Justice Department wins lawsuit to end JetBlue and American Airlines alliance

New York (CNN) A U.S. court judge on Friday ordered American Airlines and JetBlue Airways to dismantle their alliance over Northeastern Airlines.

U.S. District Judge Leo Sorokin ruled in favor of the Justice Department, giving the Biden administration a victory in its years-long lawsuit against the airlines’ cooperation. The Justice Department lawsuit filed in 2021 alleging that the two companies raised prices and reduced options for air travelers to and from major cities in the Northeast, such as New York City and Boston.

Sorokin ruled that the airlines have 30 days to end their cooperation, just as the busy summer travel season begins.

“It is quite clear to the court that the defendants’ primary motive in establishing the IAEA was to strengthen their competitive position against Delta (and to a lesser extent, United) in Boston and New York,” Sorokin wrote in Friday’s ruling. .

The judge’s ruling on Friday said that both companies are “massive and influential players” in air travel – American Airlines Group is the world’s largest airline and JetBlue is the sixth largest in the United States and has significant market power in the US. northeast. , special.

In the lawsuit, the Justice Department said the two companies committed to sharing information about the routes they fly, when they fly, who will be traveling on them and what size aircraft to use for each flight. The alliance was founded in 2020.

The airlines claimed that because of the alliance’s codeshare features, corporates and frequent flyers had wider access to benefits and discounts. But Sorokin judged that those travelers made up a relatively small percentage of the American clientele.

The judge also said improvements in planning and coordination “have resulted in lower capacity, lower frequencies or reduced consumer choice on multiple routes, including some heavily traveled routes.” It has effectively removed an entire competitor from these markets, according to Sorokin, leaving customers with fewer options for traveling between hubs like New York’s LaGuardia and Boston’s Logan airports.

Sorokin said their agreement is an “unreasonable restriction on trade” that violates the Sherman Act, a landmark antitrust law.

“While the defendants claim that their more than best-practice cooperation will benefit the flying public, they have provided as little objectively credible evidence as possible to support that claim,” Sorokin said.

The DOJ also alleged that the two companies share the revenue generated at those two airports, removing their incentives to compete with each other. In addition, the Northeast Alliance allowed the parties to pool their gates and takeoff and landing clearances, also known as slots, according to the complaint.

Jonathan Kanter, assistant attorney general in the Justice Department’s antitrust division, said in a statement Friday that he was “thrilled” with the decision.

“Today’s decision is a victory for Americans who rely on airline competition for affordable travel,” Attorney General Merrick Garland said in a statement Friday.

American Airlines said in a statement that it is “disappointed” with the court’s decision and is “fully considering the ruling” and evaluating “next steps as part of the legal process.”

“We made it clear during the trial that Northeast Alliance is a huge success for customers,” said American. “Through NEA, JetBlue has been able to grow exponentially in the limited Northeast airports, bringing lower airfares and great service to more lines than otherwise possible.”

CNN has contacted JetBlue for comment.

In March, the Justice Department filed suit to stop JetBlue’s $3.8 billion bid for Spirit Airlines.

Garland said the merger would greatly harm consumers, especially those who rely on the lower fares available from budget-friendly Spirit Airlines.

— CNN’s Christina Carega, Pete Montaigne and Chris Isidore contributed to this report.