UNITED STATES NEWS

American Airlines and JetBlue must abandon their partnership in the Northeast, federal judge rules

May 19, 2023, 1:45 PM | Updated: 2:34 pm

American Airlines and JetBlue Airways must abandon their partnership in the northeast United States, a federal judge in Boston ruled Friday, saying that the government proved the deal reduces competition in the airline industry.

The ruling is a blow for the airlines, which have said that their deal helps consumers by creating a stronger competitor in the Northeast to Delta Air Lines and United Airlines.

But U.S. District Judge Leo Sorokin wrote that through their alliance, American and JetBlue carved up Northeast markets between them, “replacing full-throated competition with broad cooperation.”

Sorokin said the airlines offered only minimal evidence that the partnership helped consumers.

JetBlue said it was considering whether to appeal.

“We are disappointed in the decision,” said an airline spokeswoman, Emily Martin. “We made it clear at trial that the Northeast Alliance has been a huge win for customers.”

Neither American nor the Justice Department responded immediately when asked for comment.

The ruling is a major victory for the Biden administration, which has used aggressive enforcement of antitrust laws to fight against mergers and other arrangements between large corporations.

The Justice Department sued to kill the deal in 2021, and was joined by six states and the District of Columbia. The case went to trial last fall in Boston.

The partnership, called the Northeast Alliance, had the blessing of the Trump administration when it took effect in early 2021. It lets American and JetBlue coordinate schedules and share revenue on many routes to and from New York and Boston.

But soon after President Joe Biden took office, the Justice Department took another look at the case and found an economist who predicted that consumers would spend more than $700 million a year extra if American and JetBlue stopped competing with each other in the Northeast.

“It is a very important case to us … because of those families that need to travel and want affordable tickets and good service,” Justice Department lawyer Bill Jones said during closing arguments.

During the nearly monthlong trial last fall, the airlines argued that the government couldn’t show that the partnership had caused fares to rise. The airlines pointed to several new routes they added from New York and Boston, saying they were possible only because the alliance provided enough new passengers to make flights economically feasible.

The trial featured testimony by current and former airline CEOs and economists who gave wildly different opinions on how the deal would affect competition and ticket prices.

Hanging over the trial was JetBlue’s proposed $3.8 billion purchase of Spirit Airlines, the nation’s largest discount carrier. In March, while Sorokin was mulling his decision, the Justice Department sued to block that deal too, arguing that it would reduce competition and be especially harmful to consumers who depend on Spirit to save money.

JetBlue has countered that acquiring Spirit will make it a bigger, stronger low-cost competitor to Delta, United, Southwest — and American — which together control about 80% of the domestic U.S. air-travel market.

The government’s lawsuit against the JetBlue-Spirit deal is pending before a different judge in the same Boston courthouse.

United States News

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American Airlines and JetBlue must abandon their partnership in the Northeast, federal judge rules