Three years after JetBlue Airways and American Airlines first created a strategic partnership that gave their customers mutual access to earning and redeeming miles, to reciprocal codeshare flights, and to an expanded route network, JetBlue this week said that it plans to end the union following a federal ruling against the pact.
“Despite our deep conviction in the procompetitive benefits of the [Northeast Alliance (NEA) with American Airlines], after much consideration, JetBlue has made the difficult decision not to appeal the court’s determination that the NEA cannot continue as currently crafted, and has instead initiated the termination of the NEA, beginning a wind down process that will take place over the coming months,” JetBlue said in a statement issued on Wednesday.
The low-cost airline stated that it instead plans to focus on its bid to purchase Spirit Airlines, “which is the best and most effective opportunity to truly transform the competitive landscape in the U.S.,” JetBlue stated.
The JetBlue–American partnership, which was announced in 2020 and went into effect in 2021, was almost immediately met with legal challenges when the U.S. Department of Justice sued to block it as anti-competitive in September 2021.
“In an industry where just four airlines control more than 80 percent of domestic air travel, American Airlines’ ‘alliance’ with JetBlue is, in fact, an unprecedented maneuver to further consolidate the industry,” Attorney General Merrick Garland said in a DOJ release about the 2021 lawsuit. Garland argued that the pact was likely to result in higher airfares, fewer choices, and a lower quality of service for travelers.
On May 19, Judge Leo Sorokin of the U.S. District Court in Massachusetts ruled in favor of the Justice Department’s position, writing in his order that “the two carriers essentially agreed to operate as one airline for most of their flights in and out of New York City and Boston.”
With the partnership, known as the Northeast Alliance (NEA), “American and JetBlue transformed themselves from competitors to collaborators, joining forces to create a single ‘optimized network,’” Sorokin wrote.
The ruling is “great news for consumers,” Christopher Elliott, a consumer advocate and founder of Elliott Advocacy, told AFAR in May following the decision. “American and JetBlue were not competing—this was a de facto merger—and the government correctly put an end to it. Passengers will benefit with lower fares and better service. The government needs to finish the job now by pulling the plug on the JetBlue–Spirit merger.”
In a statement released this week, American said it plans to move forward with an appeal of the decision despite the fact that JetBlue said it would not to be pursuing an appeal.
“We, of course, respect JetBlue’s decision to focus on its other antitrust and regulatory challenges. At the same time, JetBlue’s decision and reasoning confirm our belief that the NEA has been highly pro-competitive and that an erroneous judicial decision disregarding the NEA’s consumer benefits has led to an anticompetitive outcome,” American stated.
When JetBlue and American first unveiled their joint plan, they stated that, among other things, the move was designed to help the airlines recover from the effects of the pandemic and better compete in the Northeast, especially on flights out of New York City and Boston, where there are four major airports: Boston Logan International Airport, LaGuardia Airport, John F. Kennedy International Airport, and Newark Liberty International Airport.
The May 19 court order contends that American Airlines is the largest airline in the world, and that JetBlue is the sixth-largest airline in the United States. Nearly 75 percent of JetBlue’s overall operations are flights into or out of the Northeast, Judge Sorokin cited, adding that American is the third-largest carrier operating in Boston.
Prior to the partnership, “In both locations, the defendants vigorously competed on everything from fares to the features they offered customers,” the judge wrote. “Though the defendants claim their bigger-is-better collaboration will benefit the flying public, they produced minimal objectively credible proof to support that claim. Whatever the benefits to American and JetBlue of becoming more powerful—in the Northeast generally or in their shared rivalry with Delta—such benefits arise from a naked agreement not to compete with one another.”
Once the airlines uncouple, some of the mutual access that had been created for JetBlue and American customers will fall by the wayside. JetBlue and American operate reciprocal codeshare flights, which means that members of JetBlue’s TrueBlue loyalty program can garner points on American flights and that American’s AAdvantage loyalty program members can do the same on JetBlue flights. Codesharing also allows customers to book flights with both airlines through a single booking.
Earlier this year, the Justice Department also sued to block JetBlue’s proposed acquisition of Spirit Airlines, arguing that it, too, would violate antitrust laws. In the spring of 2022, JetBlue put in a surprise bid to purchase low-cost carrier Spirit Airlines for $3.8 billion, and in the fall, shareholders voted to accept the JetBlue buyout.
The lawsuit, which the Department of Justice filed in the District of Massachusetts in early March, claims that Spirit offers travelers lower fares and more options. “As our complaint alleges, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” stated Attorney General Garland.
The Justice Department argues that the Spirit acquisition will make it easier for other U.S. airlines to “coordinate to charge travelers higher fares or limit capacity” and that through the bid JetBlue is “seeking to acquire and eliminate its main ultra-low-cost competitor, depriving travelers of yet another choice.”
For its part, JetBlue hopes that in response to its termination of the American pact, the Justice Department will reconsider its plan to acquire Spirit. “With strong momentum, a clear organic plan, and the procompetitive Spirit combination on the horizon, we are ready to be a force for good in the industry on a more national scale and look forward to advancing our planned combination with Spirit,” JetBlue stated.
This story was originally published on May 19, 2023, and has been updated to include current information.
