American Airlines’ alliance with JetBlue is now the subject of a lawsuit by the US Department of Justice and Attorneys General from six states and the District of Columbia.[1] In filing the suit, US Attorney General Merrick Garland called the alliance “an unprecedented maneuver to further consolidate the industry” and alleged that it would “create higher fares, fewer choices, and lower quality service if allowed to continue.”[1]
Meanwhile, as the Dallas Morning News reported, “[a] similar alliance on the West Coast between American Airlines and Alaska Airlines has not resulted in the same kind of regulatory scrutiny.”[3] The American-Alaska alliance, announced on February 13, 2020, was submitted for review to the US Department of Transportation (DOT) during the Trump Administration.[5] The DOT allowed the review period to expire with no action taken.[5]
But, while JetBlue included a redacted copy of the American-JetBlue “Northeast Alliance” in a disclosure to investors, the American-Alaska agreements appear to not have been publicly disclosed, leaving serious questions about how this alliance operates and whether it is harming the traveling public.[6]
The American-JetBlue Northeast Alliance, and the DOT’s quick approval of the alliance without a full public review, prompted a complaint by Spirit Airlines.[7] The complaint garnered support from a diverse array of companies and organizations, including Southwest Airlines, the National Air Carrier Association, Travelers United, the American Antitrust Institute, Airports Council International – North America, as well as SEIU.[8]
In its comments to DOT in support of the Complaint filed by Spirit Airlines, SEIU expressed particular concern regarding the potential impact on workers, both directly employed and contracted, of further consolidation among airlines. As SEIU explained in its comments,
Wages, benefits, and working conditions for these employees can vary by airport and by company. With this joint venture increasing American and JetBlue’s combined power at a number of key airports, it creates the risk that they could act as if they were a monopsony employer. A recent paper by Alan Krueger of Princeton University and Eric Posner of the University of Chicago Law School argued that “labor market collusion or monopsonization – the exercise of employer market power in labor markets – may contribute to wage stagnation, rising inequality, and declining productivity in the American economy.”[9]
SEIU Airport Workers United applauds the action by the US Department of Justice and State Attorneys General to challenge the legality of American’s alliance with JetBlue. This action is directly in line with President Biden’s Executive Order on Promoting Competition in the American Economy, which directs DOJ, among others, to “enforce the antitrust laws to combat the excessive concentration of industry”.[10] Our hope is that antitrust regulators apply similar oversight and scrutiny to the American-Alaska West Coast alliance. Public officials in West Coast states should demand transparency and that the agreement between the two airlines is made public.
[1] U.S. Department of Justice Press Release. September 21, 2021 https://www.justice.gov/opa/pr/justice-department-sues-block-unprecedented-domestic-alliance-between-american-airlines-and
[2] Ibid
[3] Arnold, Kyle. “Biden administration files antitrust lawsuit over American Airlines-JetBlue partnership.” Dallas Morning News, for the Seattle Times. September 21, 2021.https://www.seattletimes.com/business/boeing-aerospace/biden-administration-files-antitrust-lawsuit-over-american-airlines-jetblue-partnership/.
[4] Alaska Airlines, American Airlines Announce New West Coast International Alliance: Alaska’s West Coast Network to Connect With American’s Long-Haul Flying to Create More Choice for Travelers (Feb. 13, 2020) https://news.aa.com/news/news-details/2020/Alaska-Airlines-American-Airlines-Announce-New-West-Coast-International-Alliance-Alaskas-West-Coast-Network-to-Connect-With-Americans-Long-Haul-Flying-to-Create-More-Choice-for-Travelers-NET-ALP/default.aspx.
[5] American Airlines Form 10-K for the year ended December 31, 2020 at page 9. https://www.sec.gov/ix?doc=/Archives/edgar/data/0000006201/000000620121000014/aal-20201231.html.
[6] Based on a review of SEC filings by American Airlines and Alaska Airlines in 2020 and 2021.
[7] Complaint of Spirit Airlines, Inc. (Jan. 7, 2021) and Supplement to Complaint of Spirit Airlines, Inc. (Jan. 19, 2021), Docket DOT-OST-2021-0001.
[8] Ibid.
[9] Comments of Service Employees International Union concerning the Complaint filed by Spirit Airlines, Inc. for Investigation of the Joint Venture Agreements announced by
American Airlines and JetBlue Airways under 49 U.S.C. §§ 41712 as an unfair method of
Competition at p. 5 (Docket DOT-OST-2021-0001) https://www.regulations.gov/comment/DOT-OST-2021-0001-0015; see also SEIU Joins Passengers, Airports, Anti-Trust Groups in Expressing Concern Regarding American Airlines-JetBlue Joint Venture http://airlineaccountability.org/2021/05/04/seiu-joins-passengers-airports-anti-trust-groups-in-expressing-concern-regarding-american-airlines-jetblue-joint-venture/.
[10] Executive Order on Promoting Competition in the American Economy, (E.O. 14036), 86 F.R. 36987 (July 9, 2021) available at https://www.whitehouse.gov/briefing-room/presidentialactions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.