06 July, 2023

No more Northeast Alliance for JetBlue and American Airlines

Two of the major airlines in the U.S. have been ordered to smash up an alliance agreement following a long trial in the U.S. courts.

The Justice Department had originally taken legal action against JetBlue and American Airlines in September of  2021 claiming the tie-up between the two carriers, was having a detrimental impact on the market, cutting choices and raising fares. However, in fact there have been more services and routes introduced during the time of the alliance and fares have, allowing for inflation, reduced. 

Now JetBlue and American have been told to dismantle the alliance by U.S. District Judge Leo Sorokin in Boston, with the news welcomed by Merrick B. Garland, the Attorney General who said  "The Justice Department will continue to protect competition and enforce our antitrust laws in the heavily consolidated airline industry and across every industry. - Today's decision is a win for Americans who rely on competition between airlines to travel affordably" 

JetBlue said: "The DOJ’s proposal is too onerous and overreaching, ignoring arguments the DOJ itself presented at trial about the benefits of similar aspects of other domestic carrier partnerships."

Jetblue, which is busy with its takeover of budget carrier Spirit has said it will not appeal the decision, despite the millions it has already spent on the court case.  In a statement, the hometown airline said: "Despite our deep conviction in the procompetitive benefits of the NEA, after much consideration, JetBlue has made the difficult decision not to appeal the court’s determination that the NEA cannot continue as currently crafted and has instead initiated the termination of the NEA." The beginning of a wind-down process that will take place over the coming months the airline advises and local analysts have said JetBlue will axe 14 services before the end of the year. However, for the moment, nothing will change and existing bookings will be honoured. 

JetBlue says it will now focus all its attention on the proposed combination with Spirit, "which is the best and most effective opportunity to truly transform the competitive landscape in the U.S. and bring the JetBlue Effect to more routes and markets across the country."

The charge that the NEA was "anticompetitive" has angered American Airlines, which will continue to appeal, without JetBlue. The mega-carrier issued the following statement  "JetBlue has advised us that it will not join the appeal of the District Court ruling in the Northeast Alliance case. We, of course, respect JetBlue’s decision to focus on its other antitrust and regulatory challenges. At the same time, JetBlue's decision and reasoning confirm our belief that the NEA has been highly pro-competitive and that an erroneous judicial decision disregarding the NEA's consumer benefits has led to an anticompetitive outcome. American will therefore move forward with an appeal. JetBlue has been a great partner, and we will continue to work with them to ensure our mutual customers can travel seamlessly without disruption to their travel plans."