US Court Orders American Airlines, JetBlue Airways to Terminate Alliance

A federal judge in Boston has issued a ruling stating that American Airlines [AAL:US] and JetBlue Airways [JBLU:US] must terminate their partnership in the northeast United States within 30 days, as the government proved the deal reduces competition in the airline industry, as reported by Reuters on May 20. The judge argued that the two airlines, acting as one entity in the northeast, divide markets between them and replace robust competition with extensive collaboration. The judge concluded that the alliance constitutes an “unreasonable restraint on trade” that violates the Sherman Act, a significant antitrust law. Attorneys representing JetBlue and American maintain that the alliance has not led to increased airfares or reduced flight availability, but rather it has expanded flight options and intensified competition on routes in the northeastern region.

The ruling aligns with the Biden administration’s ongoing efforts to prevent consolidations among large corporations, particularly in the highly concentrated aviation industry. The Northeast Alliance (NEA) between American and JetBlue, the largest and sixth-largest airlines in the US, was approved in early 2021 during the Trump administration. The NEA enables the two airlines to sell seats on each other’s flights and share revenue from them. The US Justice Department filed a lawsuit in 2021 to dissolve the alliance, arguing that it effectively merged the airlines’ operations in New York and Boston. The department alleged that the alliance allowed the two airlines to control over 80% of market share in flights to and from Boston’s Logan Airport and three airports in the New York City area, resulting in approximately USD700m in additional annual costs on consumers.

Sources:

https://www.reuters.com/legal/us-justice-dept-wins-antitrust-fight-against-american-jetblue-alliance-2023-05-19/

https://edition.cnn.com/2023/05/19/business/jetblue-american-airlines-alliance-blocked/index.html

https://www.npr.org/2023/05/20/1177295597/american-airlines-jetblue-must-end-partnership-judge

https://www.bloomberg.com/news/articles/2021-09-21/u-s-doj-poised-to-challenge-american-airlines-jetblue-venture