American And JetBlue Broke Up Three Years Ago—But They’re Facing A Class Action Over Higher Fares And Fighting Each Other For $100 Million

The American Airlines – JetBlue partnership was dismantled July 21, 2023 – three years ago – but the lawsuits continue.

The Biden administration sued to break up the partnership in the Northeast between American Airlines and JetBlue. This had a number of downstream effects.

• There’s less competition in the New York market. American and JetBlue were becoming a third viable competitor to Delta and United.
  
• The rationale behind JetBlue’s acquisition of Spirit Airlines no longer made sense, since JetBlue needed Spirit’s planes and pilots to compete in Boston and South Florida at the same time as growing in New York – because of the Northeast Alliance with American.
  
• But the Biden administration blocked JetBlue from acquiring Spirit also (RIP), JetBlue’s CEO is now at Airbus, and the carrier hasn’t earned a profit in seven years.

A core purpose of antitrust law is to prevent companies from earning monopoly profits at the expense of consumers. JetBlue hasn’t earned any profits, and American Airlines was break-even last year.

Yet there’s a class action lawsuit – In re American Airlines/JetBlue Antitrust Litigation, E.D.N.Y. No. 1:22-cv-07374-AMD-CHK – seeking certification over the Northeast Alliance, claiming that it raised fares and limited options for passengers. (Here’s the original filing and the third consolidated amended complaint.)

• The original plaintiff was a New York passenger who bought JetBlue tickets. Four related cases were consolidated. The current certification motion is led by a Massachusetts JetBlue customer who bought tickets originating in Boston.

• The original proposed class covered all direct purchasers of American or JetBlue tickets to or from Boston, New York LaGuardia, New York JFK, and Newark. New York airports have been dropped. That’s smart.

American and JetBlue worked together on which routes each carrier would fly. They were no longer competing with each other in the Northeast. In the New York market, though, JetBlue and American Airlines were driving prices down.

• New York JFK and LaGuardia are slot-controlled. There’s a fixed number of takeoffs and landings. Re-allocating slots from one airline to another doesn’t reduce the number of flights, seats, or choices.

• The Trump Department of Transportation entered an agreement not to object to the partnership, in exchange for guarantees that the two airlines would increase the number of seats flown in the New York market (and if they didn’t they would give up slots to other airlines).

• But the airlines couldn’t add flights. They had to fly bigger planes with more seats, which they did. They added supply to the New York market.

• Air traffic control shortages led the FAA to lift the normal ‘use it or lose it’ rule for slots. Other airlines took advantage of that. But this didn’t automatically relieve American and JetBlue from the obligation under its agreement with DOT. They grew the number of seats in the market. Other airlines were restricting capacity and increasing fares, while American and JetBlue acted as a countervailing force.

Fares were high in 2022 as airlines struggled to build back capacity after the pandemic. They’d retired planes, incentivized pilots to retire, not trained up new pilots. And that meant higher fares, but American and JetBlue were overall a force in the New York market for lower fares than there otherwise would have been.

Some markets, though, saw higher fares as airlines shifted which markets they were serving. So there were some losers in this. And that’s the core argument in the case – to focus on customers who lost, and claim that’s an overall loss for consumers (it wasn’t).

Overall, Boston though lost JetBlue capacity as they shifted planes to New York. So focusing on Boston only makes the most sense for plaintiffs. And coming in after the federal government won an antitrust suit against the airlines piggybacks on an assumption that the deal was anticompetitive. But that’s not the same as showing consumer harm! The Biden administration sought antitrust law that moved away from the traditional notion of consumer benefit as the standard. The class action has to adhere to that traditional line to prove private damages.

The Clayton Act authorizes direct purchasers injured “by reason of” an antitrust violation to recover treble damages and attorneys’ fees. However, it’s going to be tough for the class action to show that Boston fares were higher because of this partnership, separated from the effects of Covid recovery, when fares were broadly up in 2022.

Meanwhile, American Airlines is suing JetBlue over the breakup of the partnership (American Airlines, Inc. v. JetBlue Airways Corp., Texas Business Court, Eighth Division, No. 25-BC08A-0007), claiming that JetBlue owes more than $100 million under the final revenue-sharing reconciliation between the two carriers.

The antitrust ruling permitted the airlines to complete audits and settlement for flights through July 18, 2023. American sent a final invoice on January 9, 2024 covering April 1, 2022 through July 18, 2023 and says that JetBlue’s own calculation differed by only about 6%. JetBlue didn’t pay a dime.

• American didn’t sue until April 2025 because the two carriers were discussing a new partnership. They filed after those talks ended (and JetBlue announced a partnership with United).

• JetBlue argues that the two airlines were supposed to have good faith modification discussions because of COVID and the return of normalcy to the industry but American refused those discussions, and that they hadn’t really been sticking to the agreement’s reimbursement formula. American says that these side agreements ended March 31, 2022 and they are only looking for payment for the period after that.

The case was remanded to Texas state court.