American Airlines and JetBlue have to dissolve their partnership, court rules

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NEW YORK – A US District Court judge on Friday ordered the separation of the American Airlines and JetBlue Airways alliance on US Northeastern Airlines.

US District Judge Leo Sorokin ruled in favor of the Justice Department, giving the Biden administration a victory in its years-long lawsuit against the airlines’ cooperation. The Justice Department filed the lawsuit in 2021, alleging that the two companies raised prices and reduced options for air travelers to and from major cities in the Northeast, such as New York City and Boston.

Sorokin ruled that the airlines have 30 days to end their partnership — just as the busy summer travel season begins.

“It is quite clear to the Court that Defendants’ primary motive in creating the IAEA was to strengthen their competitive positions against Delta (and, to a lesser extent, United) in Boston and New York,” Sorokin wrote in the ruling Friday. .

The judge’s ruling on Friday said both companies are “formidable and influential players” in air travel — American Airlines Group is the world’s largest airline and JetBlue is the sixth-largest airline in the United States, with significant market power in the Northeast, in particular.

In its lawsuit, the Ministry of Justice said that the two companies committed to exchanging information about the routes it travels on, when it travels on it, who will travel on it, and what size aircraft should be used on each flight. The alliance was established in 2020.

The airlines claimed that because of the alliance’s code-sharing features, businesses and frequent flyers had broader access to benefits and discounts. But Sorokin judged that those travelers made up a relatively small percentage of the American clientele.

Judge also said that schedule and coordination improvements “have resulted in lower capacity, lower frequencies, or reduced consumer choice on multiple routes, including some heavily traveled routes.” It has effectively removed an entire competitor from these markets, according to Sorokin, leaving customers with fewer options for travel between hubs like New York’s LaGuardia and Boston’s Logan airports.

Sorokin said their agreement is an “unreasonable restriction on trade” that violates the Sherman Act, a landmark antitrust law.

“Although the Defendants claim that their greater-than-the-best cooperation will benefit the flying public, they have presented the least amount of objective credible evidence to support that claim,” Sorokin said.

The DOJ also alleged that the two companies share the revenue generated at those two airports, eliminating their incentives to compete with one another. In addition, the Northeast Alliance allowed the parties to pool their gates and take-off and landing clearances, known as “slots,” according to the complaint.

Jonathan Kanter, assistant attorney general in the Department of Justice’s antitrust division, said in a statement on Friday that he was “thrilled” with the decision.

“Today’s decision is a win for Americans who depend on airline competition for affordable travel,” Attorney General Merrick Garland said in a statement Friday.

American Airlines said in a statement that it was “disappointed” with the court’s decision and was “considering the ruling fully” and evaluating its “next steps as part of the legal process.”

“We made clear during the trial that Northeast Alliance has been a huge success for clients,” American said. “Through NEA, JetBlue has been able to grow exponentially in restricted Northeast airports, bringing lower airline prices and great service to more lines than would have been possible otherwise.”

In March, the Justice Department filed a lawsuit to block JetBlue’s $3.8 billion bid for Spirit Airlines.

Garland said the merger would hurt consumers significantly, especially those who depend on the lower fares available on Spirit’s low-cost airlines.

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