American-JetBlue Partnership Nixed by Judge

A federal judge last week ordered American Airlines and JetBlue Airways to cease the partnership known as the Northeast Alliance, ruling that the pact hurts competition.

What’s happening: The agreement launched in 2021 allowed each airline to sell seats offered by the other on certain routes and share revenue from certain flights and access to airport gates. The alliance covers the three major airports serving New York City and Boston Logan International Airport, according to The New York Times.

• The Justice Department sued to stop the partnership in September 2021, with the trial beginning in 2022 and finishing in December. The DOJ said the alliance reduced competition and would increase costs for travelers, while the airlines argued it provides consumers with more flying options.

What they’re saying: “It makes the two airlines partners, each having a substantial interest in the success of their joint and individual efforts, instead of vigorous, arms-length rivals regularly challenging each other in the marketplace of competition,” U.S. District Judge Leo Sorokin said in his ruling, according to CNBC.com.

• “Today’s decision is a win for Americans who rely on competition between airlines to travel affordably,” U.S. Attorney General Merrick Garland said in a statement. “The Justice Department will continue to protect competition and enforce our antitrust laws in the heavily consolidated airline industry and across every industry.”
• “We are disappointed in the decision,” a JetBlue spokeswoman said in a statement. “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.”
• “The Court’s legal analysis is plainly incorrect and unprecedented for a joint venture like the Northeast Alliance,” an American Airlines spokesman said in a statement. “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,” according to CNBC.com.

What’s next: The judge ordered the airlines to end the partnership 30 days from the ruling.

• This ruling is separate from a separate Department of Justice lawsuit filed earlier this year to block JetBlue’s $3.8 billion acquisition of ultra-low-cost carrier Spirit Airlines. That case continues.