On Friday, a federal judge in Boston ruled that American Airlines and JetBlue Airways must end their alliance in the northeastern United States because the government had shown that the agreement lessens competition in the airline sector.
The decision is a setback for the airlines, who have argued that their agreement benefits consumers by giving Delta Air Lines and United Airlines in the Northeast a stronger rival.
However, U.S. District Judge Leo Sorokin said American and JetBlue divided up the Northeast markets through their alliance, “replacing full-throated competition with broad cooperation.”
According to Sorokin, the airlines provided scant evidence that the collaboration benefited consumers.
JetBlue stated that it was debating filing an appeal.
Emily Martin, a spokesman for the airline, stated, “We are disappointed in the decision. “We made it abundantly clear at trial that the Northeast Alliance has been a huge customer win.”
When contacted for comment, neither American nor the Justice Department gave a prompt answer.
The decision is a significant win for the Biden administration, which has utilized zealous antitrust law enforcement to combat mergers and other agreements between influential firms.
In 2021, the Justice Department filed a lawsuit to void the agreement. Six states and the District of Columbia also joined. In Boston, the case was tried last October.
When it went into force in early 2021, the Northeast Alliance cooperation enjoyed the support of the Trump administration. On numerous flights to and from New York and Boston, it enables American and JetBlue to coordinate schedules and split income.
But soon after President Joe Biden took office, the Justice Department reexamined the case and discovered an economist who asserted that if American and JetBlue stopped going head-to-head in the Northeast, customers would spend more than $700 million year more.
During closing arguments, Justice Department attorney Bill Jones stated, “It is a critical case to us because of those families that need to travel and want affordable tickets and good service.”
The airlines contended that the government couldn’t prove that the alliance had raised fares during last October’s nearly month-long trial.
The airlines cited several additional routes that they added out of Boston and additional York, claiming that only because of the partnership were they made economically viable.
Current and former airline CEOs and economists testified during the trial, and their assessments of how the agreement would impact the market and ticket prices were dramatically divergent.
The trial was marred by JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines, the biggest discount carrier in the country.
The Justice Department also filed a lawsuit to stop that agreement in March, when Sorokin was still deliberating his choice, claiming that it would lessen competition and be particularly hurtful to customers who rely on Spirit to save money.
JetBlue has argued that acquiring Spirit will become a more formidable low-cost rival against American, Delta, United, Southwest, and other airlines that collectively account for nearly 80% of domestic air traffic in the United States.
A different judge in the same Boston courthouse hears the government’s complaint about the JetBlue-Spirit merger.
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