Justice Department Sues American, JetBlue Over Northeast Alliance

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Fourteen months after American Airlines and JetBlue announced they would form an alliance focused on the Northeast and New England, the U.S. Department of Justice is suing to block the partnership. Government attorneys say the alliance will “eliminate important competition,” while the carriers say there’s no basis to those claims.

Six states and the District of Columbia will join the U.S. Department of Justice are coming together to block one of the most ambitious aviation partnerships in history: The American Airlines-JetBlue Northeast Alliance. The agency announced the lawsuit on September 21, 2021, with both carriers immediately firing back against the accusations.

Attorneys Call Partnership “Unprecedented,” Fear Reduced Competition

The road to forming the alliance was accelerated by the COVID-19 pandemic, as both airlines announced they would work together in July 2020. After a review by the U.S. Department of Transportation led by Trump appointee Elaine Chao, the two airlines began moving forward with implementation in January 2021. By April 2021, the Justice Department began looking into the partnership, after both Southwest Airlines and Spirit Airlines requested the DOT to reconsider.

With the lawsuit, the antitrust division is accusing American of attempting to consolidate power without outright merging with JetBlue. Because the three legacy carriers and Southwest control 80 percent of domestic air travel, attorneys claim the partnership will reduce competition and drive airfare higher.

“The Northeast Alliance would eliminate significant competition in this important industry,” acting assistant attorney general Richard A. Powers of the Justice Department antitrust division said in a press release. “This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger between American and JetBlue in Boston and New York City.”

The lawsuit seeks to prevent the Northeast Alliance from fully coming to fruition, ultimately preventing “further domestic consolidation.” If the partnership does move forward, the Justice Department says it would give more power to American, while de-incentivizing JetBlue from competing.

American and JetBlue Call Lawsuit Allegations Unfounded

Leaders from both American and JetBlue were quick to strike back against the lawsuit. In a statement, American chief executive Doug Parker says breaking up the alliance would prevent competition in New York.

“Before the alliance, Delta and United dominated the New York City market. The NEA has created a third, full-scale competitor in New York and is empowering more growth in Boston,” Parker’s statement reads. “This is not a merger: American and JetBlue are – and will remain – independent airlines. We look forward to vigorously rebutting the DOJ’s claims and proving the many benefits the Northeast Alliance brings to consumers.”

JetBlue president Robin Hayes echoed many of the same talking points in an open memo to employees, noting that the New York-based carrier is not working with American on pricing. His argument focuses on the slots the airline would get access to from American, further spurring growth.

“[The Justice Department] believes that American’s influence will bring an end to the ‘JetBlue Effect,’” Hayes wrote in his extensive memo. “Of course, the NEA is already up and running and every day we are proving DOJ’s theory wrong. We have no intention of abandoning our low-fare model – in fact, the NEA empowers us to deliver more of it.”

The complaint was filed in the U.S. District Court for the District of Massachusetts. Lawyers for American and JetBlue have not yet filed a formal response to the complaint.