The Northeast Alliance of American Airlines and JetBlue, launched last January with approval from the Department of Transportation has now run into turbulence from the Department of Justice, which has sued to dismantle the arrangement on grounds it illegally restricts airline competition.
The two airlines quickly fired back, arguing that the arrangement that allows the two airlines a degree of coordination in the New York and Boston markets is, in fact, pro-competitive, allowing them to gain a greater share against the two airlines, Delta and United, that dominate the Northeast.
The plan basically allows JetBlue to offer its passengers a variety of connections to American Airlines long-haul markets, while American's long-haul passengers gain access to a variety of cities American doesn't serve or has limited service to. Under the approved plan, they are able to coordinates schedules at Boston and the three NYC airports, but cannot coordinate on pricing. The two are also offering more codeshares, and reciprocal loyalty benefits.
In a statement issued Tuesday, AA CEO Doug Parker said that “Before the alliance, Delta and United dominated the New York City market. The NEA has created a third, full-scale competitor in New York and is empowering more growth in Boston. Ironically, the Department of Justice’s lawsuit seeks to take away consumer choice and inhibit competition, not encourage it.”
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