JetBlue Gives Up on American Alliance

UPDATE Jul 5, 2023 6:45 PM CDT

JetBlue will abandon its partnership in the Northeast with American Airlines, accepting a judge's ruling though its former partner is appealing it. JetBlue said Wednesday it will instead concentrate on acquiring Spirit Airlines, CNBC reports, after a court found that the deal with American hurts competition. American confirmed Wednesday that it's still going ahead with its appeal, though a spokesman didn't say how the partnership could be revived without one of the partners. "We, of course, respect JetBlue's decision to focus on its other antitrust and regulatory challenges," he said.

May 19, 2023 4:45 PM CDT

American Airlines and JetBlue Airways must abandon their partnership in the Northeast US, a federal judge in Boston ruled Friday, saying that the government proved that the deal reduces competition in the airline industry. The ruling is a blow for the airlines, which have said that their deal helps consumers by creating a stronger competitor in the region to Delta Air Lines and United Airlines. But US District Judge Leo Sorokin wrote that through their alliance, American and JetBlue carved up Northeast markets between them, "replacing full-throated competition with broad cooperation," the AP reports. Sorokin said the airlines offered only minimal evidence that the partnership helped consumers.

The ruling is a major victory for the Biden administration, which has used aggressive enforcement of antitrust laws to fight mergers and other arrangements between large corporations. The Justice Department sued to kill the deal in 2021 and was joined by six states and the District of Columbia. The case went to trial last fall in Boston. The partnership, called the Northeast Alliance, had the blessing of the Trump administration when it took effect in early 2021. It lets American and JetBlue coordinate schedules and share revenue on many routes to and from New York and Boston.

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But soon after President Biden took office, the Justice Department took another look at the case and found an economist who predicted that consumers would spend more than $700 million a year extra if American and JetBlue stopped competing with each other in the Northeast. "It is a very important case to us ... because of those families that need to travel and want affordable tickets and good service," Justice Department lawyer Bill Jones said during closing arguments. Lawyers for American and JetBlue countered that the government had failed to produce evidence of harm to consumers nearly two years after the alliance took effect. They pointed to new routes, which they said were added only because the alliance provided enough new passengers to make the flights feasible. (The Biden administration also is fighting JetBlue's proposed purchase of Spirit Airlines.)