The Northeast Alliance between American Airlines and JetBlue has been blocked by a judge with potentially major implications for both airlines. But what does it mean to passengers today?
The partnership, which began in early 2021, was intended to strengthen American and JetBlue’s competitive positions in the Northeastern United States. However, the Biden administration opposed the alliance, claiming it hurt competition and was harmful to consumers.
The Ruling Against the Northeast Alliance
US District Judge Leo Sorokin, an Obama appointee, ruled in favor of the Justice Department, ordering the termination of the Northeast Alliance partnership between American Airlines and JetBlue within 30 days.
The judge’s based his decision on several conclusions which he concluded would hurt competition.
- The primary motivation for establishing the Northeast Alliance was to strengthen American and JetBlue’s competitive positions against Delta and United in Boston and New York.
- The airlines’ coordination of schedules led to decreased capacity, lower frequencies, and reduced consumer choices in many markets.
- Revenue sharing eliminated the incentive for the airlines to compete with one another.
- American and JetBlue claimed their collaboration benefited the flying public, but provided only minimal evidence supporting this claim.
- The Northeast Alliance is an unreasonable restraint on trade and violates the Sherman Act.
Of course, many commentators (including here on Travel Spill) disagree with the judge that the ruling reduces competition. In coordinating closely, JetBlue and American create a third viable competitor in New York City rather than a Delta and United duopoly.
American Airlines and JetBlue React to the Ruling
Both American Airlines and JetBlue have expressed disappointment in the ruling. An American Airlines spokesperson stated that they believe the decision is wrong and are considering next steps.
“The Court’s legal analysis is plainly incorrect and unprecedented for a joint venture like the Northeast Alliance. There was no evidence in the record of any consumer harm from the partnership, and there is no legal basis for inferring harm simply from the fact of collaboration.”American Airlines spokesperson (CNBC)
A JetBlue spokesperson also expressed disappointment in the ruling, stating that the Northeast Alliance has been a significant win for customers by allowing JetBlue to grow in constrained Northeast airports and providing low fares and excellent service on more routes.
“We are disappointed in the decision. We made it clear at trial that the Northeast Alliance has been a huge win for customers. Through the NEA, JetBlue has been able to significantly grow in constrained northeast airports, bringing the airline’s low fares and great service to more routes than would have been possible otherwise.”JetBlue spokesperson (CNBC)
What Happens Next for American & JetBlue?
The ruling is unprecedented, no previous agreement has been challenged in a similar manner. Similarly, it’s basis is questionable given that the Justice Department filed this case after the federal government previously approved the alliance. As Gary at View From The Wing has eloquently stated, this violates a key tenet of rule of law.
American and JetBlue were given 30 days to end the Northeast Alliance but the decision is very likely to be stayed upon appeal. With schedules already set for a busy summer season around the corner, it’s very unlikely the carriers will be forced to make any changes until the appeal is heard.
It also remains unclear whether the partnership between the two airlines must be completely discontinued or merely scaled back, even if the appeal is unsuccessful.
Meanwhile, American and JetBlue customers can continue enjoying the benefits of the Northeast Alliance, such as frequent flyer reciprocity and improved travel options.
The Appeal: Can the Northeast Alliance Survive?
American Airlines and JetBlue are expected to appeal the ruling, arguing that the Department of Justice has not met its burden of showing competitive harm resulting from the Northeast Alliance.
For now, nothing will change for travelers as the airlines continue their partnership while awaiting further legal proceedings. The outcome of the appeal will determine whether American and JetBlue can maintain their Northeast Alliance or if they must alter their partnership to comply with regulatory requirements. With any luck, customers in New York City and the Northeast will continue to have a third viable airline…
With the future of American Airlines and JetBlue’s Northeast Alliance uncertain as legal battles continue, only time will reveal how this situation will resolve itself.