A U.S. appeals court upheld a ruling on Friday, rejecting American Airlines’ appeal to form an alliance with JetBlue. This decision reaffirms a trial judge’s finding that the now-defunct Northeast Alliance violated federal antitrust laws.
Northeast Alliance Violated Antitrust Laws
The Northeast Alliance, formed in 2020, allowed both American Airlines and JetBlue to coordinate flights and pool revenue on flights operating in Boston and New York City.
In May 2023, U.S. District Judge Leo Sorokin ruled that the alliance harmed competition. His decision sided with the Justice Department and six states that had filed a lawsuit blocking the American Airlines and JetBlue agreement.
However, this was not the only time JetBlue encountered antitrust issues. The DOJ also filed a lawsuit against the airline when JetBlue attempted to acquire Spirit Airlines. Ultimately, JetBlue abandoned its initial plan to acquire Spirit Airlines for $3.8 billion.
However, American Airlines, for its part, appealed the 2023 ruling. It argued that it restricted both airlines from forming partnerships similar to those happening elsewhere in the airline industry. On Friday, the 1st U.S. Circuit Court of Appeals in Boston upheld the previous decision, concluding that the Northeast Alliance violated federal antitrust laws.
Industry Dominated by a Few Airlines
The U.S. airline industry is currently dominated by a small number of airlines, with American Airlines, Delta Air Lines, and United Airlines collectively controlling around 80% of domestic air travel.
On the other hand, JetBlue is considered a disruptor, offering competitive prices primarily in Boston and New York. Before the Northeast Alliance, American and JetBlue competed on all their shared routes.
The court reiterated that domestic airline partnerships are generally limited to interline agreements and code-sharing. It sees Northeast Alliance’s profit-sharing and joint scheduling as a different type of cooperation between airlines. Ultimately, the decision affirmed that the agreement between American Airlines and JetBlue would reduce incentives to offer competitive prices to consumers.
