Biden administration wants to rekindle competition at airports
The Biden administration is stepping up actions aimed at increasing competition at airports, as illustrated by a final complaint against two companies.
American, Delta, United and Southwest control 80% of air traffic in the United States.
AFP
Several US authorities are working to reinvigorate competition between airlines in the country, as illustrated by the complaint filed Tuesday by the Department of Justice against a partnership between American Airlines and JetBlue.
The two airline companies announced in July 2020 that they wanted to share the codes of certain flights departing from New York and Boston, thus offering new options to their customers on schedules, prices or non-stop flights. After the negotiation of several conditions with the Ministry of Transport, the alliance entered into force in February.
But this partnership between “the largest company in the world” and “a low-cost company” will above all lead to “higher prices, less choice and lower quality services,” said Richard Powers of the responsible division. of antitrust at the Department of Justice, during a conference with journalists.
The sector is already very concentrated: American, Delta, United and Southwest control 80% of air traffic in the United States, he said. American can’t really merge with another company anymore, he argued, so the company uses other tactics to reduce competition such as partnerships. Conversely, the arrival of a new entrant like JetBlue helps revive competition.
“Not a merger”
However, the alliance will probably encourage the low-cost company not to compete head-on with American at other airports, he said. “Consumers will be better off if American and JetBlue continue to be fierce competitors, not allies,” said Richard Powers. The attorneys general of Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and the District of Columbia have joined the lawsuit, which aims to block the partnership.
In separate statements, the two companies dismissed the charges, saying the alliance allowed them to offer new services and bring a third strong competitor to New York airports, previously dominated by Delta and United. “This is not a merger: American and JetBlue are – and will remain – independent airlines,” said American Airlines CEO Doug Parker.
“We have two different business models and do not work together on pricing,” said JetBlue CEO Robin Hayes. If JetBlue has forged this partnership, it is because “in the airports of New York, there is literally no place for us to add flights”, due to the lack of available slots, and it is difficult to to find a place in Boston against the historical companies, he stressed.
Anti-competitive practices
The authorities’ complaint comes after several other recent actions aimed at increasing competition at airports. As part of a broad plan to fight against anti-competitive practices and presented in July, US President Joe Biden, for example, asked his services to provide clearer rules on the presentation of additional charges related to baggage, to changes or cancellations.
The Department of Transport announced last week that it wanted to allocate slots to one or more low-cost companies at Newark airport, near New York, left vacant since Southwest left in 2019.
While welcoming the decision, the New York prosecutor on Tuesday asked in a letter to authorities overseeing aviation to review the allocation of slots at the other two airports in New York, JFK and La Guardia. “Now is the time to act, as many Americans return to the skies and find ticket prices sometimes sky-high,” Letitia James said in a statement.
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