A federal judge ruled that a partnership between JetBlue and American Airlines (American), known as the Northeast Alliance (NEA), constitutes an “unreasonable restraint on trade” in violation of the Sherman Act, as noted in a recent Law360 article. Senior Consultant to CRA, Professor Robert Town, submitted multiple expert reports and testified on behalf of the Justice Department in the trial that took place in the fall of 2022. Sean Taylor and Jarrod Welch led a team of CRA consultants in supporting Professor Town and providing economic expertise and analyses to the Justice Department’s Antitrust Division.
Under the NEA, which began in 2021, JetBlue and American coordinate on flights to and from four major airports in the Northeast: Boston Logan International Airport, John F. Kennedy International Airport, LaGuardia Airport, and Newark Liberty International Airport. Areas of coordination between JetBlue and American include setting flight schedules, selling seats offered by the other airline on certain routes, sharing revenues on those routes, and sharing access to airport gates.
The Justice Department’s lawsuit, filed in September 2021, alleged that the NEA was effectively a merger that would harm consumers by reducing competition for air travel in the Northeast. JetBlue and American, on the other hand, argued that the NEA allowed them to compete more successfully against rival airlines Delta and United.
Professor Town and the CRA team analyzed the impact of past consolidation in the airline industry and evaluated the defendants’ economic experts’ claims that the NEA would generate and has generated consumer benefits.
The Court found that the NEA, “substantially diminishes competition in the domestic market for air travel,” and that it “does so by combining the Boston and New York operations of two airlines that are among the most significant competitors in that region.”
Under the Court’s order, JetBlue and American have 30 days to discontinue the NEA.
