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The US Department of Justice (DOJ) has accused United Airlines of “unlawfully seeking to maintain a monopoly” at Newark worldwide Airport (EWR) and filed a civil antitrust lawsuit against the carrier.
“Airfares at Newark are among the highest in the country while United’s service at Newark ranks among the worst”, said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.
The release said United already controls 73 percent of the slots at the airport, about 10 times as many as its closet competitor.
The feds even used the “M” word – monopoly – making it clear that by giving United more slots at Newark-Liberty it would have created even further disparity among the airlines who fly out of the airport and leave consumers vulnerable to pay the going rate without any competing alternative to United.
Delta and United reached a deal for a slot swap, with Delta getting United’s 30 JFK slots while United would acquire the Newark slots from Delta, which has only a small presence at that airport.
Delta said in a statement that its agreement to lease slots at Newark to United “is an independent transaction” and does not affect Delta’s “separate agreement to lease slots from United at JFK Airport”.
In response to the department’s concerns expressed during its review of the United/Continental merger in 2010, United divested its 36 slots at Newark to Southwest Airlines.
“With each additional slot it acquires, United reduces competition and forecloses entry or expansion of a rival that would otherwise use the slot to compete”, the lawsuit states.
In response to the lawsuit, United said in a statement that it will “vigorously defend our ability to operate effectively, efficiently and competitively at Newark”.
United’s hub at Newark Liberty global is a gateway for overseas flights for the world’s second-biggest carrier. The deals, both of which were worth $14 million, were subject to regulatory approval.
“By contrast, United’s existing competitors and new entrants with very few slots are limited in their ability to add service or shift flights to other Newark routes to counter United’s initiatives”.
“With three major airports, the New York/Newark area is the most competitive air transportation market in the country”, said Rahsaan Johnson, a United spokesperson.
In June, United said it was dropping service at New York’s Kennedy airport – where JetBlue Airways Corp. and Delta are the leading tenants – to consolidate operations at Newark.
In the letter, Alaska Air Group Inc., Virgin America Inc., Allegiant Travel Co., Spirit Airlines Inc. and Frontier Airlines Inc. urge the federal government to change the way it allocates slots at Newark, JFK and LaGuardia. United’s then-CEO, Jeff Smisek, lauded the settlement as a “fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network and top-quality products and services, while enhancing domestic competition at Newark”. He claims that by acquiring Delta’s slots, however, those gains will be surrendered. The complaint also alleged that United does not use all the slots it controls at Newark.
