On Friday, the U.S. Court of Appeals for the First Circuit in Boston rejected the American Airlines appeal to reinstate its Northeast Alliance with JetBlue. I wrote after oral argument that “questioning by the judges…seemed more skeptical of American than of the government.”
- The Trump administration approved it in 2020
- The Biden administration sued to dismantle it
- And a District Court judge agreed.
The ruling focused on carving up markets as per se illegal, rather than deciding primarily on consumer benefit or harm, which is a break from standard antitrust precedent. However the appeals court found that the analysis of law was not clearly wrong.
American appealed the ruling, it said, because it limited their ability to enter future partnerships without government permission. JetBlue gave up the appeal to focus on securing its acquisition of Spirit Airlines (which they originally needed for planes and pilots, to grow in both Boston and New York at the same time, because of the American partnership). JetBlue lost its attempted takeover of Spirit, and that carrier now teeters on bankruptcy.
Despite losing the anti-trust ruling appeal, a JetBlue and American partnership could still happen again. Both airlines have said they’re interested in partnering again. On their own, neither is a significant enough player in New York to compete with Delta and United.
- They need to go to the government for permission
- The first Trump administration gave them permission to begin with
- They could offer a slightly different partnership, with less coordination over which carrier flies where. The judge who struck down their partnership was explicit that an arrangement like American has with Alaska would have been legal.
- And circumstances in the industry are different now. It’s clear that neither American nor JetBlue competes successfully in New York on their own. Without this partnership there’s less competition, not more. Anti-trust efforts in aviation didn’t work out well to protect ultra-low cost flying, either.
American was going to sponsor JetBlue for oneworld membership. JetBlue needs partners to compete with larger airlines, and not just in New York. American in New York is ‘too small to win, too big to quit’ as former Chief Commercial Officer Vasu Raja frequently put it.
Starting January 20, 2025, regulation and anti-trust is officially DEAD. Good luck, fellow peasants.
Gary, while you obviously have an interest in this partnership being revived somehow, the original partnership was clearly illegal collusion, and won’t be revived, even under a Trump administration. Remember that Trump only has a four year term. JetBlue in Oneworld, or some kind of other milder partnership, could make sense. But as a NYC area resident, I would rather both JetBlue and American remain around and aggressively compete with each other, along with Delta and United, than have what was going on with the NEA. The NEA was clunky, and the fact that the airlines decided certain flights between the two airports meant that you couldn’t really rely on full service across the partnership. The lack of lounges at JFK Terminal 5 was the best example of this.
Starting January 20, 2025, common sense WINS. Good luck fellow winners!!
The Trump Administration will greenlight the eventual acquisition of JetBlue by AA. Only a matter of time.
If “carving up markets” is illegal, then slots perennially owned by airlines should also be illegal.
Gary,
please get over your twisted belief that the DOJ will change its mind and allow AA and B6 to collude because neither one of them were able to come up w/ legal or workable strategies for 2 decades.
AA and B6 had more slots at JFK than DL did when B6 was “born”
AA failed to properly restructure out of bankruptcy post 9/11 and had industry high costs for years which they never got down successfully even w/ chapter 11 a decade later because Parker was more interested in taking control of the company than ensuring its success.
B6 had a great product but has destroyed it by horrible execution.
DL has cleaned AA and B6′ clock at LGA, JFK and BOS.
AS’ own execs said the NEA was completely different from the AA/AS relationship which does not involve joint capacity planning or pricing or revenue sharing – which the NEA had.
Despite what the AApologists try to argue, AA gets only as much revenue and uses only as much capacity as it buys in individual tickets on AS. AS’ capacity is AS’ – not AA’s and AA cannot and does not count AS’ capacity – only the AApologists that cannot accept that AA has destroyed its own presence on two coasts as well as in Chicago.
AA and B6 can have an AA-AS type relationship which is not just a little different from the NEA. It is radically different.
The NEA was blatantly counter to US antitrust law.
And the DOT was not authorized to approve domestic antitrust and did not approve that part of the NEA. The DOJ is authorized to approve or reject mergers and anything merger- like which the NEA was. There was no discontinuity of government between the DOJ and DOT then and there won’t be now just because you and others can’t accept that there are consequences for bad decisions and AA and B6 are both going to continue to pay the price – and B6 is far closer to now realizing the error of its previous ways while AA is nowhere near that point.
@Tim Dunn – I love how you didn’t read what I wrote, or didn’t understand it, and are replying as though I wrote something completely different.
They can absolutely go back with a modified partnership closer to what the judge said was legal. They have to go to the federal government first before proceeding with it, under the terms of the judge’s order. But it’s not unreasonable to expect a different partnership would receive approval.
In any case, with respect to airline partnerships DOT generally takes the lead and DOJ follows, the NEA would have been fine under the first Trump administration’s DOT/DOJ. The idea that DOT would have entered into an agreement authorizing the deal and then DOJ goes back and sues is an absurd proposition.
@Anthony “while you obviously have an interest in this partnership being revived somehow”
Only –
– more competition in NYC market
– application of traditional consumer benefit standard to antitrust
– consistency from one administration to another to preserve rule of law, that when an executive branch approves a deal that should be honored by the next executive
What’s sad is how JetBlue is doing. They offer at far superior product to AA and far less redneck too. They are better off working with a different airline long term. AA will be it’s own demise.
Gary,
you said in the article “They could offer a slightly different partnership,” and that, along w/ multiple other things, is patently wrong.
AA and B6 could have an AA/AS style partnership but that is not just a slightly different model – it is radically different.
and you continue to think it is the government’s responsibility to break antitrust law in order to accommodate poor strategies and execution.
It doesn’t matter if consumers are helped or harmed if the “solution” to prevent deterioration of an airline is to break antitrust law.
I have said for months that AA and B6 could and should try to get an AA/AS style partnership – but that is a simple codeshare w/ alliance benefits that include no joint planning of capacity (as the NEA tried to do) and no ability to freely swap slots between AA and B6 without the DOJ being involved – as they are with any large slot transaction.
AA and B6 have made repeated strategic and executional mistakes, have done it for decades, and not only will face the consequences of those decisions but will have to compete against each other regardless of the type of partnership.
and, for the millionth time for those that continue to think that AA and B6 will merge, THAT won’t happen because AA’s costs are so much higher than B6′ that B6′ network does not work at AA costs…. you need only see how poorly AA does competing against DL to see that. Neither AA or B6 get a revenue premium to DL and AA’s costs are not much different than DL’s.
and there simply is no reason why the government has to create a third competitor to DL and UA in NYC of the same size. It is a patently false narrative and contrary to actual antitrust law.
“AA and B6 could have an AA/AS style partnership but that is not just a slightly different model – it is radically different.”
We do not know how different the partnership needs to be to gain approval by the new administration. We don’t yet even know who will run DOT or DOJ. (For DOT, the betting markets have Sam Graves as front-runner.)
While we know that the district court judge said AS/AA would be fine for B6/AA, that is not precisely the only model that could be fine or could gain approval.
The idea that only illegal collusion between two competitors can result in real competition in NYC doesn’t really hold water for me. I am looking at flights from NYC to ATL for the holidays. Without the NEA, both American and JetBlue have abandoned LGA to ATL. I guess you can claim that the demise of the NEA resulted in less competition – but it seems that both Spirit and Frontier have stepped in and added frequencies as they sensed the opportunity. JetBlue and AA simply don’t WANT to compete on the route – which is their right I guess. But that doesn’t mean that those two competitors can collude on schedule and price in violation of the law, which is what they are doing.
I am an elite on Delta, JetBlue and American, and I would just rather them all compete against each other all across the country.
I don’t understand why people are so adamant for American being allowed to work with a competitor. “We’re the world’s largest airline!” Then you should be able to COMPETE!! American HANDED OVER LaGuardia to Delta for slots at DCA. American was in and out with New York like a toxic ex, chasing away loyal customers every time.
American bet on Philly, wrong choice. Case closed. American had the TWA hub at JFK, new terminal to themselves, the whole nine yards. And US Airways took over and blew it.
Delta played the long game at both LGA and JFK. Years long plans, no mistakes. Better amenities, better lounges, better network. They fought and won the market! And for all that their two biggest competitors should be allowed to work together against them? Wild take.
It looks like Tim Dunn continues to assert that Delta is the world’s only PERFECT airline. Another article I read didn’t mention exactly what was banned, a joint venture or a code share agreement. I know Mr. Leff writes that a code share would “fly” (pun intended). But the quote I read from the other story was that American argued that it couldn’t enter into **any** kind of “similar” agreement with JetBlue. The word “similar” is the sticking point. A simple code share is “”similar” to a joint venture in many ways. The level of cooperation is the key, and that aspect wasn’t specified in that article or here. At the time of the original ruling, I read that the judge in the original case enjoined JetBlue and American from engaging in **any** kind of cooperative agreement, including a simple code share. But maybe I misunderstood what was written.
To David P.
To David P.
Yes 100%
ghost,
the problem w/ the NEA was joint capacity planning and revenue sharing.
As much as Gary wants to believe otherwise, that is not going to be allowed under any administration because it is counter to US antitrust policies.
That level of collaboration is tantamount to a merger and the DOJ has made clear that level of collaboration requires a merger.
AA and B6 know that a merger would not work because of AA’s higher costs so they tried this workaround.
AA and B6 can most certainly do a simple codeshare and alliance relationship -because that is what AA has with AS.
The DOJ did its job in kicking it back.
TW Aviator gets it and it has nothing to do w/ involving Delta.
AA and B6 have spent two decades trying to figure out how to compete instead of actually doing it.
there is no requirement and no argument to be made that the US needs an equally sized competitor to DL and UA in NYC and certainly not one that is created by violating established antitrust principles.
Biden Administration is a bunch of crap the democrats with their woke society and anti Christian/business matters have killed the USA . Trump will approve all this and the house and senate are all Republican nothing to worry about.
I think this. I think that. And, another thing . . . blah, blah, blah. Glad I got that off my chest.
“It’s clear that neither American nor JetBlue competes successfully in New York on their own.”
BRUTAL! JFK Is JetBlue’s biggest hub, corporate HQ and the closest thing they have to a “fortress”. If they can’t compete there I have no idea how the government thinks they’re supposed to survive pitted against monopolistic giants created under the Obama administration like Delta and United. Strange that Hawaiian already controlling 67% of HNL pre-merger without AK was not an anitrust issue according to DOJ but B6/NK could not have 50% combined share in secondary spillover market FLL?!
Whole situation reeks of corruption and bribery.
Either bust up the big monopolistic legacies that have over 90% share in some markets or let JetBlue merge into a larger more relevant airline that has a shot at competing against the dominant giants formed by multiple mergers. Any other action amounts to deliberate eradication of competition and capacity to the detriment of consumers.
Neither AA or B6 is big enough to compete with UA in NYC???
Seriously?
UA doesn’t fly to JFK at all and has only token service in LGA because of slot restrictions.
IATA hasn’t considered EWR as the same place as LGA/JFK since 2022.
But seriously..
How many people in New York would consider EWR and JFK as reasonable alternatives?
You don’t seem to understand that the US DOT and the US Justice Department are just two players in anti-trust actions. While it is common for those two agencies to insert themselves into these kinds of cases, they are not the only interested parties.
Trump could shut down these two departments, but unless Congress changes the law, parties claiming injury could still sue.
UA or New York City or individual passengers could still bring antitrust actions. They just like the feds to do it and save them the expense.
To understand, you need to go back to 2013. Because of the illegal merger, explained in the link below, American became handicapped by an inferior large regional airline group of suits that called themselves management. The only thing they were good at was filing multiple bankruptcies. Ever since, the airline has lost its identity. Their history is a failed low-cost style. American never had the structure to be a high-density, low-cost airline. They replaced the people with the experience of operating a superior first-class airline. ( Which is being removed from most flights)
Trying to guide American Airlines, they have disassembled the New York and West Coast markets. Lost European market share- due to insufficient quantity of wide-body aircraft. Before 2013 AA was the premiere airline in America and 1 of 3 worldwide. United and Delta are eating their lunch and market share in many markets. The worst thing they did after the merger was how they handled redundancy. Instead of keeping the more talented, they chose the inferior US Air personnel, which caused the entire company to be downgraded in all departments. Quick example. First project – New Uniforms. Their low-cost history caused them to re-uniform three times to get it correct. The 1st uniform was toxic, which put many employees in the hospital.
The Board members need to replace all of these inferior suits with capable, quality-minded leadership ASAP! Please learn from the history explained in the link below.
https://callingonthedoj.wordpress.com/
Lets not overlook that JetBlue is under new leadership. I don’t know that they want this revived or redone as badly as AA does. Nor do they need it as badly as AA does.