For the past three years, American Airlines (AAL) and JetBlue (JBLU) have had an agreement unofficially called the Northeast Alliance. And now that agreement is no more, at least for the time being.
Per the agreement, the two airlines coordinated schedules, shared revenue on flights from LaGuardia, JFK, Newark and Boston airports, and also sell seats on each other’s planes. The companies are not allowed to collaborate on prices.
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The two airlines always insisted this agreement did not constitute a monopoly, and was in fact good for consumers, giving them more options in the Northeast. The two airlines also said it allowed them to stay competitive in the Northeast area with larger airlines such as Delta and United Airlines.
But the Biden Administration, which has been cracking down on what it views as monopolies, sees it a different way. The government claimed the Northeast Alliance cost “consumers an additional $700 million a year.”
Last year, The Justice Department sued to block the alliance, and last month a federal judge ruled that the partnership violates antitrust law.
U.S. District Judge Leo Sorokin ruled in Boston that “these two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation.” The judge dismissed American CEO Robert Isom's arguments that the deal actually fosters more competition in the area.
The two airlines now face a late-June deadline to end their agreement, though American Airlines has indicated it will appeal the decision, and may seek a stay of the judge’s orders.
"We've got a system that allows for appeal, and we are going to do that," said Isom during an investor conference. "In the meantime, we are going to have to work with [the Justice Department], work with JetBlue, to find out exactly what we do in the interim."
Without the alliance, American Airlines would have less of a presence in New York and Boston, where it continues to face stiff competition from Delta Air Lines and United Airlines.
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