When the Biden administration won its anti-trust case against the American Airlines – JetBlue “Northeast Alliance,” the District Court judge’s decision basically laid out that what the airlines should have done in order to running afoul of competition laws was something alone the lines of the American Airlines – Alaska ‘West Coast International Alliance’ which involves codesharing and a frequent flyer partnership.
In fact, American’s partnership with Alaska was initially the model for talks between American and JetBlue, after initially just talking about American leasing New York slots to JetBlue (and effectively walking away from the market). According to the judge, the two airlines got into trouble by divvying up the market (deciding together which airline would fly which routes) and sharing revenue.
Now that the judge has ruled in favor of the government, the airlines and the government each have to propose what exactly should be ordered to implement the ruling. Both sides have done so.
— David Koenig (@airlinewriter) June 9, 2023
American Airlines and JetBlue basically asked the judge to do what the judge suggested would have been permissible: codeshare and partner through their frequent flyer programs. That helps retain some competitiveness in the New York market, attracting customers away from the biggest players Delta and United.
The government though wants the partnership itself fully terminated, not only the parts that were found to be anti-competitive. At least they are willing to allow existing tickets sold to customers to be honored with the partnership benefits in effect at the time tickets were issued – so for instance customers could have their checked bag fees waived if eligible.
Robert Isom, CEO of American Airlines, has said that they plan to appeal the judge’s ruling. I haven’t seen JetBlue make the same statement. JetBlue may try to leverage walking away from the alliance to get a deal for approval of its acquisition of Spirit.