American Airlines and JetBlue Have to Break Up Their Partnership, Court Rules

American Airlines and JetBlue Airways have been ordered to terminate their alliance on Northeast US flight routes by a US District Court judge.

The ruling, in favor of the Justice Department, marks a victory for the Biden administration’s long-standing lawsuit against the airlines, accusing them of price increases and reduced choices for passengers traveling to and from major cities in the Northeast, including New York City and Boston.

Judge Leo Sorokin, in his ruling, stated that the airlines had established the alliance primarily to enhance their competitive positions against Delta and United in Boston and New York.

Sorokin described both airlines as influential players in the air travel industry, with American Airlines Group being the world’s largest airline and JetBlue being the sixth largest in the US, holding significant market power in the Northeast.

The Justice Department’s lawsuit claimed that the airlines engaged in the exchange of information regarding routes, flight timing, carriers, and aircraft sizes through their alliance, which was formed in 2020.

While the airlines argued that the alliance provided benefits and discounts to corporate and frequent flyers, Sorokin ruled that these travelers constituted a relatively small proportion of American’s customer base.

The judge also noted that the schedule optimization and coordination resulting from the alliance had led to decreased capacity, lower frequencies, and reduced consumer choices on various routes, including heavily traveled ones.

Sorokin stated that the alliance effectively eliminated a competitor from these markets, leaving customers with fewer options for travel between hubs like New York’s LaGuardia and Boston’s Logan airports.

The judge deemed the pact an “unreasonable restraint on trade” in violation of the Sherman Act, a significant antitrust law.

The Justice Department further alleged that the airlines shared revenues earned at the airports involved in the alliance, removing their incentives to compete with each other.

The “Northeast Alliance” also allowed the parties to pool their gates and slots, which are takeoff and landing authorizations.

Assistant Attorney General Jonathan Kanter of the DOJ’s Antitrust Division expressed satisfaction with the decision, emphasizing its benefits for affordable travel and competition.

American Airlines expressed disappointment with the court’s decision and stated that it is studying the judgment and evaluating its next steps.

The airline highlighted the positive impact of the Northeast Alliance on customers, particularly JetBlue’s ability to expand in constrained northeast airports, offering low fares and excellent service to more routes.

In March, the Justice Department filed a lawsuit to halt JetBlue’s $3.8 billion acquisition of Spirit Airlines, arguing that the merger would significantly harm consumers, especially those relying on the budget-friendly fares provided by Spirit Airlines.