FEDERAL JUDGE RULES AGAINST JETBLUE-AMERICAN “NORTHEAST ALLIANCE”
May 31, 2023
On May 19, 2023, a U.S. federal judge ruled that the planned partnership between JetBlue Airways (“JetBlue”) and American Airlines (“American”) amounts to an illegal merger in violation of U.S. antitrust law because the deal would restrict competition by allowing two of the largest airlines in the U.S. to join forces. As background, JetBlue and American implemented a partnership known as the “Northeast Alliance,” allowing the carriers to coordinate routes and schedules, and to share revenues, on flights in the Northeastern U.S. to better compete with Delta Air Lines (“Delta”) and United Airlines (“United”), two of the largest carriers in the U.S. The venture had been in place since 2021. In response, the U.S. Justice Department (“DOJ”) and several U.S. states filed a lawsuit against American and JetBlue seeking to stop the partnership based on anti-competition concerns.
In the order striking down the partnership, the Court noted that the proposed Northeast Alliance would in fact violate the Sherman Act as the agreement between American and JetBlue would have essentially allowed the two airlines to “operate as one” for most flights to/from Boston, MA, and the New York City area. The judge also disagreed with American and JetBlue’s argument that they sought the partnership to better compete with Delta, noting that it seemed more likely that the airlines’ agreement was intended to keep the two airlines from having to compete with each other, as had been the case in the past, amounting to an unreasonable restraint on trade. In reaching a decision, the federal judge further compared the Northeast Alliance to the West Coast International Alliance (“WCIA”), a partnership between American and Alaska Airlines, which allowed for codesharing, reciprocal lounge/loyalty benefits, and capped/non-reciprocal revenue sharing, but notably did not include any coordination by the partners on pricing, capacity, scheduling, or network planning. The court reasoned that had JetBlue and American pursued a WCIA style agreement, there likely would not have been any antitrust issues.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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