo that.
“When airlines compete on price, quality and innovative services, consumers benefit,” she said. “This consolidation would undermine the competition that has greatly benefitted Massachusetts consumers.”
American chief executive Doug Parker said the companies are prepared to fight the lawsuit.
“They’re wrong, and we’ll prove it,” Parker said Tuesday in an online interview with the Washington Post. “It’s disappointing. We feel really good about what we’re doing for consumers. We’ll defend it and I feel quite certain we will prevail.”
Spirit Airlines and Southwest had filed complaints calling for renewed scrutiny of the JetBlue-American deal, saying the agreement was approved without a full public review and would block competitive growth at all three major New York-area airports.
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The venture includes a code-sharing agreement that enables the carriers to book travelers on each other’s flights and offer reciprocal loyalty-program benefits. Passengers can use either airline’s website to buy a single itinerary that includes flights on both airlines. The alliance focuses on the Boston-New York corridor.
The pact was approved by the Transportation Department in the final two weeks of the Trump administration, and American and JetBlue already have put key portions of the venture in place, including adding or announcing 58 new routes from airports covered by the alliance.
The two carriers say that by working together, they can compete more effectively against United and Delta. The alliance is “already providing more choices and better service for customers,” American said by e-mail. “It’s also provoking a competitive response from other carriers in the region by compelling them to step up their own products and services.”
To get Transportation Department approval of the alliance, the airlines agreed to sell a combined seven slot pairs at New York’s John F. Kennedy International Airport and lease out a combined six slot pairs to competitors at Ronald Reagan Washington National Airport. Slots are used to control flights at congested airports, and each slot allows for one takeoff or landing. Small carriers historically have struggled to gain access to slots at some of the largest airports.
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JetBlue and American are prohibited from discussing certain topics, including fares or revenue management strategy in any context, and outside of the alliance’s purposes, they can’t discuss route, schedule, and capacity decisions.
“Through this extensive partnership, American and JetBlue have quietly agreed to share revenue, coordinate on which routes to fly and when to fly them and to share slots,” said Richard A. Powers, acting assistant attorney general of the DOJ’s antitrust division. “This unprecedented venture will combine operations at all four airports, forging a de facto merger in Boston and New York.”
Tim Logan of the Globe Staff contributed to this report.