JetBlue Ending Alliance With American Airlines After Judge Rules Partnership Violates Anti-Competition Laws

A JetBlue Airbus A320 taxis to a gate after landing, as an American Airlines jet is seen parked at its gate at Tampa International Airport in Tampa, Fla., on Oct. 26, 2016. Chris O'Meara/AP Photo

JetBlue Airlines is ending its partnership with American Airlines in the northeastern United States after a federal judge in May ruled the two carriers should dissolve the agreement to comply with anti-competition laws.

The companies announced the ending of the agreement, known as the Northeast Alliance (NEA), in separate statements on July 4 where they voiced their disagreements over the court’s decision.

“JetBlue’s unique model has successfully disrupted the industry for well over 20 years, and we decided to enter into the NEA as a creative solution to bring more of the JetBlue Effect to customers in New York and Boston, where our growth has been challenged by constraints outside of our control. By all measures, it succeeded,” JetBlue said in a statement.

“For these reasons, we strongly disagree with the court’s ruling against the NEA and stand behind the pro-competitive impact of the alliance,” the airline continued.

“Despite our deep conviction in the pro-competitive 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, beginning a wind-down process that will take place over the coming months,” the airline said.

Meanwhile, American Airlines said it plans to appeal the court’s earlier ruling.

‘Erroneous Judicial Decision’

“JetBlue has advised us that it will not join the appeal of the District Court ruling in the Northeast Alliance case,” the carrier said. “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 anti-competitive outcome.”

“American will therefore move forward with an appeal,” the company continued. “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.”

The partnership between the two air carriers was initially announced in 2020 and approved by the Transportation Department under former president Donald Trump, although that approval was based on the requirement that a string of various conditions were met.

Under the agreement, the two airlines were able to sell customer seats on each other’s flights to and from Boston’s Logan Airport and three New York City area airports—JFK, LaGuardia, and Newark Liberty in New Jersey—and share in the revenue.

It went into effect in early 2021, but was soon challenged by the Department of Justice (DOJ) and attorneys general in six states and the District of Columbia, under President Joe Biden, who sued to block the partnership, claiming that it would eliminate competition in New York and Boston and harm air travelers across the nation.

In its lawsuit (pdf), the DOJ argued that the two airlines consolidating their operations in Boston and New York City violated Section 1 of the Sherman Antitrust Act aimed at protecting against monopolistic business practices.

The DOJ further claimed that the joint venture would lead to increased fares and reduced choice among customers as well as the possibility of poor service.

Partnership ‘Upsets the Competitive Balance’

A trial on the matter initially began in September 2022, and U.S. district judge Leo Sorokin in May agreed with the DOJ and struck down the partnership between JetBlue and American.

In his ruling (pdf), Judge Sorokin said the agreement “substantially diminishes competition in the domestic market for air travel” by combining the Boston and New York operations of two airlines “that are among the most significant competitors in that region.”

“These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation,” the judge wrote.

Sorokin further added that the partnership “immediately and substantially upsets the competitive balance in a highly concentrated industry.”

The DOJ welcomed the judges ruling at the time but has not yet commented on the latest announcement from the airlines,

The Epoch Times has contacted the DOJ for comment.

In its statement on Wednesday, JetBlue said it is focusing on its proposed $3.8 billion merger with Spirit Airlines which would mark the biggest merger in the U.S. airline industry since American and US Airways merged in 2013.

Both airlines also noted that thousands of customers have already booked flights for the months ahead under the now-scrapped NEA, but stressed that those customers will not be impacted by the latest decision.

“For customers, it’s important to note that nothing will change immediately, and they can feel confident in new and existing bookings for the coming months,” JetBlue said.

Tom Ozimek and Reuters contributed to this report.