Justice Department wins lawsuit to undo JetBlue, American Airlines partnership in the Northeast

A federal judge on Friday ordered American Airlines and JetBlue Airways to end their partnership in the Northeast, a win for the Justice Department after it sued to undo the alliance arguing it was anti-competitive.

The lawsuit, filed in September 2021, alleged that the airlines’ alliance was effectively a merger that would hurt consumers by driving up fares. The trial began a year later in Boston and wrapped up in December.

Fort Worth, Texas-based American Airlines and New York-based JetBlue Airways argued they needed the so-called Northeast Alliance to better compete with other large carriers Delta Air Lines and United Airlines in congested airports in the region.

“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,” U.S. District Judge Leo Sorokin wrote in his ruling. “Such a pact is just the sort of ‘unreasonable restraint on trade’ the Sherman Act was designed to prevent.”

He ordered the airlines to end the partnership 30 days after the ruling. The carriers are likely to challenge the decision. The airlines didn’t immediately comment.

Undoing the partnership would be difficult, especially during the peak summer travel season, which airlines have already sold tickets for.

JetBlue and American are not allowed to coordinate fares under the partnership, which was approved in the final days of the Trump administration in 2021 and has since expanded.

JetBlue had previously warned in a securities filing that a ruling against the NEA “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,” the company said.

The Justice Department didn’t immediately respond to a request for comment.

The department separately in March filed an antitrust lawsuit to block JetBlue’s proposed acquisition of budget carrier Spirit Airlines, arguing the deal would drive up fares, “harming cost-conscious fliers most acutely.”

That combination faces a high hurdle for approval by the Biden administration, which has vowed to take a hard line against what it views as anticompetitive deals.