On Friday, a federal judge ordered American Airlines and JetBlue Airways to terminate their partnership in the Northeast.
This ruling was in favor of the Justice Department, which had filed a lawsuit in September 2021 to dissolve the alliance on the grounds that it was anti-competitive, CNBC reported.
The lawsuit alleged that the partnership was essentially a merger that would result in increased fares and harm consumers. The trial took place in Boston and concluded in December.
“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.“
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The airlines expressed disappointment with the decision and said they were considering next steps.
“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.
American Airlines, based in Fort Worth, Texas, and JetBlue Airways, based in New York, stated that the Northeast Alliance is necessary for them to effectively compete against Delta Air Lines and United Airlines in busy airports within the region.
“Whatever the benefits to American and JetBlue of becoming more powerful — in the northeast generally or in their shared rivalry with Delta — such benefits arise from a naked agreement not to compete with one another,” Sorokin wrote. “Such a pact is just the sort of ‘unreasonable restraint on trade’ the Sherman Act was designed to prevent.”
The airlines were instructed to terminate their partnership within 30 days following the ruling. It is expected that the carriers will contest the decision. A spokeswoman for JetBlue stated that the company is examining the ruling and determining its next actions.
“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.”
Dissolving the partnership could pose a challenge, particularly given that airlines have already sold tickets for the busy summer travel season.
Under the 2021 partnership approval in the final days of the Trump administration, there are restrictions on JetBlue and American coordinating fares, though the partnership has since grown.