American Airlines (American) and JetBlue Airways (JetBlue) are appealing to a U.S. judge to allow them to continue their mutual frequent flyer recognition and codeshare agreements, according to a Reuters report. The airlines are arguing that these arrangements are legal and necessary to ensure proper compensation for services provided to customers.
On May 19, U.S. District Judge Leo Sorokin ruled that the airlines must terminate their Northeast Alliance (NEA), which facilitated flight coordination and revenue pooling. Judge Sorokin found that this arrangement led to higher prices for consumers and ordered the companies to separate within 30 days. The Justice Department opposed the airlines’ request to create a new, modified version of the NEA, stating that the court should not hastily endorse a different partnership, just because it lacks some of the most egregious features of the NEA.
In 2021, the Justice Department and six states filed a lawsuit to dismantle the NEA, which was announced in 2020. It argued that the NEA created a de facto merger of American and JetBlue’s Boston and New York operations, eliminating incentives for competition. The Justice Department insisted that the airlines should sever their connections and return to being independent competitors to rectify the unlawful distortion of airline competition in the Northeast and beyond.
The airlines oppose certain disclosure and monitoring conditions proposed by the U.S. authorities, considering them burdensome and unnecessary. They also object to a two-year ban on forming any new alliance with another U.S. air carrier similar to the NEA. They argue that Judge Sorokin should aim to minimise disruption for consumers and avoid becoming the central planner in the unwinding of a long-standing joint venture, which would violate fundamental principles of antitrust law.
