NEW YORK, Sept 21 (Reuters Breakingviews) - Governments that bail out private enterprises create problems for themselves – especially when they try to ensure those companies don’t gouge their customers. Airlines show the problem.
On Tuesday the Wall Street Journal reported the U.S. Justice Department was preparing a lawsuit challenging an alliance between American Airlines (AAL.O) and JetBlue Airways (JBLU.O). The arrangement between the two companies was meant to allow both to sell each other’s flights in some areas of the Northeast including New York. It effectively merged parts of the sales structure of the business in busy hubs, enabling them to better compete.
President Joe Biden wants to be tough on antitrust, and it was his predecessor Donald Trump who authorized the earlier bailouts and the deal between the airlines. Still, as recently as last quarter, the U.S. government was bankrolling American and JetBlue. That leaves Biden and his trustbusters awkwardly balanced between contradictory interests. The better the airlines’ earnings, the faster they can pay the taxpayer back.
This could have been avoided . Airlines could have been given punitive terms that encouraged them to wipe the slate clean early. But that wasn’t the case . So a challenge to their profit-boosting tie-up is also a challenge to getting them off government life support. (By Lauren Silva Laughlin)
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