American Airlines and JetBlue have been ordered by a US judge to dissolve their Northeast Alliance partnership within 30 days, after ruling in favour of the US Department of Justice in a lawsuit and deeming the carriers' alliance anticompetitive.
Judge Leo Sorokin, sitting in the US District Court of Massachusetts, said the carriers violated the Sherman Antitrust Act, which governs competitive corporate conduct in the US.
“These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad co-operation,” said Sorokin in his ruling.
“The plaintiffs have convincingly established that this arrangement immediately and substantially upsets the competitive balance in a highly concentrated industry.”
Six states and the District of Columbia joined the DOJ to file the antitrust suit in September 2021 with the trial being held between September and November last year.
American and JetBlue announced the partnership in July 2020 which combined operations at Boston and the three major New York area airports.
In January 2023, JetBlue executives said the alliance had become profitable and in April 2023 would operate 290 combined alliance flights at New York's JFK International, 190 at LaGuardia and 220 at Boston's Logan International.
The DOJ argued the alliance a “de facto merger”, and Sorokin agreed, highlighting in his ruling what he called the anticompetitive nature of the partnership.
“This is the alignment of two distinct and powerful competitors in a unique and congested region,” said Sorokin. “All other domestic carriers operating there can be counted using single digits. American and JetBlue command at least a quarter of the market in the northeast generally.”
Sorokin also dismissed the carriers’ claims of consumer benefits, and said increasing services and loyalty programme reciprocity could have been achieved through a looser alliance, like the one formed in 2020 between American and Alaska Airlines.
American Airlines said in a statement: “We believe the decision is wrong and are considering next steps. The court's legal analysis is plainly incorrect and unprecedented for a joint venture like the Northeast Alliance.
“There was no evidence in the record of any consumer harm from the partnership, and there is no legal basis for inferring harm simply from the fact of collaboration.”
JetBlue said it was "disappointed" in the verdict and said the alliance had allowed it 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”.
DOJ is also trying to block JetBlue's announced merger with Spirit Airlines in a separate case which is not affected by this latest ruling.