WASHINGTON, (Reuters) – American Airlines Group AAL.O must end its alliance with JetBlue Airways Corp JBLU.O, a federal judge ruled yesterday, agreeing with the U.S. Justice Department that the arrangement means higher prices for consumers and ordering the companies to part ways within 30 days.
The decision represented a victory for President Joe Biden’s administration, which has taken a hard line on consolidation and tie-ups in the aviation industry. The Justice Department, six states including Massachusetts as well as the District of Columbia sued in 2021 to unwind the deal announced in 2020, calling the “Northeast Alliance” a “de facto merger” of the American and JetBlue Boston and New York operations that removes incentives for them to compete.
In his ruling, U.S. District Judge Leo Sorokin said the partnership “substantially diminishes competition in the domestic market for air travel.”
“These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation,” the judge wrote.
American is the largest U.S. airline by fleet size and low-cost carrier JetBlue is the sixth largest. The airlines use the alliance to coordinate flights and pool revenue.
JetBlue shares fell 1.8% for the day, while American closed down 1.5%.
Both airlines said after the ruling they were evaluating their next steps.