NEW YORK (CNN) – American Airlines and JetBlue Airways must sever their alliance on routes in the northeastern United States, a US District Court judge ordered on Friday.
US District Judge Leo Sorokin ruled in favor of the Justice Department, giving the Biden administration a victory in its years-long lawsuit against airline cooperation. The Justice Department filed the lawsuit in 2021, alleging that the two companies had increased fares and limited choice for airline passengers traveling to and from major Northeast cities like New York City and Boston.
The airlines have 30 days to end their partnership, ruled Sorokin – right at the start of the busy summer travel season.
“It is perfectly clear to the court that the defendants’ primary motivation in forming the NEA was to strengthen their own competitive position against Delta (and to a lesser extent United) in Boston and New York,” Sorokin wrote in Friday’s sentencing statement.
Friday’s judge’s decision said both airlines are “impressive and influential players” in air travel — American Airlines Group is the world’s largest airline and JetBlue is the United States’ sixth-largest airline, with significant market power in the Northeast, specifically.
In its lawsuit, the Justice Department said the two companies had agreed to share information about what routes they would fly and when, who would fly them, and what size aircraft to use for each flight. The alliance was founded in 2020.
The airlines claimed corporate and frequent flyers would have broader access to benefits and discounts because of the alliance’s codeshare capabilities. But Sorokin concluded that these travelers make up a relatively small portion of American customers.
The judge also said that optimizing and coordinating the timetable “has resulted in reduced capacity, lower frequencies or reduced choice for consumers on several routes, including some busy routes”. According to Sorokin, this effectively eliminated an entire competitor from those markets, leaving customers with fewer options for travel between hubs like New York’s LaGuardia Airport and Boston’s Logan Airport.
Sorokin said their pact was an “unreasonable restriction on trade” in violation of the Sherman Act, the landmark antitrust law.
“Although the defendants claim that their ‘bigger the better’ cooperation will benefit the flying public, they have presented minimal objectively credible evidence to support that claim,” Sorokin said.
The Justice Department also claimed that the two airlines shared revenue generated at those airports, discouraging them from competing with each other. In addition, the Northeast Alliance allowed the parties to pool their gates and take-off and landing permits, so-called “slots,” according to the lawsuit.
“The Department cannot allow American Airlines to continue to consolidate the airline industry where competition is already critical,” Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division told reporters in 2021.
In a statement, American Airlines said it was “disappointed” with the court’s decision and that it is “fully studying the ruling” and considering its “next steps as part of the court process.”
“We made it clear in the process that the Northeast Alliance was a great win for customers,” American said. “The NEA has enabled JetBlue to grow significantly in the congested airports of the Northeast, extending the airline’s low fares and superior service to more routes than would otherwise have been possible.”
In March, the Justice Department filed a lawsuit to stop JetBlue’s $3.8 billion bid to buy Spirit Airlines.
US Attorney General Merrick Garland said the merger would cause significant harm to consumers, particularly those who rely on Spirit Airlines’ cheap fares.
CNN has reached out to JetBlue and the Justice Department for comment.
– CNN’s Christina Carrega, Pete Muntean and Chris Isidore contributed to this report.