Notice2021-20849
Clarification of Departmental Position on American Airlines-JetBlue Airways Northeast Alliance Joint Venture
Primary source
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Published
September 27, 2021
Issuing agencies
Transportation Department
Abstract
By this notice, the U.S. Department of Transportation (DOT or Department) clarifies its position on the American Airlines (American) and JetBlue Airways (JetBlue) Northeast Alliance (NEA) joint venture agreements and the January 10, 2021 agreement between and among DOT, JetBlue and American (DOT Agreement) terminating the Department's review of the NEA, following the September 21, 2021 announcement of antitrust litigation by the U.S. Department of Justice (DOJ). The Department will work closely with DOJ should it seek data and documents that will help in the resolution of DOJ's action. The DOT Agreement remains in effect during the pendency of the DOJ litigation. The Department retains independent statutory authority to prohibit unfair methods of competition in air transportation to further its statutory objectives to prevent predatory or anticompetitive practices and to avoid unreasonable industry concentration.\1\ However, the Department intends to defer to DOJ, as the primary enforcer of Federal antitrust laws, to resolve the antitrust concerns that DOJ has identified with respect to the NEA. The Department also intends to stay the proceedings in a Spirit Airlines, Inc. (Spirit) formal complaint against the NEA's implementation while the DOJ action is pending. The Department will assess its next steps, if any, relating to the Spirit complaint and the NEA at the conclusion of the DOJ litigation. ---------------------------------------------------------------------------
Full Text
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<title>Federal Register, Volume 86 Issue 184 (Monday, September 27, 2021)</title>
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[Federal Register Volume 86, Number 184 (Monday, September 27, 2021)]
[Notices]
[Pages 53401-53402]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-20849]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Clarification of Departmental Position on American Airlines--
JetBlue Airways Northeast Alliance Joint Venture
AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT).
ACTION: Clarification notice.
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SUMMARY: By this notice, the U.S. Department of Transportation (DOT or
Department) clarifies its position on the American Airlines (American)
and JetBlue Airways (JetBlue) Northeast Alliance (NEA) joint venture
agreements and the January 10, 2021 agreement between and among DOT,
JetBlue and American (DOT Agreement) terminating the Department's
review of the NEA, following the September 21, 2021 announcement of
antitrust litigation by the U.S. Department of Justice (DOJ). The
Department will work closely with DOJ should it seek data and documents
that will help in the resolution of DOJ's action. The DOT Agreement
remains in effect during the pendency of the DOJ litigation. The
Department retains independent statutory authority to prohibit unfair
methods of competition in air transportation to further its statutory
objectives to prevent predatory or anticompetitive practices and to
avoid unreasonable industry concentration.\1\ However, the Department
intends to defer to DOJ, as the primary enforcer of Federal antitrust
laws, to resolve the antitrust concerns that DOJ has identified with
respect to the NEA. The Department also intends to stay the proceedings
in a Spirit Airlines, Inc. (Spirit) formal complaint against the NEA's
implementation while the DOJ action is pending. The Department will
assess its next steps, if any, relating to the Spirit complaint and the
NEA at the conclusion of the DOJ litigation.
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\1\ 49 U.S.C. 40101.
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DATES: September 27, 2021.
FOR FURTHER INFORMATION CONTACT: Blane A. Workie or Ryan Patanaphan,
Office of Aviation Consumer Protection, U.S. Department of
Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590, at 202-
366-9342 or by email at <a href="/cdn-cgi/l/email-protection#63010f020d064d140c11080a0623070c174d040c15"><span class="__cf_email__" data-cfemail="41232d202f246f362e332a282401252e356f262e37">[email protected]</span></a> or
<a href="/cdn-cgi/l/email-protection#cab8b3aba4e4baabbeaba4abbaa2aba48aaea5bee4ada5bc"><span class="__cf_email__" data-cfemail="53212a323d7d233227323d32233b323d13373c277d343c25">[email protected]</span></a>, or Todd Homan, Director, Office of Aviation
Analysis, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-366-5903,
<a href="/cdn-cgi/l/email-protection#1e4a717a7a305671737f705e7a716a30797168"><span class="__cf_email__" data-cfemail="ce9aa1aaaae086a1a3afa08eaaa1bae0a9a1b8">[email protected]</span></a> (email).
SUPPLEMENTARY INFORMATION:
Background
In 2020, American and JetBlue submitted to the Department joint
venture agreements concerning the NEA, which covered code-sharing,
frequent flyer, interline, revenue sharing, and asset sharing. The
agreements and supporting documentation were submitted to the
Department under 49 U.S.C. 41720, which requires that major air
carriers submit joint venture agreements to the Department at least 30
days before the agreements take effect. Section 41720 permits the
Department to extend the 30-day period up to an additional 150 days for
joint venture agreements involving code-sharing and 60 days for other
types of joint venture agreements.
Consistent with past precedent, the Department chose to conduct the
review of the NEA informally and without establishing a docketed
proceeding.\2\ As permitted by 49 U.S.C. 41720, the Department extended
its review and the waiting period for the NEA to November 19, 2020, via
a Federal Notice issued on August 20, 2020.\3\ In the notice, the
Department explained that it would consult with DOJ during its review,
and that its focus was on whether the NEA would likely reduce
competition and create the potential for collusion or other
restrictions on price and service levels in markets where the carriers
compete.
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\2\ See, e.g., 67 FR 50,745 (Aug. 5, 2002) (United Air Lines and
US Airways) and 67 FR 69,804 (Nov. 19, 2002) (Delta Air Lines,
Northwest Airlines, and Continental Airlines). Both agreements were
subject to an informal, non-docketed review, although third parties
were given the opportunity to submit comments on the agreements due
to public interest concerns, subject to access restrictions designed
to ensure that confidential business information did not become
public.
\3\ 85 FR 51,552 (Aug. 20, 2020).
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Section 41720 does not provide the Department the authority to
approve or disapprove agreements submitted for review under that
section; rather, the section gives the Department a limited period of
time to review the agreements before such agreements may take effect.
DOJ, which is responsible for enforcing Federal antitrust laws and has
also been conducting its own review of the NEA, had not concluded its
investigation at the time DOT's review period ended and DOT entered in
the DOT Agreement with American and JetBlue on January 10, 2021.
Section 41720 does not require DOJ to adhere to a particular timeframe
for its review. If an alliance agreement appears to be problematic, the
Department and DOJ have separate authority to address anticompetitive
conduct. As the Department's time-limited review of the NEA was
concluding, it was aware that DOJ was continuing its detailed review
and identifying and examining concerns on the impact on competition.
In this context, DOT's review of the NEA under section 41720 was
not designed to approve or disapprove the alliance. During the
Department's review, American and JetBlue entered into negotiations
with DOT. These negotiations culminated in the DOT Agreement with
American and JetBlue on January 10, 2021, in which the carriers agreed
to take actions to address several Departmental concerns about
anticompetitive harms arising out of the NEA.\4\ The DOT Agreement did
not address all of the Department's concerns resulting from the NEA's
impacts on competition, but instead sought concessions from the
carriers that were intended to mitigate some of the anticompetitive
harm while providing a means for monitoring the NEA's implementation.
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\4\ The agreement can be found at <a href="https://www.transportation.gov/sites/dot.gov/files/2021-01/Agreement%20terminating%20review%20DOT-AA-B6%20with%20appendix%20011021%20website.pdf">https://www.transportation.gov/sites/dot.gov/files/2021-01/Agreement%20terminating%20review%20DOT-AA-B6%20with%20appendix%20011021%20website.pdf</a>.
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For example, the DOT Agreement required upfront slot divestitures
of six slot-pairs at Ronald Reagan Washington National Airport (DCA),
seven slot-pairs at John F. Kennedy International Airport (JFK), and a
conditional divestiture of up to ten additional slots at JFK if the
carriers failed to meet capacity growth targets in New York City
(limited to JFK and LaGuardia Airports). In the case of the DCA slot-
pairs, a perpetual-lease arrangement provided for the divested slots to
be reacquired by the carriers in the event that the NEA is
discontinued. The carriers also agreed to periodically report to DOT
capacity figures, route changes, and slot and gate utilization metrics.
The carriers agreed to adhere to antitrust protocols to limit the type
of communications between them, as well as other commitments.
The DOT Agreement does not expand or restrict the Department's
existing statutory and regulatory authorities, including the ability to
investigate and prohibit potentially unfair, deceptive, or exclusionary
practices.\5\ The parties to
[[Page 53402]]
the DOT Agreement recognized that the alliance was still subject to the
antitrust laws, that DOJ was continuing its review, and that DOT
retained its authority to remedy any competitive harm.
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\5\ Section 7 of the DOT Agreement specifies that ``[n]othing in
this Agreement shall expand or restrict DOT's existing statutory and
regulatory authorities, or at any time prohibit or limit DOT from
exercising those authorities, including but not limited to
investigation and enforcement regarding: (1) Potentially unfair or
deceptive practices; (2) potentially exclusionary practices; [or]
(3) acquisition or operation of additional slots or gates not
currently held by American or JetBlue.''
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Spirit Airlines Formal Complaint
On January 7, 2021, prior to execution and public release of the
DOT Agreement, Spirit filed a formal complaint with DOT that was
docketed in DOT-OST-2021-0001. In its complaint, Spirit requested an
on-the-record investigation of the NEA to determine whether the NEA's
implementation would constitute an unfair method of competition in
violation of 49 U.S.C. 41712(a).\6\ Spirit also asserted that
insufficient information about the NEA was made public during the
Department's review, and that the remedies agreed to in the DOT
Agreement were insufficient to address anticompetitive concerns.
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\6\ The Department's authority to address competition concerns
is separate and distinct from that of DOJ, covering a different
scope of anticompetitive conduct than DOJ's authority. Under 49
U.S.C. 41712, the Department has authority to investigate and decide
whether a carrier has been or is engaging in an unfair method of
competition in air transportation. The Department prohibits
anticompetitive conduct that (1) violates the antitrust laws, (2) is
not yet serious enough to violate the antitrust laws but may well do
so if left unchecked, or (3) although not a violation of the letter
of the antitrust laws, is close to a violation or is contrary to
their spirit. See, e.g., ASTA v. United et al., DOT Order 2002-9-2
(Sep. 4, 2002), citing E.I. Du Pont de Nemours and Co. v. Federal
Trade Commission, 729 F.2d 128, 136-137 (2d Cir. 1984). E.I.Du Pont
de Nemours interpreted the Federal Trade Commission's authority
under 15. U.S.C. 45, upon which 49 U.S.C. 41712 is based.
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Several entities, including other airlines, an airline association,
a consumer advocacy organization, and a non-profit organization focused
on competition, submitted comments supporting various aspects of
Spirit's complaint.\7\ Those comments were filed after the public
release of the DOT Agreement. American and JetBlue filed answers
opposing Spirit's complaint.
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\7\ The organizations included the National Air Carrier
Association, Southwest Airlines, United Airlines, Travelers United,
the American Antitrust Institute, Airports Council International--
North America, and the Service Employees International Union.
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DOJ Litigation
On September 21, 2021, after completing an extended review of the
NEA, DOJ announced its determination that the NEA violates the
antitrust laws and that the agency has initiated action to enjoin the
agreements. DOJ has shared with the Department its significant concerns
with respect to the effect of the NEA on competition. The Department
notes that the DOT Agreement does not, nor was it intended to, wholly
address these concerns. The Department will work closely with DOJ
should it seek data and documents that will help in the resolution of
DOJ's action.
Because of the DOJ action, and to avoid duplicative or inconsistent
proceedings, DOT is separately staying the proceedings in the Spirit
formal complaint while the DOJ action is unresolved. Although the DOT
Agreement remains in effect, the Department will continue coordinating
with DOJ. The Department notes its own statutory authority to
investigate and prohibit anticompetitive conduct if the situation
warrants. However, the Department intends to defer to DOJ, as the
primary enforcer of Federal antitrust laws, to resolve antitrust
concerns with respect to the NEA. The Department believes that it would
be inefficient and unhelpful to have two concurrent proceedings and
therefore intends to defer any independent action until the DOJ
antitrust litigation has concluded.
Issued this 21st Day of September, 2021, in Washington, DC.
John E. Putnam,
Acting General Counsel.
[FR Doc. 2021-20849 Filed 9-24-21; 8:45 am]
BILLING CODE 4910-9X-P
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