BOSTON (Legal Newsline) - A federal appeals court has affirmed a ruling that put an end to the so-called "Northeast Alliance" between American Airlines and JetBlue - an arrangement the companies claimed would help customers.
Instead, the U.S. Court of Appeals for the First Circuit found on Nov 8 the alliance violated antitrust laws. Its decision is a victory for the Department of Justice, plus attorneys general of six states and the District of Columbia.
The agreement has American and JetBlue sharing revenue and coordinating flights into and out of four major airports – Boston Logan, John F. Kennedy International, LaGuardia and Newark Liberty International.
The companies briefed both the DOJ and the Department of Transportation before announcing the alliance in July 2020. After a six-month investigation, the DOT gave the pact its blessing as long as it increased options for consumers.
But the DOJ and D.C, Arizona, California, Florida, Massachusetts, Virginia and Pennsylvania said it would eliminate significant competition between the two airlines. That fight for customers had led to lower fares and higher quality service, the plaintiffs say.
They also argued an alliance would tie JetBlue's fate to American, diminishing JetBlue's incentives to compete with American in markets across the country.
“Today’s decision is a hard-won victory for the millions of Americans who count on competition between airlines to fly affordably, whether to visit family, to go on vacation, or to travel for business,” U.S. Attorney General Merrick Garland said.
“The airline industry — like every industry — must comply with the antitrust laws that protect consumers and prohibit anticompetitive coordination.”
The agreement was rejected in May 2023 after a bench trial before Judge Leo Sorokin, who had ruled earlier it was likely to harm competition. Schedule-coordination provisions had JetBlue and American acting as one airline, he said.
Plus revenue-sharing left the airlines indifferent as to which company customers chose, he said. Other parts of the NEA were rejected, which caused JetBlue to cancel it. American, however, tried to salvage the NEA with an appeal to the First Circuit.
"American's argument is unavailing on multiple levels," Judge William Kayatta wrote. "For one, that the NEA is a 'joint venture' says little about the level of antitrust scrutiny it should receive. After all, one could describe price-fixing as a joint venture."
The First Circuit affirmed Sorokin's findings that the NEA led to decreased capacity, lower frequencies and reduced consumer choices on multiple routes.
In at least 13 markets, the NEA gave certain routes to one carrier while the other airline exited, Sorokin determined. He rejected arguments to the contrary from the airlines' experts.
"And more broadly, the mere fact that airline capacity overall increased between 2021-2022 - just as the industry began to recover from the COVID-19 pandemic - did little to show that the NEA itself increased American or JetBlue's capacity in any meaningful way," Kayatta wrote.