American, JetBlue try to poke holes in US case against Alliance

Lawyers from the US Justice Department have spent weeks arguing an alliance between American Airlines Group Inc. and JetBlue Airways Corp. would cost consumers $700 million. On Thursday, a government economist acknowledged the number left out one of the New York area’s three major airports.

The economist, Nathan Miller, said the government’s estimate of consumer harm included only traffic at John F. Kennedy International Airport and LaGuardia Airport, but overlooked Newark Liberty International Airport, one of the region’s busiest hubs.

Dan Wall, the lawyer for American Airlines who was questioning Miller, said that excluding Newark deflated the size of the market being analyzed. With it back in the mix, “the predicted harm drops 30%,” Wall said. 

This testimony came in the middle of an antitrust trial challenging a partnership between American and JetBlue, known as the Northeast Alliance, that lets the airlines share routes, passengers, and other resources at airports in the US Northeast. 

Central to the government’s argument is the allegation the alliance is a “merger in all but name,” effectively giving the two airlines outsized control over airport gates and flight slots in the region.

On Thursday, nearly three weeks into the federal trial in Boston, US District Judge Leo Sorokin asked government lawyers to, at some point, provide him metrics illustrating changes that occurred within the two carriers’ fleets and routes serving New York City and Boston, both before and since their Northeast Alliance took effect in early 2021.

“Is there more, and is the more because of the NEA?” Sorokin asked, referring to the number of routes and seats currently available in the region. He specifically wanted data available at the time the deal was being hammered out, when “people were making decisions prospectively, not retrospectively like me.”

He also asked for a list of the agreement’s key provisions, to make sure he understands them.

Sorokin’s request underscores the difficulty DOJ lawyers have had to present their bid to undo the deal.

Earlier in the trial, senior airline executives from competitors Southwest Airlines Co. and Spirit Airlines Inc. testified that the alliance makes it harder for them to compete in Boston and New York. An executive for Spirit accused JetBlue last month of being “a feeder airline for American.”

Executives for American and JetBlue, including Scott Laurence, a current American executive who previously negotiated the deal as an executive at JetBlue, defended the alliance as a key way the airlines were able to compete with larger rivals like Delta Air Lines Inc. and United Airlines Holdings Inc. in Boston and New York City-area airports. Newark Airport is a hub for United.

The non-jury trial is expected to continue at least another week.

The case is US v American Airlines, 21-cv-11558, US District Court of Massachusetts (Boston).