DOJ wins lawsuit terminating JetBlue’s partnership with American Airlines Northeast

A federal judge ruled on Friday American Airlines And JetBlue Airways to end their partnership in the Northeast, a victory for the Justice Department after it asked for the alliance to be dissolved on the grounds that it was anti-competitive.

The lawsuitThe lawsuit, filed in September 2021, alleged that the airline alliance was a de facto merger that would harm consumers by driving up prices. The trial began a year later in Boston and ended in December.

“This results in the two airlines being partners, each having a significant interest in the success of their combined and individual efforts, rather than fierce, independent rivals regularly challenging one another in the competitive marketplace,” U.S. District Judge Leo Sorokin said in his ruling Verdict.

American Airlines, based in Fort Worth, Texas, and JetBlue Airways, based in New York, argued they needed the so-called Northeast Alliance to better compete with other major carriers Delta Air Lines and United Airlines at congested airports in the region.

“Whatever the benefits to American and JetBlue of growing more powerful — in the Northeast generally, or in their shared rivalry with Delta — such benefits come from a naked agreement not to compete with each other,” Sorokin wrote. “Such a pact is exactly the kind of ‘undue trade restriction’ that the Sherman Act was intended to prevent.”

He instructed the airlines to end the partnership 30 days after the ruling. The airlines are likely to appeal the decision. A JetBlue spokeswoman said the airline is reviewing the decision and reviewing next steps.

“We are disappointed with the decision,” she said. “We made it clear during the negotiation that the Northeast Alliance was a great win for customers. The NEA has enabled JetBlue to grow significantly in the cramped airports of the Northeast, extending the airline’s low fares and great service to more routes than would otherwise have been possible.”

American Airlines did not immediately respond to a request for comment.

A withdrawal from the partnership would be difficult, especially during the peak summer travel season, for which the airlines have already sold tickets.

JetBlue and American are not allowed to coordinate fares under the partnership, which was approved in the final days of the Trump administration in 2021 and has been in effect ever since expanded.

JetBlue previously warned in a securities statement that a judgment against the NEA “could have an adverse impact on our business, financial condition and results of operations.”

“In addition, we incur costs associated with implementing operational and marketing elements of the NEA that would not be recoverable if we had to wind down all or part of the NEA,” the company said.

The Justice Department did not immediately respond to a request for comment.

The department filed a separate application in March antitrust lawsuit to block JetBlue’s proposed takeover of the low-cost carrier Spirit Airlinesargued the deal would drive up fares and “hurt cost-conscious passengers the most.”

That combination faces a high hurdle for approval from the Biden administration, which has vowed to take a hard line against what it considers anti-competitive deals.