A federal appeals court has upheld the 2023 decision that broke up the Northeast Alliance between American Airlines and JetBlue in Boston and the New York area.
American filed the appeal last December in an effort to preserve the right to enter into future partnerships similar in nature to the Northeast Alliance. JetBlue decided not to appeal the ruling, focusing instead on its now-failed attempt to win antitrust approval to acquire Spirit Airlines.
Under the alliance, American and JetBlue jointly scheduled flights and split revenue on most of their operations out of Boston Logan, Newark, New York LaGuardia and New York JFK airports. The arrangement went beyond the scope of other domestic airline partnerships, resembling international joint venture airline alliances in key respects.
However, unlike international joint ventures, such as the one American has with British Airways, the Northeast Alliance had not been granted antitrust immunity by regulators at the Justice Department.
In the trial court ruling, Judge Leo Sorokin sided with litigants the Justice Department, the District of Columbia and six states, determining that the alliance harmed competition by turning competitors into partners in New York and Boston.
In its appeal, American contended that Sorokin ignored benefits the alliance brought to consumers, such as increasing competition with market leaders Delta and United.
In its Nov. 8 ruling against American, the U.S. First Circuit of Appeals in Boston determined that American had failed to make its case that Sorokin’s ruling was on flawed legal ground, nor did the airline dispel Sorokin’s conclusion that the Northeast Alliance was harmful to competition.
“Presented with an arrangement that had many of the essential attributes of an agreement between two powerful competitors sharing revenues and divvying up highly concentrated markets, the district court conducted a monthlong proceeding, after which it made detailed findings of fact, many key ones of which were unfavorable to American,” Circuit Judge William Kayatta wrote in the opinion.
“Seeing no clear error in those findings, we also see no error of law in the court’s application of the rule of reason to conclude that the arrangement violated section one of the Sherman Act,” he added, citing the 1890 antitrust law that governs competition.
U.S. attorney general Merrick Garland lauded the appellate court decision, calling it a victory for Americans who count on competition between airlines to fly affordably.
“The airline industry — like every industry — must comply with the antitrust laws that protect consumers and prohibit anticompetitive coordination,” he said.
In a statement, American said it is reviewing the decision and considering its options.
“We are disappointed and disagree with the First Circuit’s decision,” the airline said.
“The Northeast Alliance was designed to increase competition and expand customer options in the Northeast, which it clearly did during the time it was allowed to operate.”