JetBlue, American offer to rework alliance after legal setback

JetBlue Airways Corp. and American Airlines Group Inc. are seeking to keep components of their US Northeast operating alliance in tact while winding down other elements, part of a high-stakes antitrust battle playing out in court.

The airlines want to keep codeshare and loyalty agreements in place, but are willing to stop joint scheduling and sales, they said in a court filing Friday. They also asked the court to reject a request from the Department of Justice to require the companies to dissolve the Northeast Alliance, or NEA, completely and impose a monitor to oversee the wind down.

The move may be the carriers’ best shot at salvaging the NEA in some form after the judge ruled last month it violated US antitrust laws. It replaced competition between JetBlue and American with broad cooperation, US District Judge Leo Sorokin said.

The Justice Department and the airlines submitted dueling court filings Friday to influence Sorokin as he crafts a final injunction against the alliance.

JetBlue and American could also appeal the ruling entirely. JetBlue is still deciding whether to do so, it said in an email, adding the NEA “has boosted airline competition in the Northeast and delivered the low-fare benefits we promised.” American has already said it will appeal.

The changes proposed by the airlines in Friday’s court filings would bring it more in line with a separate partnership American created with Alaska Air Group Inc. on the US West Coast in 2020. 

Stern Stance

The Justice Department took a stern stance on dismantling the alliance, even in the face of proposed revisions from the airlines. It suggested that the carriers be required to terminate all coordination on scheduling and routes within one week and stop selling tickets on each other’s flights within a month.

“The court should reject defendants’ invitation to craft a new ‘NEA Lite’ on the fly,” the government said in a filing, adding the new alliance only eliminates the “most brazen” features of the NEA. 

The DOJ also urged the court to reject efforts by the airlines to keep in place codesharing and reciprocal frequent flier miles. It asked the judge to require American and JetBlue to notify the agency before entering into new partnerships with each other or other domestic airlines.

In their filing, the airlines accused the DOJ of “drastically” overreaching. They said cutting codesharing and frequent flier agreements would cause “real and substantial harm” to them.

May Ruling

Sorokin ruled on May 19 that the NEA, which focuses on the New York City area and Boston, must be dismantled. In his decision, he drew a distinction between the NEA and American’s arrangement with Alaska Air, known as the West Coast International Alliance. Sorokin said that alliance benefits those companies while largely leaving competition between them in place. 

The West Coast partnership also allows Alaska to put its customers on international flights operated by American and partners in the Oneworld global alliance, stepping up competition with Delta Air Lines Inc. in Seattle. Those additional passengers and Alaska’s network on the West Coast help American face off against broader networks in the region comprised of Delta, United Airlines Holdings Inc. and Southwest Airlines Co.

Sorokin found that the NEA, which allows the carriers to share routes, revenue, passengers and flight slots, and make capacity and planning decisions together, “substantially” reduced competition in the domestic market.

The Justice Department’s lawsuit against the NEA was the first challenge the government had brought against airlines since 2013, and is part of the agency’s renewed trust-busting efforts under President Joe Biden’s administration. The department has also sued to block JetBlue’s proposed $3.8 billion merger with Spirit Airlines Inc. A trial is scheduled for October.