JetBlue-American partnership struck down by federal judge

A federal judge has blocked a partnership between American Airlines and JetBlue Airways at airports in New York and Boston, writing in a ruling released Friday that the alliance would harm competition and raise fares.

The decision is a major victory for the Justice Department, which under President Biden has sought to more aggressively enforce antitrust laws. The judge ruled that the cooperation between the airlines, known as the North East Alliance, must end.

The Justice Department said the partnership would reduce competition and cost travelers hundreds of millions of dollars a year if it remains in place. The airlines argued that the partnership gives customers more flying options.

Sided with the government, Judge Leo D. of the U.S. District Court in Massachusetts. Sorokin wrote, “This makes the two airlines partners, each with a substantial interest in the success of their joint and individual ventures, rather than serious, arms-length competitors. Challenging each other in a competitive marketplace.”

Under the agreement, which begins in 2021, each airline sells seats offered to others on certain routes. Airlines share revenue through access to certain flights and airport gates. The alliance includes three major airports serving New York City and Boston Logan International Airport.

American and JetBlue did not immediately respond to requests for comment.

The ruling is a blow to JetBlue, which has been trying to expand rapidly in recent years. In addition to the tie-up with American, JetBlue also has a deal to buy Spirit Airlines. The Justice Department is asking a judge to block that acquisition as well.

JetBlue is the sixth-largest airline in the U.S. with a 5.5 percent share of the domestic market, according to federal data. American is the largest with 17.6 percent.

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In the lawsuit against Northeast Alliance, the Justice Department argued that JetBlue was disruptive in the industry, forcing larger, more established airlines to lower prices. JetBlue’s deal with American effectively eliminated a formidable competitor from several important markets, the department argued.

More than 75 percent of all JetBlue flights last year flew to or from the four airports under the agreement, according to flight schedules tracked by aviation data firm Sirium.

“Although the defendants claim that their larger-than-life cooperation will benefit the flying public, they have produced minimal objectively credible evidence to support that claim,” Judge Sorokin wrote. “As American and JetBlue become more powerful — generally in Northeast or whatever their shared competitive advantages with Delta — such advantages arise from a bare-bones agreement not to compete with each other.”

Antitrust regulators argued that JetBlue’s pursuit of Northeast Alliance was evidence that the airline was acting like a larger, more established carrier in a lawsuit to block JetBlue’s takeover of Spirit. The department said Spirit today is more disruptive to other airlines than JetBlue, which has “less reason to continue to aggressively compete” with the nation’s largest airlines. That case is expected to go to trial this year if it is not settled first.

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