JetBlue Airways and American Airlines say the US Department of Transportation (DOT) has cleared their planned strategic alliance, despite low-cost carriers warning that the tie-up may stifle competition.
The DOT has “agreed to terminate its review… in exchange for a series of commitments to ensure the alliance delivers consumer benefits without harming competition”, says a statement published on both airlines’ websites on 12 January. It adds that the airlines will move forward with the alliance later this quarter and will refrain from “certain kinds of coordination” between some cities.
The announcement comes just days after competitors Spirit Airlines and Southwest Airlines complained to the regulator that the joint venture could serve as a back-door to keeping ticket prices high, especially on routes to and from slot-restricted markets such as New York and Washington, DC. Both low-cost carriers had requested in in-depth investigation of their competitors’ plans.
JetBlue and American say they have committed to divest slots at New York City’s John F Kennedy International airport and Washington’s Ronald Reagan National airport.
The DOT says on 12 January that the two airlines will initially give up seven pairs of slots in New York, and six pairs in Washington. Furthermore, should the airlines fail to reach certain capacity targets in the coming years, the airlines will divest of up to ten more slot pairs at John F Kennedy airport.
“Beyond today’s agreement with the DOT, the carriers will also be refraining from certain kinds of coordination in city pair markets where they are substantial competitors to each other and there is little service from other airlines,” the carriers add.
American and JetBlue announced the partnership last July, saying they intended to operate codeshare flights and offer reciprocal frequent flier benefits in order to better weather the coronavirus crisis. The partnership concentrates on Northeast USA cities and, as rolled out, would bring 60 American routes into JetBlue’s network and 130 JetBlue routes into American’s operation. It allows customers to book flights on such routes via either airline.
The airlines will, in the first half this year, align their schedules in New York and Boston, says the 12 January statement. The changes will ”give customers new flight options, with improved schedules, better connections, competitive fares and access to more domestic and international destinations”.
“The carriers also expect this alliance will accelerate each airline’s recovery from the pandemic as customers are attracted to the expansion of options and enhanced service,” they write.
Miramar, Florida-based Spirit and Dallas-headquartered Southwest said in complaints earlier this week that the joint venture raises “serious competitive concerns”.
By partnering with American, JetBlue “would obviously no longer be considered an independent LCC providing competitive discipline to American or other legacy carriers”, Southwest wrote in its 11 January filing.
Updates on 12 January to include a statement from the Department of Transportation about slot divestitures.