Airline Alliances: Will the American and JetBlue Pact Harm the Travel Landscape?  

Airline Alliances are not new. And certainly in this topsy turvy, wild west era of flying, the concept can be both welcoming or menacing – allowing that much more chaos and poor service to form add wrinkles on the face of travel. To that end, a current battle between the Department of Justice and the Northeast Alliance is testing the turf and scrutinizing the way airlines may able to increase market share and profits. 

Last month JetBlue Airways and American Airlines announce the addition of 11 new nonstop flights out of their Boston and New York hubs in a move to increase presence for the Northeast Alliance.

The Northeast Alliance, however, is being test in federal court as a concept that can either open up seats and lower fares or eventually dominate the market in that region. The Airline Alliances allows the companies to take advantage of each other’s networks and services and offer passengers better access to the Sunbelt. 

The JetBlue and American Airline Alliances was officially formed in 2020 as a partnership to maximize lift in the Boston and New York metro areas. The move was approve outgoing Trump administration Transportation Secretary Elaine as a system that promotes the coordination of schedules at BOS, JFK, New York LaGuardia (LGA) and later Newark Liberty International (EWR) airports. 

Airline Alliances

The latest announced route additions within the airline alliance are mostly domestic once-daily flights with the exception of Atlanta and Buffalo. Atlanta should see some eight new U.S. flights, Buffalo will see three and Greenville, two. Other spots will be Knoxville, Hyannis, Birmingham, Alabama, Columbia, and Grand Rapids. However, the expansion also reaches the international destinations of  Nassau, Vancouver, and Bermuda.

In all, for this go-round, the NEA will offer nearly 300 daily departures from New York’s John F. Kennedy Airport (JFK) and will serve 49 of the top 50 global markets in 2023. Across New York’s three major airports, the NEA will fly more than 500 daily departures next year, as well as nearly 200 daily departures from Boston. 

The NEA pact seeks to overcome obstacles historically faces by each airline in challenging other airlines’ dominance in the region. Thus, in the time since forming, the NEA describes itself as a third, full-scale competitor in New York in the form of a virtual network that closes longstanding competitive gaps. In Boston, the alliance claims to be empowering more growth by both carriers, as American expands its global product offering and JetBlue extends its low fares and high-quality product to new markets.

So far, the NEA has resulted in approximately 50 new routes out of JFK, LGA, BOS and EWR; increased frequencies on more than 130 existing routes; 90 nonstop routes with increased capacity; and 17 new international routes launched.

Not So Fast

However, the department of Justice sees it differently. The department invoked the Sherman Act last year, claiming such an airline alliance poses harm to consumers by, in fact, decreasing competition and allowing airfares to rise. 

The Justice Department filed a lawsuit in 2021 to block the partnership, arguing that just four carriers control more than 80% of domestic air travel within the U.S., adding that the alliance has presented as “an unprecedented maneuver to further consolidate the industry” easily resulting “in higher fares, fewer choices, and lower quality service if allowed to continue.” The move also clears the way for other such moves in a continuously shrinking competitive platform.

American is the world’s largest airline by market share, and claims its partnership with JetBlue helps them to compete against the dominant carriers in those regions, namely United Airlines and Delta Air Lines. 

The Justice Department made its case in in U.S. District Court before Judge Leo T. Sorokin last fall, and a ruling is expected early this year.  

“This case is straightforward,” the Justice Department wrote this month in a legal brief describing its arguments. “The NEA eliminates competition between the largest airline in the world and a disruptive competitor on flights to and from Boston and New York. It deprives the public of the benefits that the rivalry has brought to passengers for two decades.” The airline industry became heavily concentrated after a series of mergers in the 2000s and early 2010s.

American and JetBlue account for four fifths of all revenue earned from flights between Boston and Phoenix, Rochester, N.Y., Charlotte, N.C., Philadelphia and Washington National Airport, the government said and argued that an alliance could cost travelers as much as $700 million.