UPDATE
Jul 5, 2023 6:45 PM CDT
JetBlue has decided to end its partnership with American Airlines in the Northeast region, as a result of a judge’s ruling, despite American Airlines appealing the decision. In its place, JetBlue has announced its focus on acquiring Spirit Airlines, according to a report by CNBC. Although American Airlines is still moving forward with its appeal, it remains unclear how the partnership can continue without both parties. A spokesperson for American Airlines commented, “We, of course, respect JetBlue’s decision to focus on its other antitrust and regulatory challenges.”
May 19, 2023 4:45 PM CDT
A federal judge in Boston has ruled that American Airlines and JetBlue Airways must terminate their partnership in the Northeast United States, stating that the government has presented evidence showing that the agreement reduces competition in the airline industry. The ruling comes as a disappointment for the airlines, who have argued that their partnership benefits consumers by creating a stronger competitor to Delta Air Lines and United Airlines in the region. However, US District Judge Leo Sorokin stated that through their alliance, American and JetBlue have divided Northeast markets between themselves, resulting in “replacing full-throated competition with broad cooperation.” Sorokin emphasized that the airlines have provided minimal evidence to demonstrate how the partnership benefits consumers.
This ruling represents a significant victory for the Biden administration, which has taken a strong stance on enforcing antitrust regulations in order to combat mergers and similar agreements between large corporations. The Department of Justice filed a lawsuit to block the partnership in 2021, and it was supported by six states and the District of Columbia. The case went to trial in Boston last fall. The Northeast Alliance, as the partnership was called, received approval from the Trump administration when it was established in early 2021. The alliance allows American and JetBlue to coordinate their schedules and share revenue on numerous routes to and from New York and Boston.
However, following President Biden’s inauguration, the Department of Justice reevaluated the case and enlisted an economist who predicted that consumers would spend over $700 million more per year if American and JetBlue ceased competing with each other in the Northeast region. During closing arguments, Bill Jones, a lawyer for the Department of Justice, emphasized the significance of the case for families who rely on affordable tickets and high-quality service when traveling. Lawyers representing American and JetBlue countered by arguing that the government had failed to provide evidence of harm to consumers nearly two years after the alliance was formed. They pointed to the introduction of new routes, which they claimed were made possible because the alliance attracted enough new passengers to make the flights economically viable. (The Biden administration is also opposing JetBlue’s proposed acquisition of Spirit Airlines.)
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