[Federal Register Volume 86, Number 184 (Monday, September 27, 2021)]
[Notices]
[Pages 53401-53402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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 [email protected] or 
[email protected], or Todd Homan, Director, Office of Aviation 
Analysis, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-366-5903, 
[email protected] (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 https://www.transportation.gov/sites/dot.gov/files/2021-01/Agreement%20terminating%20review%20DOT-AA-B6%20with%20appendix%20011021%20website.pdf.
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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