A federal judge, in a ruling released on Friday, suspended a tie-up between American Airlines and JetBlue Airways at New York and Boston airports, saying the tie-up would stifle competition and raise fares.
The decision is a major win for the Justice Department, which has sought to enforce antitrust laws more aggressively under President Biden. A judge ruled that the partnership between the airlines known as the Northeast Alliance must be terminated.
The Justice Department said the partnership would reduce competition and cost travelers hundreds of millions of dollars a year if kept up. The airline claimed the partnership would provide consumers with more flight options.
Massachusetts U.S. District Court Judge Leo T. Sorokin sided with the government, stating, “This ensures that the two airlines, rather than being staunch rivals who regularly go head-to-head, contribute tremendously to the success of their joint and individual efforts.” We will be interested partners.” They challenge each other in a competitive market. ”
Under the agreement, which will begin in 2021, each airline will sell seats provided by the other on specific routes. Airlines also share revenue from specific flights and airport gate access. The partnership covers three major airports serving New York City and Boston Logan International Airport.
American Airlines and JetBlue did not respond to requests for comment.
The ruling is a blow to JetBlue, which has been expanding rapidly in recent years. In addition to its partnership with American Airlines, JetBlue also signed a deal to acquire Spirit Airlines. The Justice Department is asking a judge to block the acquisition as well.
JetBlue is the sixth-largest airline in the United States, with a 5.5% share of the domestic market, according to federal data. The United States is the largest at 17.6%.
In the Northeast Alliance lawsuit, the Justice Department argued that JetBlue was a disruptive player in the industry, forcing large, established airlines to cut prices. The JetBlue and American Airlines deal effectively eliminated a strong competitor from several key markets, the ministry said.
More than 75% of JetBlue flights last year were to and from the four airports covered by the agreement, according to flight schedules tracked by aviation data firm Cilium.
“Defendants have presented minimal objectively credible evidence to support their allegation that greater-is-better cooperation benefits the flying public,” Sorokin said. wrote. “Whatever the gains to be made by American Airlines and JetBlue becoming stronger, either in the Northeast generally or in their common rivalry with Delta Air Lines, from a bare agreement that such gains will not compete with each other. to be born.”
In a lawsuit seeking to block JetBlue’s acquisition of Spirit, antitrust regulators said JetBlue’s pursuit of the Northeast Alliance meant JetBlue increasingly acted like a larger, more established airline. He argued that it was evidence that Spirit is now even more disruptive to other airlines than JetBlue, which “has less reason to continue to compete aggressively” with the country’s largest carrier, the ministry said. The lawsuit is expected to go to trial this year unless a settlement is reached first.
