JetBlue Announces It Will End Its Partnership with American Airlines

After three years of a strategic partnership allowing customers to earn and redeem miles, enjoy reciprocal codeshare flights, and access an expanded route network, JetBlue has announced plans to dissolve the alliance following a federal ruling against it.

“Although we firmly believe in the procompetitive advantages of the [Northeast Alliance (NEA) with American Airlines], after careful consideration, JetBlue has made the tough choice not to contest the court’s ruling that the NEA cannot proceed as it currently stands, and has initiated the process to terminate the NEA, starting a wind-down phase that will unfold over the next few months,” stated JetBlue in a press release on Wednesday.

The low-cost airline expressed its intention to concentrate on its bid to acquire Spirit Airlines, claiming it represents the best chance to genuinely reshape the competitive environment in the U.S.,” JetBlue added.

The JetBlue–American partnership, announced in 2020 and activated in 2021, faced immediate legal scrutiny when the U.S. Department of Justice filed a lawsuit to block it as anti-competitive in September 2021.

“In a market dominated by just four airlines controlling over 80 percent of domestic air travel, American Airlines’ partnership with JetBlue represents an extraordinary move towards further industry consolidation,” stated Attorney General Merrick Garland in a DOJ release regarding the 2021 lawsuit. He contended that the alliance would likely lead to higher airfares, fewer options, and a decline in service quality for travelers.

On May 19, Judge Leo Sorokin of the U.S. District Court in Massachusetts ruled in favor of the Justice Department, noting in his order that “the two airlines essentially agreed to function as a single airline for most of their flights to and from New York City and Boston.”

With the partnership, known as the Northeast Alliance (NEA), “American and JetBlue transitioned from rivals to partners, uniting to create a single ‘optimized network,’” Sorokin observed.

The ruling is “fantastic news for consumers,” remarked Christopher Elliott, a consumer advocate and founder of Elliott Advocacy, in a statement to Dinogo in May following the ruling. “American and JetBlue were not truly competing—this was essentially a merger—and the government rightly put a stop to it. Passengers will benefit from lower fares and improved service. The government must now complete the process by terminating the JetBlue–Spirit merger.”

In a statement issued this week, American Airlines announced plans to appeal the decision, despite JetBlue’s declaration that it would not pursue an appeal.

“We certainly respect JetBlue’s choice to concentrate on its other antitrust and regulatory issues. At the same time, JetBlue’s reasoning reinforces our belief that the NEA has been very pro-competitive, and that an incorrect judicial ruling that overlooks the NEA’s consumer advantages has resulted in an anti-competitive situation,” stated American Airlines.

When JetBlue and American first announced their collaborative strategy, they indicated that, among other objectives, the initiative aimed to aid the airlines in recovering from the pandemic's impact and to enhance their competitiveness in the Northeast, particularly on flights departing from New York City and Boston, which are served by four major airports: Boston Logan International, LaGuardia, John F. Kennedy International, and Newark Liberty International.

The court order dated May 19 notes that American Airlines is the largest airline globally, while JetBlue ranks as the sixth-largest in the United States. Judge Sorokin highlighted that nearly 75 percent of JetBlue’s total operations are linked to flights in and out of the Northeast, noting that American is the third-largest airline operating in Boston.

Before the partnership, “In both markets, the defendants competed vigorously on all fronts, from fares to the services provided to customers,” the judge remarked. “While the defendants assert that their larger collaboration will benefit travelers, they have presented minimal credible evidence to substantiate that claim. Any advantages that American and JetBlue may gain by increasing their market power—in the Northeast or in their competition with Delta—stem from a blatant agreement not to compete with one another.”

As the airlines separate, some of the shared benefits established for JetBlue and American customers will be lost. They currently operate reciprocal codeshare flights, allowing members of JetBlue’s TrueBlue loyalty program to earn points on American flights, and vice versa for American’s AAdvantage loyalty program members. Codesharing also enables customers to book flights with both airlines using a single reservation.

Earlier this year, the Justice Department also initiated a lawsuit to prevent JetBlue from acquiring Spirit Airlines, claiming it would violate antitrust regulations. In spring 2022, JetBlue made an unexpected offer to buy the low-cost carrier Spirit Airlines for $3.8 billion, and by fall, shareholders approved the JetBlue acquisition.

The lawsuit, filed by the Department of Justice in the District of Massachusetts in early March, asserts that Spirit provides travelers with lower fares and more options. “As our complaint states, the merger between JetBlue and Spirit would lead to increased fares and fewer choices for millions of travelers, particularly impacting those who depend on ultra-low-cost carriers,” said Attorney General Garland.

The Justice Department contends that acquiring Spirit would enable other U.S. airlines to “collaborate to raise fares or restrict capacity,” claiming that JetBlue is “looking to acquire and eliminate its primary ultra-low-cost competitor, denying travelers yet another option.”

JetBlue, for its part, is optimistic that following its decision to end the partnership with American, the Justice Department will rethink its stance on the Spirit acquisition. “With strong momentum, a clear organic strategy, and the procompetitive Spirit merger on the horizon, we are prepared to make a positive impact in the industry on a broader scale and look forward to progressing with our planned merger with Spirit,” JetBlue stated.

This article was initially published on May 19, 2023, and has been revised to include the latest updates.