4 ms·

DOJ sues to block domestic alliance between American Airlines and JetBlue

109 points by infodocket 5y ago

SmellTheGlove 5y ago
This is the right thing to do. We're down to 4 major network carriers (American, Delta, Southwest, United) + a couple of national players with strong regional networks (Alaska, JetBlue). The majors are already using regional carriers to fly their thinner routes. Alaska and American are now members of the same alliance and expanding codesharing, where it used to be that Alaska codeshared and partnered well with both Delta and American. The last thing we need is even less competition with another alliance/codesharing lockup between two domestic carriers. JetBlue has a fantastic northeast/east coast operation ex-BOS/JFK, and as a consumer I'm happier if they have to compete with American ex-PHL/CLT. At least out here in Seattle, we have Delta competing ex-SEA with Alaska, which has been good for fares.
- jrockway 5y ago
  Doesn't JetBlue lose here? People that are picking frequent flyer programs want one where they can make domestic and international trips, and the legacy carriers have a large international network that JetBlue doesn't. So for the type of person that cares, they will just ignore JetBlue domestically, because it's not a major hardship to fly one of the legacy carriers domestically. i.e. American will do fine here.
  - monksy 5y ago
    This means that Jetblue still has to compete for customer's happiness. Which is good. When they have a larger customer they don't have to. (Prices go down, quality goes down)
  - mtalantikite 5y ago
    Maybe, it depends on where that traveler prefers to vacation if you’re talking international though. I’m in NYC and fly them a lot (well, used to when that was a thing), and they have pretty good coverage around the Caribbean and parts of Latin America. I’m more likely to want to vacation in Colombia or Mexico or Jamaica than I am in Europe. And when I do go to Paris to see family I just use travel points from my credit card.
  - cascom 5y ago
    I agree. I would have been more inclined to fly jet blue. If you fly all the time status is meaningful (you’re just treated badly, as opposed to being outright abused).
  - 542354234235 5y ago
    Frequent flyer programs cost money. Making deals so you can earn and spend miles on other airlines costs money. Making routes reliably available for business travelers costs money. Jetblue wins by competing in other areas, like price for leisure travelers or routes/times that are underserved by other carriers.
endisneigh 5y ago
This is great, but I wish there were legislation specifying in detail specific circumstances in which actions should be blocked rather than our tax dollars be wasted suing these people. Ultimately tax dollars are spent to sue, and consumers’ money is indirectly spent on the defense too.
- whoknowswhat11 5y ago
  And there is a ton of waste just in doing these deals, negotiating them. Since the govt already approved them they did slot divestment per govt request, which may need to be unwound? Will the govt pay them? It's a colossal waste of time and energy when just having some much clearer guidelines, or being able to pay $500K to get a likely ruling based on a proposed deal would save a ton of everyones time (and our tax dollars). Quick note that I think the case is relatively weak at first glance. The case highlights for example routes that used to have both carriers and makes NO mention if those routes also have other carriers which is such a critical distinction it's kind of appalling the DOJ wasn't able to analyze that. Ie, a route with just AA and Jetblue - comp is DEF reduced with this. However, a route that they were both margin or second in against on the majors out of NY etc - not sure comp is harmed by beefing the AA/Jetblue position. A fair bit of their antitrust has been surprisingly weak, but I like this because at least it is focused on supposed consumer harm rather what they were pushing for before (ie, to help businesses without regard for consumer).
- Daishiman 5y ago
  The unintended consequence of codifying the specific circumstances is that companies will do everything in possible to escape said criteria to justify a merger, complying with the letter but not the spirit of the law.
  - endisneigh 5y ago
    That’s fine as it wouldn’t be necessarily exhaustive - presumably it would just revert to the present status quo.
MattGaiser 5y ago
If I remember correctly, American and Jetblue had to make concessions to get this deal approved in the first place. So do they get their landing slots back if this is reversed?
paxys 5y ago
Anecdote – I work for a small tech company that was acquired by a massive tech company last year. The deal sailed through until Biden was sworn in. Right after that the DoJ blocked it and said they needed to reapprove it ("we are looking at these deals more closely now"). Took us months to remake our entire case. They went through a ton of data from both parties with a magnifying glass before finally letting it through. Sucked for us, but happy to see the slightest more antitrust scrutiny from the government.
- fallingknife 5y ago
  Once a regulatory agency makes a decision, it should be final, though. Unless they find that someone was lying or withholding information in the process.
  - ocdtrekkie 5y ago
    Was frustrating about this approach is how many wrongs are done by corporate insiders in those regulators. Making it impossible to unwind these mergers rewards corruption.
    - propogandist 5y ago
      you may enjoy some coverage of the revolving door politics, although this (predictably) hasn't gotten much traction https://www.nytimes.com/2021/09/19/business/accounting-firms-tax-loopholes-government.html https://www.nytimes.com/2021/09/19/business/accounting-firms...
  - phdelightful 5y ago
    I don't think either of the two antitrust agencies in the US are empowered to give approval, they are only empowered to challenge at the time of the review. They can always review more later and challenge if they want, but never give a 100% okay
whoknowswhat11 5y ago
Bummer. It was a good combo, jetblue already gave up a bunch of slots etc. Hopefully DOJ forces the slots to go back to jetblue - this kind of do / redo stuff is super annoying. Ideally republicans don't copy this approach or we are just going to get constant flip flops.
mrtweetyhack 5y ago
how about domestic partnership?

109 points by infodocket 5y ago

This is the right thing to do. We're down to 4 major network carriers (American, Delta, Southwest, United) + a couple of national players with strong regional networks (Alaska, JetBlue). The majors are already using regional carriers to fly their thinner routes. Alaska and American are now members of the same alliance and expanding codesharing, where it used to be that Alaska codeshared and partnered well with both Delta and American. The last thing we need is even less competition with another alliance/codesharing lockup between two domestic carriers. JetBlue has a fantastic northeast/east coast operation ex-BOS/JFK, and as a consumer I'm happier if they have to compete with American ex-PHL/CLT. At least out here in Seattle, we have Delta competing ex-SEA with Alaska, which has been good for fares.

jrockway 5y ago
Doesn't JetBlue lose here? People that are picking frequent flyer programs want one where they can make domestic and international trips, and the legacy carriers have a large international network that JetBlue doesn't. So for the type of person that cares, they will just ignore JetBlue domestically, because it's not a major hardship to fly one of the legacy carriers domestically. i.e. American will do fine here.
- monksy 5y ago
  This means that Jetblue still has to compete for customer's happiness. Which is good. When they have a larger customer they don't have to. (Prices go down, quality goes down)
- mtalantikite 5y ago
  Maybe, it depends on where that traveler prefers to vacation if you’re talking international though. I’m in NYC and fly them a lot (well, used to when that was a thing), and they have pretty good coverage around the Caribbean and parts of Latin America. I’m more likely to want to vacation in Colombia or Mexico or Jamaica than I am in Europe. And when I do go to Paris to see family I just use travel points from my credit card.
- cascom 5y ago
  I agree. I would have been more inclined to fly jet blue. If you fly all the time status is meaningful (you’re just treated badly, as opposed to being outright abused).
- 542354234235 5y ago
  Frequent flyer programs cost money. Making deals so you can earn and spend miles on other airlines costs money. Making routes reliably available for business travelers costs money. Jetblue wins by competing in other areas, like price for leisure travelers or routes/times that are underserved by other carriers.

endisneigh 5y ago

This is great, but I wish there were legislation specifying in detail specific circumstances in which actions should be blocked rather than our tax dollars be wasted suing these people. Ultimately tax dollars are spent to sue, and consumers’ money is indirectly spent on the defense too.

whoknowswhat11 5y ago
And there is a ton of waste just in doing these deals, negotiating them. Since the govt already approved them they did slot divestment per govt request, which may need to be unwound? Will the govt pay them? It's a colossal waste of time and energy when just having some much clearer guidelines, or being able to pay $500K to get a likely ruling based on a proposed deal would save a ton of everyones time (and our tax dollars). Quick note that I think the case is relatively weak at first glance. The case highlights for example routes that used to have both carriers and makes NO mention if those routes also have other carriers which is such a critical distinction it's kind of appalling the DOJ wasn't able to analyze that. Ie, a route with just AA and Jetblue - comp is DEF reduced with this. However, a route that they were both margin or second in against on the majors out of NY etc - not sure comp is harmed by beefing the AA/Jetblue position. A fair bit of their antitrust has been surprisingly weak, but I like this because at least it is focused on supposed consumer harm rather what they were pushing for before (ie, to help businesses without regard for consumer).
Daishiman 5y ago
The unintended consequence of codifying the specific circumstances is that companies will do everything in possible to escape said criteria to justify a merger, complying with the letter but not the spirit of the law.
- endisneigh 5y ago
  That’s fine as it wouldn’t be necessarily exhaustive - presumably it would just revert to the present status quo.

MattGaiser 5y ago

If I remember correctly, American and Jetblue had to make concessions to get this deal approved in the first place. So do they get their landing slots back if this is reversed?

paxys 5y ago

Anecdote – I work for a small tech company that was acquired by a massive tech company last year. The deal sailed through until Biden was sworn in. Right after that the DoJ blocked it and said they needed to reapprove it ("we are looking at these deals more closely now"). Took us months to remake our entire case. They went through a ton of data from both parties with a magnifying glass before finally letting it through. Sucked for us, but happy to see the slightest more antitrust scrutiny from the government.

fallingknife 5y ago
Once a regulatory agency makes a decision, it should be final, though. Unless they find that someone was lying or withholding information in the process.
- ocdtrekkie 5y ago
  Was frustrating about this approach is how many wrongs are done by corporate insiders in those regulators. Making it impossible to unwind these mergers rewards corruption.
  - propogandist 5y ago
    you may enjoy some coverage of the revolving door politics, although this (predictably) hasn't gotten much traction https://www.nytimes.com/2021/09/19/business/accounting-firms-tax-loopholes-government.html https://www.nytimes.com/2021/09/19/business/accounting-firms...
- phdelightful 5y ago
  I don't think either of the two antitrust agencies in the US are empowered to give approval, they are only empowered to challenge at the time of the review. They can always review more later and challenge if they want, but never give a 100% okay

whoknowswhat11 5y ago

Bummer. It was a good combo, jetblue already gave up a bunch of slots etc. Hopefully DOJ forces the slots to go back to jetblue - this kind of do / redo stuff is super annoying. Ideally republicans don't copy this approach or we are just going to get constant flip flops.

mrtweetyhack 5y ago

how about domestic partnership?