On Friday, the U.S. Court of Appeals for the First Circuit in Boston rejected the American Airlines appeal to reinstate its Northeast Alliance with JetBlue.
I wrote after oral argument that “questioning by the judges…seemed more skeptical of American than of the government.”
- The Trump administration approved it in 2020
- The Biden administration sued to dismantle it
- And a District Court judge agreed.
The ruling focused on carving up markets as per se illegal, rather than deciding primarily on consumer benefit or harm, which is a break from standard antitrust precedent.
However the appeals court found that the analysis of law was not clearly wrong.
American appealed the ruling, it said, because it limited their ability to enter future partnerships without government permission. JetBlue gave up the appeal to focus on securing its acquisition of Spirit Airlines (which they originally needed for planes and pilots, to grow in both Boston and New York at the same time, because of the American partnership).
JetBlue lost its attempted takeover of Spirit, and that carrier now teeters on bankruptcy.
Despite losing the anti-trust ruling appeal, a JetBlue and American partnership could still happen again.
Both airlines have said they’re interested in partnering again. On their own, neither is a significant enough player in New York to compete with Delta and United.
- They need to go to the government for permission
- The first Trump administration gave them permission to begin with
- They could offer a slightly different partnership, with less coordination over which carrier flies where. The judge who struck down their partnership was explicit that an arrangement like American has with Alaska would have been legal.
- And circumstances in the industry are different now. It’s clear that neither American nor JetBlue competes successfully in New York on their own. Without this partnership there’s less competition, not more. Anti-trust efforts in aviation didn’t work out well to protect ultra-low cost flying, either.
American was going to sponsor JetBlue for oneworld membership. JetBlue needs partners to compete with larger airlines, and not just in New York.
American in New York is ‘too small to win, too big to quit’ as former Chief Commercial Officer Vasu Raja frequently put it.
