An alliance between American Airlines (AAL) and JetBlue (JBLU) will harm air travelers nationwide, according to the Department of Justice. Did JetBlue merge with American Airlines? Not quite. The two carriers have partnered for flights that they offer in the northeastern U.S.
American and JetBlue formed the Northeastern Alliance.
Under the “Northeastern Alliance” announced earlier this year, the two carriers combined their operations at four major airports—Boston Logan, John F. Kennedy, LaGuardia, and Newark Liberty. The partnership enables them to coordinate “on all aspects” of network planning. They will coordinate on which routes to fly, when to fly them, who will fly them, and what size planes to use for each flight. The two airlines will also share revenues earned at these airports.
The codesharing agreement between American and JetBlue adds more than 70 routes and allows the two carriers to sell tickets on each other’s flights. Common in the airline industry, a codeshare agreement enables two or more airlines to market the same flights under their own airline.
“One of the best things about our Northeast Alliance is the additional benefits it brings to customers. This includes more ways to earn miles and eventually more choice in how they use them, creating a truly valuable loyalty program,” said Alison Taylor, American’s Chief Customer Officer, in a statement on May 26. “Our partnership with JetBlue offers travelers more options to get to more places with ease, thanks to better schedules and on a more premium product.”
The Department of Justice and six states sued to block the airline alliance.
However, the Department of Justice disagrees. On Sept. 21, the Department of Justice and attorney generals in six states filed a civil antitrust lawsuit to block the alliance. They said that it eliminates competition in air travel and will eventually lead to higher airfares.
“Millions of consumers across America rely on air travel every day for work, to visit family, or to take vacations. Fair competition is essential to ensuring they can fly affordably and safely,” said Attorney General Merrick B. Garland.
Garland also said, “In an industry where just four airlines control more than 80 percent of domestic air travel, American Airlines’ alliance with JetBlue is, in fact, an unprecedented maneuver to further consolidate the industry. It would result in higher fares, fewer choices, and lower quality service if allowed to continue.”
American Airlines has codesharing agreements with over 20 other airlines.
As the world’s largest airline, American is one of four airlines that dominates the domestic air travel market. The other major players are Delta, United, and Southwest. American Airlines is the parent company of American Eagle, which is a network of six regional carriers that operate under codeshare and service agreements. Those carriers include three subsidiaries (Envoy Air, Piedmont Airlines, and PSA Airlines) and three contracted carriers (Mesa, Republic, and SkyWest).
American Airlines also partners with over 20 other airlines including Alaska Airlines, British Airways, and Finnair through the OneWorld Alliance that it founded in 1999.
The alliance isn't a merger, American CEO says.
American Airlines officials call the Department of Justice lawsuit “misguided.” The Northeastern Alliance has increased competition in New York City, which Delta and United have dominated in past years, said American Airlines chairman and CEO Doug Parker.
“Ironically, the Department of Justice’s lawsuit seeks to take away consumer choice and inhibit competition, not encourage it. This is not a merger: American and JetBlue are – and will remain – independent airlines,” Parker said in a statement.