Federal Court orders American Airlines and JetBlue to terminate their Northeast Alliance, concurring with antitrust authorities that the partnership could lessen competition and increase airfares.
«The defendants contend that their combined influence is advantageous to the passengers, yet they have failed to provide sufficient convincing evidence to back this assertion,» opined US District Court Judge Leo Sorokin in a ruling on Friday.
Sorokin detailed, «Regardless of American and JetBlue’s gains from fortifying their market position — broadly in the northeast or in their joint competition with Delta — these advantages stem from a plain agreement to avoid rivalry. This kind of agreement constitutes the exact ‘unreasonable restraint on trade’ the Sherman Act was established to obstruct.»
According to Bloomberg, the verdict is a victory for the Justice Department, which contended that the Northeast Alliance, established in 2020, conferred excessive market control on the airlines in Boston and New York City, leading to inflated prices for consumers.
Airlines’ Next Move Uncertain
The airlines still have the opportunity to appeal, yet representatives from the Justice Department and the airlines’ legal team were unavailable for immediate comments. Following the ruling, JetBlue’s shares dipped by 1.8% in New York, whereas American’s decreased by 1.5%.
A Blow to Major Players in Northeast Air Travel Market
Both American and JetBlue rank among the top four airlines operating in New York and two of the biggest three in Boston, as Sorokin pointed out. Delta Air Lines represents the only other significant player in the Boston market.
«The alliance between these two major carriers considerably curtails competition in the domestic air travel market,» Sorokin wrote. «By merging their Boston and New York operations, these two formidable competitors act as a single entity in the northeast, dividing markets amongst them and substituting intense competition with expansive collaboration.»
