Northeast Alliance turmoil as JetBlue won’t appeal end of pact, but American will

The Northeast Alliance has been thrown into question once more.

JetBlue said Wednesday that it would not appeal a recent antitrust ruling by the federal District Court in Massachusetts against its partnership with American Airlines and begin the process of unwinding a complex integration that has been in place for more than two years.

The airline said it would instead focus on an upcoming antitrust suit over its planned merger with low-cost Spirit Airlines.

American Airlines, on the other hand, said that it would plan to file an appeal separately. It was not immediately clear if JetBlue intended to stick with the alliance if American's appeal is successful.

Nor was it clear what such a split legal strategy would mean for passengers in the interim as JetBlue and American continue to sell and operate flights under the alliance, pending a final injunction which is yet to be issued by the court. The airlines are still honoring benefits, including earning and using miles, across their two frequent flyer programs.

The specifics of the injunction are expected to be determined following a hearing on July 26, which would impact the nature of American's appeal. Unless a stay of the initial ruling is issued by the Circuit Court hearing the appeal, the two airlines would have to begin unwinding the alliance beginning 21 days following the final injunction being issued.

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In a statement to TPG, an American Airlines spokesperson said that the airline would not seek a stay, but would instead seek to have its appeal fast-tracked.

"In light of JetBlue's decision, American will not seek a stay of the District Court's injunction, but we will seek an expedited appeal," the airline said. "The importance of the legal issues presented and the burdens of the restrictions on our business should easily justify an accelerated appeal."

Since the decision was passed down in May, both airlines have expressed disagreement with the court's finding that the alliance stifled competition, a sentiment they repeated Wednesday.

"We strongly disagree with the court’s ruling against the NEA and stand behind the procompetitive impact of the alliance," JetBlue said in a statement, noting that it would focus on fighting the Justice Department's suit against the merger with Spirit.

"As it relates to the Spirit combination, terminating the NEA renders the U.S. Department of Justice’s (DOJ) concerns about our partnership with a legacy carrier entirely moot," JetBlue said.

The appeals process can take months or longer, and it was not clear what that would mean if a stay of the District Court ruling is not issued.

American and JetBlue have argued that the partnership is pro-competitive because it allows them to offer stronger competition against Delta Air Lines and United Airlines — which dominate the Northeast market — than either airline could do alone. While JetBlue has a strong presence in the Northeast, it remains relatively small and has less of a presence elsewhere in the country.

Although American Airlines remains large, its New York presence has shrunk significantly since the early 2000s, and it can't significantly add service due to slot restrictions in New York.