American Airlines has asked the United States Court of Appeals to reverse a decision in favor of the U.S. Department of Justice, which declared the Northeast Alliance as anti-competitive.
While the decision wouldn’t bring back the Northeast Alliance, a victory could mean the possibility of entering future partnerships.
What is the Northeast Alliance
American Airlines and JetBlue Airways entered a partnership in 2020 to improve their performance in the Boston and New York areas. Here, both JetBlue and American coordinated schedules and pooled their revenues.
Nevertheless, US District Judge Leo Sorokin terminated the Northeast Alliance. The judge agreed with the U.S. Department of Justice’s lawsuit against the airlines, leading to the dissolution of the partnership.
After Sorokin’s ruling, JetBlue decided to shut down the Northeast Alliance and focused on its $3.8 billion purchase of Spirit Airlines. Similarly, the Justice Department filed a separate case attempting to block the deal.
So Why Have The Ruling Overturned?
American Airlines lawyers argued that while the partnership was over, the case wasn’t moot.
On Wednesday, American Airlines filed a case requesting that the judge’s ruling to be overturned. Their reason is because the decision was too broad, preventing American from working with competing airlines.
American Airlines argued that joint ventures are “virtually never” deemed illegal under antitrust law “because they usually have a pro-competitive rationale.
American Airlines lawyers said that the decision “wrongly terminated a beneficial commercial arrangement that added more flights, more seats, and more options for consumers without raising prices.”
The airline added, “If left unchecked, the district court’s decision will discourage fruitful and lawful collaboration that benefits consumers through increased output, decreased prices, and improved product quality.”
Both the DOJ and JetBlue did not comment.
Based on the original ruling on the Northeast Alliance case, both American and JetBlue can’t collaborate for the next ten years without notifying the Department of Justice.
