Update, 5/31: American CEO Robert Isom announced today that his airline will appeal the decision that ordered it to terminate its JetBlue partnership. I’d assume that JetBlue is onboard with the appeal as well, though that airline is also being sued by the Justice Department to stop its takeover of Spirit.
Originally posted on 5/19:
A federal judge has ordered American with JetBlue to end their partnership within 30 days from today.
It’s likely that the airlines will appeal the decision.
That alliance was approved by the Trump administration, but has been challenged in court by the Biden administration over the past 2 years.
The Northeast Alliance was announced in July 2020 by the airlines as a path forward to compete against the dominant carriers in NYC, Delta and United.
American said the alliance would allow them to once again fly to Tel Aviv, thanks to the connecting feed that JetBlue would be able to provide.
The Trump administration’s DOT allowed the alliance to move forward in exchange for slot divestitures in JFK and Washington/DCA.
The airlines linked their mileage programs together for earning/redeeming miles and for reciprocal elite benefits.
However the Biden administration’s DOT then sued to end the partnership, despite the prior approval, citing fewer competitors in the marketplace.
Despite that, the airlines continued to grow closer.
The airlines argued that in fact there was more competition to the Delta/United NYC duopoly, with more new destinations offered at lower prices. The two sides failed to settle, which led to today’s groundbreaking decision.
Frankly, it’s hard to understand how just about every airline in the marketplace has been allowed to merge except JetBlue, but this certainly does not bode well for the JetBlue-Spirit merger.
If the airlines decide not to appeal or if they lose the appeal, will they maintain any mileage earning and elite benefits or will they be eliminated? Will the new routes be killed off?
Will American be able to maintain Tel Aviv service, that was specifically credited with being able to launch because of the partnership?
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26 Comments On "[American Will Appeal Ruling] Judge Orders American And JetBlue To End Northeast Alliance, Is This The End Of The Road, And What Will It Mean For Flights To Israel?"
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Wow this is annoying, I recently booked a flight on JetBlue’s website bc I had credit, but it was operated by AA allowing me to use my Aviator red card to get free checked baggage
Do they get back any slots divested?
You would think, no?
All I know is that it was the JetBlue partnership that allowed me to fly to Israel for $367 round trip last year, so this makes me sad.
Biden administration is looking for a win against the mega-corporations. If they still would have been able to split AA and US Airways, Continental and United Airlines, Delta and Northwest, they would have done that, too.
The FTC is selectively fighting mergers across Main Street in a progressive push. I’ve got no problem with stopping mergers but right it in the law and enforce! Be it percentage of market or anything else it needs to be a clear rule not based on who the admin likes or dislikes and opposed it without any clear basis
While it’s true that selective enforcement of mergers can cause imbalance, in this particular case we’re dealing with an alliance, not a merger. The airlines remained separate, merely sharing resources and revenue, without merging operations. It’s crucial to note that this isn’t about who the administration favors; it’s about establishing clear, consistent rules to govern alliances like these. The need is apparent for definitive guidelines that determine when such collaborations infringe upon anti-trust laws, ensuring consistent enforcement and fostering a balanced marketplace.
And how did the admin put forth clear rules for alliances? It is clear that it is simply and effort to chill the market
I have four trips booked on JetBlue basic blue fare over the next few months including one that I am in middle of already. Since I am an American Platinum member I get the two free bags and the automatic seat upgrade and the carry-on and the early boarding on JetBlue. If this thing ends in 30 days I really don’t want to be flying JetBlue and paying for luggage and sitting in the middle seat somewhere in the back because this judge decided I can’t use my American status. And the basic blue fares are non-refundable so I am totally screwed.
This is yet a second hit for me on my strategy for American spending and achieving status.
First AA dropped MIA – TLV direct, now this.
I have so far flown three round trip flights on JetBlue with my status and getting the extra space even more legroom on a trip out of California was amazing. I cannot conceive wanting to do this going forward
This was not a merger, but an alliance that allowed two distinct airlines to share resources and revenue from each other’s flights, an incidental effect of which was non-competition. JetBlue’s CEO also stated in Q1 that this was their main revenue stream.
The notion that someone else managed to breach the Sherman Act does not justify the actions of another. This is a clear violation of the Sherman Act. The real issue lies in why the DOT approved it in the first place. Although it’s not entirely certain, one could presume that it might have had something to do with the numerous conflicts of interest and ethical violations in which the head of the DOT was embroiled.
There is literally no one in America who can credibly claim this merger is bad for consumers. No one has been harmed by it — except, perhaps, Delta and United. Lots of people, especially frequent NYC flyers, have benefited considerably.
If we’re now at the stage where pro-consumer actions can violate antitrust law, we need different antitrust law.
While it’s understandable that some may view this partnership between American Airlines and JetBlue favorably, particularly frequent flyers in NYC, the larger picture seems to have been overlooked. This isn’t a simple alliance; it’s an arrangement where two powerful airlines have ceased to compete in key areas, sharing revenue even when the other had no hand in generating it.
The assumption that only Delta and United have potentially been harmed by this arrangement is a narrow view. Competition isn’t about the welfare of individual airlines but about fostering an environment that encourages better prices, improved service, and innovation for consumers. Reduced competition could lead to the opposite – inflated prices and compromised service quality.
The court case text from pages 67 to 90 specifically outlines the potential adverse impacts of this alliance. The capacity growth from this partnership has been at the cost of resources and output in other areas, impacting consumers not living in the northeast. Moreover, certain routes introduced since the formation of the alliance have been unsuccessful and subsequently scrapped, casting doubt on the efficacy of this partnership.
Importantly, the airlines haven’t been able to substantiate claims of a net positive outcome from their partnership. It’s suggested in the documents that any beneficial changes could well have happened without the alliance.
So, while it’s tempting to view the alliance in a positive light, especially when viewing it through a narrow lens, the reality is more complex. Antitrust laws exist to protect consumers from monopolistic practices, no matter how they’re dressed up. Therefore, it’s important to make informed statements based on a comprehensive view of the facts and potential long-term implications. Rather than pushing for a change in antitrust law, perhaps we should value its role in preserving a competitive and healthy market environment for consumers.
Sounds like these posts were written by chatGPT
My thoughts as well
Was just going to say that. It definitely is.
To be clear, you are choosing to belittle my sentence construction instead of disputing the facts and evidence that have threatened your elite privileges of extra legroom and free checked bags. The erosion of laws and ethics in favor of class upgrades at the expense of others may seem minor or insignificant, but it is a cancer that slowly infects and degrades humanity.
I don’t have these status upgrades. I cannot remember the last time I flew either of these airlines. I don’t anticipate ever doing so in the future. I am a mostly impartial observer.
You said it yourself: “Reduced competition COULD lead to….. inflated prices and compromised service quality. emphasis on COULD. Market actions often lead to less than perfect outcomes. Why are you so sure that regulators are any more effective, unbiased, or altruistic?
I prefer that people (limited choices notwithstanding) make imperfect decisions about their own life rather than have regulators make imperfect decisions for them.
I work for government. I live in Baltimore so i know a lot of regulatory lawyers, and compliance officers. The market is no worse.
The judge didn’t seem to care that United currently has zero flights out of/into JFK, meaning that only El Al, Delta, and American Airlines offer direct flights between JFK and TLV. It was helpful to be able to also consider Jet Blue flights (serviced by American Airlines) on this route.
There are no direct JFK – TLV flights from/to LaGuardia Airport (for obviously reasons), and American doesn’t appear to fly direct between Newark and TLV (if it did, if living on the other side of Manhattan, it’s an extremely expensive and time-consuming nightmare).
I recently opened AAdvatnage cards hoping to meet spending obligations and fly with the miles to tlv. Now, will this opportunity be losed?
Shocking how Biden administration screwed me!!
No more complementary Stella beer or Jack Daniel on JetBlue!!!
I flew TPA> LGA yesterday with JetBlue flight 48, wife is AA gold member and on our boarding pass it showed Class: AAElite with elementary even more space, priority security, priority boarding , however upon flight attendants staring handing serving drinks, I asked for Stella bear and Jack Daniel, he looked up my ticket with a tablet, and said unfortunately you will have to pay and no longer eligible for complementary alcohol beverage as a AA Gold member, unfortunately the administration has won the lawsuit and we are told we need to dissolve our partnership! So I asked why was I allowed all other benefits he said he’s not sure maybe some reciprocal benefits are still allowed or it hasn’t fully implemented but I was told drinks will be charged for AA Gold member’s going Forward!
I hope JetBlue will appeal and win in supreme Court!
As usual I can read thru the comments here for a good laugh. I don’t have an opinion one way or the other because I don’t claim to know enough about airline competition or how it affects the market, but so far the only arguments I’ve seen are basically about how a few individuals won’t get some benefits they were looking forward to the next time they fly. That’s not exactly an argument a judge is gonna consider…
This was never anti-competitive. It simply allowed JetBlue & American to share networks.
it’s not anti-competitive, it actually challenges the big 3!
Um… If they’re sharing they’re not competing… and AA is one of the big 3
AA had little NYC presence and market share before this partnership. Now they can actually try to compete with Delta and United.
If this stands, is there anyway to know at what point they would stop flying to israel? If I am booking aa mileage tickets for next year, do I have to be concerned that they will get cancelled because not flying to Israel anymore? Even though required to give me back my miles, it won’t help me if flights will be more expensive at that point.
Also would israel law kick in and get $850 compensation for such a scenario?