A U.S. appeals court ruled on Friday that a trial judge correctly determined that American Airlines’ now-abandoned partnership with JetBlue Airways violated federal antitrust law. The 1st U.S. Circuit Court of Appeals, based in Boston, sided with the U.S. Department of Justice, affirming the trial judge’s decision to block the airlines’ “Northeast Alliance.” This alliance allowed the two carriers to coordinate flights and pool revenue in key Northeast U.S. markets.
U.S. Circuit Judge William Kayatta, writing for a three-judge panel, emphasized that the trial judge had been presented with an arrangement that resembled an agreement between two major competitors, sharing revenues and dividing up highly concentrated markets. He noted that Judge Leo Sorokin had issued a ruling in May 2023 after a non-jury trial, and that Sorokin’s findings were detailed and largely unfavorable to American Airlines. The panel found that none of these findings appeared to have been legally flawed.
U.S. Attorney General Merrick Garland hailed the ruling as a “hard-won victory” for American consumers, asserting that it would preserve competition between airlines, which is crucial for maintaining affordable airfares for travelers.
American Airlines, based in Fort Worth, Texas, expressed disagreement with the court’s decision. The airline said it was considering its options, including asking the 1st Circuit to reconsider the ruling or appealing to the U.S. Supreme Court.
In its statement, American Airlines defended the partnership, stating that the Northeast Alliance was intended to increase competition and expand customer options in the region. The airline argued that the alliance had, in fact, benefited consumers while it was operational.
The partnership, announced in July 2020, had received approval from the U.S. Department of Transportation just before the end of President Donald Trump’s first term in office. At that time, the alliance was seen as part of a broader regulatory shift that was more favorable to airline mergers and partnerships. However, when President Joe Biden took office, his administration, through the Department of Justice, moved to block the alliance in September 2021, along with six state attorneys general.
Under the alliance, American Airlines— the nation’s largest carrier— and JetBlue— the sixth-largest— coordinated flight schedules and shared revenue for services operating in and out of New York City and Boston. The Justice Department argued that the alliance would harm consumers by reducing American Airlines’ incentive to lower prices, especially against JetBlue, which has a reputation for offering lower fares and challenging traditional pricing models.
After Judge Sorokin’s ruling, JetBlue ended the alliance but continued its efforts to gain approval for its $3.8 billion acquisition of Spirit Airlines, another deal that the Justice Department also challenged. American Airlines, however, proceeded with its appeal, arguing that the decision could block future partnerships, including any potential agreements with JetBlue.
