Government Plays A Weak Hand, Shifts Focus To Boston In American-JetBlue Anti-Trust Trial

Testimony continues this week in the federal government’s anti-trust trial to break up the American Airlines-JetBlue Northeast Alliance. The government shifted its focus Monday morning away from the partnership the two airlines have in New York, to their arrangement in Boston.

While JetBlue used to be the clear dominant carrier in Boston, that changed and Delta has become strong in the city over the past several years. This month JetBlue still offers the most flights out of Boston while Delta operates the most seat miles from the airport. American and JetBlue together still represent fewer than half the flights and half the seats from Boston, according to data from Cirium’s Diio Mi schedule analyzer.

"The Northeast Alliance created an opportunity for us to be as viable a competitor in Boston as we could be," American Airlines CEO Robert Isom testifies. The DOJ lawyer seems to be suggesting that the rationale for the NEA in NY doesn't apply to Boston the same way.

— David Slotnick (@David_Slotnick) October 3, 2022

The suggestion that the NEA could have covered just NYC, not Boston too, has seemed like a direction the DOJ has been going over the past couple of days of testimony.

— David Slotnick (@David_Slotnick) October 3, 2022

The government’s argument is, essentially, that there’s no barriers to entry to grow in Boston – so American could have done it on its own. But that’s true for American’s competitors, too. The Northeast Alliance doesn’t block competition in Boston.

Indeed Delta launched a hub in Boston just before the pandemic and launched routes to counter the Northeast Alliance, suggesting that the Boston market is getting more competitive and even more so as a result of the JetBlue-American tie-up. They even sent Boston-based SkyMiles elites ‘Revolutionary Rewards’ socks!

Southwest’s COO concedes that they, too, could expand in Boston if they were to make it a priority.

If this is where the government is going then,

  • It is a fall back not to lose totally, avoid total disaster
  • Winning on Boston could simply mean a remedy where American and JetBlue partner, and keep their alliance in New York, but carve out Boston. Frequent flyers would still get reciprocal earning and redemption as well as status recognition.
  • Boston is less important, and a stronger argument for the government since the government itself doesn’t cap competition (through slots) at the airport, but as a package American still has the stronger case – and likely wouldn’t have given up as many slots in a settlement with the government to get the whole deal approved.

The government’s Boston focus is a path to avert total disaster and a complete loss for their position. But it doesn’t come close to demonstrating that the Northeast Alliance blocks competition in the city. And a government win here would inconvenience the two carriers but shouldn’t serve to cripple the deal. It would be more of a flesh wound.

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