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Justice Department wins lawsuit to end JetBlue and American Airlines alliance

New York (CNN) American Airlines and JetBlue Airways must end their alliance on routes in the US Northeast, a US District Court judge ordered on Friday.

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

The airlines have 30 days to end the partnership, Sorokin said – just as the busy summer travel season begins.

“It is abundantly clear to the court that the defendants’ primary motivation for establishing NEA was to strengthen their own competitive positions against Delta (and, to a lesser extent, United) in Boston and New York,” Sorokin wrote in the ruling Friday. .

The judge’s ruling on Friday said both airlines are a “formidable and influential player” in air travel – American Airlines Group is the largest airline in the world and JetBlue is the sixth largest airline in the United States, with significant market power in the Northeast. , special.

In the lawsuit, the Justice Department said the two companies agreed to exchange information about which routes they will fly, when they will fly them, who will fly them and what size aircraft they will use for each flight. The alliance was established in 2020.

The airlines argued that because of the alliance’s codeshare features, corporate and frequent flyers had wider access to benefits and discounts. But Sorokin ruled that these travelers make up a relatively small proportion of American customers.

The judge also said that the schedule optimization and coordination “has led to reduced capacity, lower frequencies or reduced consumer choice on several routes, including some that are heavily traveled.” That effectively removed an entire competitor from those markets, according to Sorokin, and gives customers fewer options for traveling between hubs like New York’s LaGuardia and Boston’s Logan airports.

Sorokin said their pact is the “unreasonable restraint of trade” that violates the Sherman Act, the landmark antitrust law.

“Although the defendants claim that their bigger-is-better cooperation will benefit the flying public, they produced minimal objectively credible evidence to support that claim,” Sorokin said.

The Justice Department also alleged that the two airlines split revenue earned at those airports, eliminating their incentives to compete with each other. In addition, the “Northeast Alliance” allowed the parties to merge their gates and take-off and landing authorizations, known as “slots”, according to the complaint.

Assistant Attorney General Jonathan Kanter of the DOJ’s Antitrust Division said in a statement Friday that he was “pleased” with the decision.

“Today’s decision is a victory for Americans who depend on competition between airlines to travel affordably,” Attorney General Merrick Garland said in a statement Friday.

In a statement, American Airlines said it is “disappointed” in the court’s decision and that it is “studying the judgment in its entirety” and evaluating the “next steps as part of the legal process.”

“We made it clear at trial that Northeast Alliance has been a great win for customers,” American said. “Through NEA, JetBlue has been able to grow significantly in constrained Northeast airports, bringing the airline’s low fares and great service to more routes than would otherwise be possible.”

CNN has reached out to JetBlue for comment.

In March, the Justice Department sued to stop JetBlue’s $3.8 billion offer to buy Spirit Airlines.

Garland said the merger would significantly hurt consumers, especially those who rely on the low fares available on budget Spirit Airlines.

— CNN’s Christina Carrega, Pete Muntean and Chris Isidore contributed to this report.

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