American Airlines and JetBlue are officially splitting up. But while JetBlue announced on Wednesday it would back away from their Northeast Alliance after a federal court struck it down this spring, American Airlines says it will continue fighting for their relationship … in the courts.
The so-called Northeast Alliance was JetBlue and American's way of teaming up to beef up their presence in New York City-area airports and Boston (BOS) by coordinating, cross-selling tickets, and carrying each other's passengers. But President Joe Biden's Department of Justice sued to put it to a stop, arguing that collaborating instead of competing hurt consumers by driving up flight prices.
In May, a U.S. District Court judge sided with the Justice Department, ordering the two airlines to wind down their partnership. After months of threatening a possible appeal, JetBlue said Wednesday it wouldn't challenge the decision, instead focusing on its ongoing attempt to take over Spirit Airlines – another move that has caught the ire of the Biden administration.
“Despite our deep conviction in the pro-competitive benefits of the (Northeast Alliance), after much consideration, JetBlue has made the difficult decision not to appeal the court’s determination that the NEA cannot continue as currently crafted, and has instead initiated the termination of the (Northeast Alliance), beginning a wind-down process that will take place over the coming months,” the airline said in a statement.
That decision to drop that partnership could have major ramifications for flyers booked on both airlines in the months to come, with fewer flights available as the carriers draw down their partnership. It's unclear whether the two airlines will continue cooperating in any form, like allowing flyers to earn and redeem miles (plus enjoy status benefits) across carriers.
In its statement, JetBlue vowed that “nothing will change immediately and they can feel confident in new and existing bookings for the coming months.” The airlines are scheduled for a hearing in U.S. District Court later this month to begin to hash out exactly how the partnership will come to a close.
But American isn't letting the relationship go just yet. Minutes after JetBlue said it would back away from their Northeast Alliance, American released a statement saying it would move ahead with an appeal of the May U.S. District Court decision – with or without JetBlue onboard.
Will American be able to mount a strong defense without its partner in court? Is American simply hoping to set a legal precedent for future airline partnerships? Or, as View from the Wing points out, is the airline merely hoping to extract a breakup fee from JetBlue if an appeal finds the Northeast Alliance was legally sound? No one knows for sure.
But the motivations are clear. For American, working with JetBlue gave it a much-needed boost in New York, where its small presence left the airline unable to compete with the likes of Delta and United. American needed JetBlue more than JetBlue needed American … and JetBlue decided it needs Spirit more.
The New York-based airline won a long and unlikely bidding war for America's biggest ultra-low-cost carrier, winning over Spirit shareholders with a $3.8 billion package last year. It's a hefty price that JetBlue was willing to pay in order to get the Spirit planes, staff, and airport infrastructure to supercharge its growth. The combined airline would end up looking much more like JetBlue than Spirit: In with JetBlue's free snacks and gate-to-gate Wi-Fi, out with Spirit's tight legroom and barebones fares at rock-bottom rates.
But the Department of Justice again stepped in to block the merger , arguing that it would lead to airfare increases by removing a critical low-cost carrier from the market.
With American Airlines out of the picture, JetBlue is clearly hoping that federal regulators will look more kindly on its Spirit takeover.
“Terminating the (Northeast Alliance) renders the U.S. Department of Justice’s concerns about our partnership with a legacy carrier entirely moot. With that, the DOJ should reconsider and support our plan to bring a national low-fare competitor to the Big Four; the flying public deserves better than the status quo,” the airline wrote in its statement.
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