A judge said that American Airlines and JetBlue Airways must dismantle a partnership that allowed the carriers to coordinate operations and share profits, a decision that boosts the Biden administration’s efforts to prevent consolidation in key industries.
JetBlue and American argued the partnership wasn’t a merger, but a limited arrangement that allows the carriers to better compete against Delta Air Lines and United Airlines, which dominate the New York-area and Boston markets. In court, they argued the agreement has given consumers more flight options and available seats.
But the Justice Department, joined by attorneys general in Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and the District, argued the arrangement was a de facto merger that harms consumers because it removes incentives for the carriers to compete in one of the nation’s busiest travel corridors.While agreements such as the Northeast Alliance are rare among domestic carriers, they are common internationally.
Diana Moss, president of the American Antitrust Institute, a nonprofit that seeks to promote competition, said the Northeast Alliance was different because the carriers didn’t just coordinate schedules, but also shared revenue. “When you share revenue, you immediately eliminate the incentive to compete against each other, because if you did, it would be like robbing Peter to pay Paul,” she said.Still, some airline analysts saw benefits in allowing American and JetBlue to join forces to compete against Delta and United.
“Frankly, the Department of Justice handed Delta Air Lines and United Airlines big victories, because while I expect that JetBlue and American will appeal this or at least try to appeal this ruling, if they’re unable to appeal or if their appeal is unsuccessful, it just means that Delta and United, which operate their own large hubs at Kennedy Airport and Newark Liberty International Airport, respectively, will not face the same level of competition.
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