JetBlue Scolds U.S. Airlines in Gulf Case on Antitrust Issue

Updated on

JetBlue Airways Corp., wading into rivals’ complaints about Persian Gulf carriers, said American, Delta and United airlines use international alliances with antitrust protection to stifle competition and control pricing.

U.S. regulators should review the agreements known as immunized joint ventures to ensure they are “truly benefiting the traveling public,” JetBlue said in a letter to the secretaries of the State, Commerce and Transportation departments Tuesday. The accords should be re-examined periodically, the airline said.

JetBlue called for a review of immunized ventures while commenting on claims by the bigger carriers that three Persian Gulf airlines have gained an unfair competitive advantage through $42 billion in subsidies from their governments. The antitrust exemptions let member airlines coordinate pricing, schedules and marketing without fear of prosecution.

“Left unchecked, this U.S. government-sanctioned collusion will continue to stifle innovation and competition in international aviation and will directly harm JetBlue and consumers,” said the letter signed by Robert Land, senior vice president for government affairs.

Delta Air Lines Inc., American Airlines Group Inc. and United Continental Holdings Inc. want the U.S. to open talks with Qatar and United Arab Emirates on whether billions in government cash have enabled Etihad Airways PSJC, Qatar Airways Ltd. and Emirates to compete unfairly. The Persian Gulf airlines have denied receiving improper funding and said there is no basis for such talks. JetBlue didn’t comment on the specifics of the allegations in the letter.

Coalition Responds

The big three U.S. airlines say that the immunized agreements are good for passengers. Venture partners share revenue, reducing the need to boost prices on the segment each carrier operates, the U.S. Transportation Department has said.

“Experts have long recognized that joint venture agreements between airlines allow passengers to fly more easily to more places around the world for lower fares,” said Jill Zuckman, spokeswoman for the Partnership for Open & Fair Skies formed by Delta, American and United.

JetBlue has accords with 40 international airlines, including code-share agreements with Emirates, Etihad and Qatar that allow them to book passengers on some of each others’ flights. Those partners feed passengers from global markets onto JetBlue routes across the U.S. and Caribbean. The New York-based airline isn’t part of any immunized alliance.

Big Three

Delta, American and United control 65 percent of domestic flights after a series of mergers in the U.S. industry, and more than 82 percent of U.S.-European Union traffic through the immunized ventures, JetBlue said.

“Just as the three U.S. legacy carriers currently alleging unfair subsidies have exhibited anti-consumer behavior domestically, they have relied upon their immunization from antitrust laws, granted by DOT, to thwart competition internationally,” JetBlue said. The three “have a history of overcharging consumers whenever the opportunity arises.”

Delta has antitrust-protected ventures with Air France-KLM and Alitalia SpA across the Atlantic, with Virgin Atlantic on nonstop routes between the U.S. and U.K. and across the Pacific with Virgin Australia Holdings Inc.

American has such a partnership with International Consolidated Airlines Group SA’s British Airways and Iberia; Royal Jordanian Airlines Plc and Finnair OYJ; and with Japan Airlines Co. across the Pacific.

United has immunized alliances with Air Canada and Deutsche Lufthansa AG over the Atlantic and with ANA Holdings Inc.’s All Nippon Airways on some trans-Pacific routes.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE