Federal judge rules in favor of DOJ, finding the deal is a ‘defacto merger’ that poses an ‘unreasonable restraint on trade’ >>
A federal judge in Boston has ruled that American Airlines and JetBlue must abandon the so-called Northeast Alliance between the two carriers. In issuing the ruling, US District Judge Leo Sorokin said the partnership "substantially diminishes competition in the domestic market for air travel."
The alliance, which was approved during the Trump administration and went into effect in early 2021, allows the two carriers to coordinate schedules and share revenue on routes to and from New York and Boston.
The Justice Department, along with six states and the District of Columbia, sued to block the partnership in 2021, claiming it constituted a "de facto merger" of the airlines’ Boston and New York operations that would drive up ticket prices.
Sorokin sided with the government, stating in his ruling that "Though the defendants claim their bigger-is-better collaboration will benefit the flying public, they produced minimal objectively credible proof to support that claim.” Such a collaboration, Sorokin wrote, ”is just the sort of 'unreasonable restraint on trade' the Sherman Act was designed to prevent."
The judge ordered the airlines to end the alliance within 30 days.
Both airlines responded to the ruling in statements. American Airlines said the alliance "has been a huge win for customers and anything but anticompetitive," adding that "the court's legal analysis is plainly incorrect and unprecedented for a joint venture."
For its part, JetBlue said, "We are studying the judgment in full and evaluating our next steps as part of the legal process." Calling the decision disappointing, the airline said, "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."
In its suit, the Justice Department claimed the alliance would cost consumers nearly $700 million more annually, and concentrate a significant market share on routes out of the New York airports, as well as Boston and Washington.
Lawyers for JetBlue and American countered that the alliance has not raised air fares but has expanded flights and made the two airlines more competitive with Delta Air Lines and United Airlines in the Northeast.