In court documents, attorneys for the United States Department of Justice suggested that the Northeast Alliance was more akin to a “de facto merger” than a legitimate business agreement.
The United States Department of Justice has won a lawsuit seeking to unravel the “Northeast Alliance” between American Airlines and JetBlue Airways.
According to CNBC, the lawsuit was first filed in 2021.
In their complaint, government attorneys claimed that a strong partnership between two of the most profitable air carriers in the country could hurt consumers—especially if American Airlines and JetBlue used their agreement to increase fares.
CNBC notes that the case moved to trial late last year and ended in December.
American Airlines and JetBlue argued in court that a partnership was necessary to compete with other large air transportation companies, providing the examples of Delta Air Lines and United Airlines.
Under the terms of their finalized partnership agreement, JetBlue and American Airlines stated that they would not coordinate fares or otherwise collaborate on price-setting practices.
JetBlue had earlier filed a securities brief that any ruling against the establishment of the Northeast Alliance could “have an adverse impact on our business, financial condition, and results of operations.”
“Additionally, we are incurring costs associated with implementing operational and marketing elements of the NEA, which would not be recoverable if we were required to unwind all or a portion of the NEA,” JetBlue wrote in its filing.
However, U.S. Attorney General Merrick Garland said that an expansive partnership would hinder consumer choice and lead to a less competitive marketplace.
“Millions of consumers across America rely on air travel every day for work, to visit family, or to take vacations. Fair competition is essential to ensuring they can fly affordably and safely,” Garland said shortly after filing the lawsuit. “In an industry where just four airlines control more than 80% of domestic air travel, American Airlines’ ‘alliance’ with JetBlue is, in fact, an unprecedented maneuver to further consolidate the industry. It would result in higher fares, fewer choices, and lower quality service if allowed to continue.”
Richard A. Powers, acting assistant attorney general of the Justice Department’s Antitrust Division, said that the Northeast Alliance is more akin to a de facto merger than a legitimate partnership.
“The Northeast Alliance would eliminate significant competition in this important industry,” Powers said. “This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger between American and JetBlue in Boston and New York City. The impact on consumers extends far beyond Massachusetts and New York, as evidenced by the participation and our ongoing cooperation with Attorneys General from across the country, including Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and the District of Columbia, in this lawsuit.”
JetBlue and American Airlines have yet to comment on the ruling, which was announced on Friday, May 19.
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