American Airlines And JetBlue Were Forced To Break Up—Passengers Say They Were Overcharged And Want Their Money Back

American Airlines and JetBlue are fighting a class action over higher fares from their Northeast Alliance partnership, more than three years after the government won its antitrust case and forced them to dismantle it. The government beat them on antitrust But they’re still dealing with a private class action The fact the government won helps the case They still have to show that their tickets were more expensive because of the partnership, though Both airlines opposed certification earlier this month, and moved to exclude the passengers’ expert witness. I covered this lawsuit in July. They’re fighting now over whether the class action gets certified – whether the different groups of customers in the lawsuit were disadvantaged, and in similar enough ways. The case is In re American Airlines/JetBlue Antitrust Litigation in the Eastern District of New York, which combines lawsuits that began in 2022. Originally the lawyers went after JetBlue and American for their flights out of both Boston and New York, but the current state of the class is direct purchasers of American and JetBlue flights to or from Boston, April 1, 2021 through July 28, 2023. The lawsuit argues that American and JetBlue coordinated schedules, decided which airline would fly particular routes, and shared revenue (which was the gift of the partnership) and that reduced their incentive to compete with each other for business. As a result of losing a competitor in the market, they say they faced higher fares, and passengers want their excess airfare back plus treble damages. Fares rose as travel recovered from the pandemic as airlines were short of pilots (too many were encouraged to retire and they weren’t hiring new ones) and planes (too many of those got retired). Inflation was rampant. But those fares went up everywhere, not just Boston. And Delta was growing in Boston. American left the Boston – LaGuardia shuttle market, leaving JetBlue and Delta (and United in and out of Newark). But it’s also a market that was heavy business travel when business travel wasn’t coming back so quickly in the Northeast. There was probably too much capacity on the route to begin with! Sill, a court already found the conduct illegal. I think the alliance pretty clearly benefited consumers overall. It created a strong third competitor to United and Delta in New York. They were required to add seats to the market under an agreement with the Department of Transportation that approved the agreement (under the Trump administration, which didn’t preclude the Biden Justice Department from breaking it up) That actually meant lower fares overall because of increased supply. A given route’s fare might have gone up, but that happens from shifting capacity anyway and the plaintiffs should have to show not just higher fares after American or JetBlue left the market but an increase overall in their shared markets greater than other markets in the region at the time as a specific result of illegal conduct. The funny thing is that simultaneously, a more modest relationship, along the lines of American’s West Coast Alliance with Alaska Airlines would have been considered legal – the judge in the antitrust case pointed to that as exactly what they could have done. And an actual merger, had one been approved, would have put route decisions inside a single company – and therefore exempt from antitrust under Copperweld. It’s the middle ground between the two that created the legal problem. I disagreed with breaking up the alliance when the decision came down. Neither JetBlue nor American on their own had the scale to compete effectively with United and Delta in New York. JetBlue now partners with… United. They aren’t carving up routes but together they’re even bigger. The biggest restraint on competition in New York comes from the federal government itself. JFK and LaGuardia slots are government-granted subsidies that give incumbents the right to take off and land, and exclude new competition. A government that cares about competition and lowering fares should expand supply, which starts with greater air traffic control throughput – there are decades of failures to modernize air traffic control technology and procedures – along with staffing shortages that restrict how much flying the system can handle. And it starts with better regulation of infrastructure projects. The National Environmental Policy Act turns out to hinder all development, even green energy projects. It creates veto points in the process, slows down building, and allows interests to extract resources and drive up costs. We need more runways and more gates at congested airports but that’s very difficult to do. Breaking up American and JetBlue doesn’t fix any of that. The Biden DOJ pursued the airlines who were adding capacity which would have driven down fares overall, while leaving the barriers to adding competing service in place. JetBlue compounded its problems by continuing to chase Spirit after losing the alliance. It had agreed to buy Spirit before the antitrust loss. But the strongest rationale was acquiring planes and pilots so it could expand into the opportunities American made available, while sustaining its other markets. Once that opportunity disappeared, the acquisition made much less sense. By January 2024 I was arguing it was time to walk away. JetBlue needed to fix its operation and business. Instead, it kept spending money and management attention pursuing a deal whose best strategic justification had been taken away. And this lawsuit is costing it even more. Topics on this page