Court Ruling Calls American Airlines' Reliance on Partners Into Question

American Airlines is appealing a court ruling breaking up its Northeast Alliance with JetBlue, which was determined to have "broke antitrust law."

The decision made by United States District Judge Leo Sorokin on May 19 calls into question American's plan to grow revenue by relying more heavily on alliance partners to transport passengers in uncompetitive markets while bulking up flights to more popular destinations.

According to Reuters, American has been relying on JetBlue in the Northeast region, leaning on Alaska Airlines on the West Coast and looking to partners like Qatar Airways in long-haul international markets, allowing the carrier to sell tickets on its partner flights and generate revenue at a fraction of the cost of operating the flights itself.

Additionally, American is seeking to gain market share in lucrative Sunbelt states such as Texas, Florida, Tennessee, Arizona and North Carolina, where population and commerce are growing, Reuters points out.

Passenger traffic to these states rebounded the quickest after the pandemic and bookings to the region continue to outpace those for overall domestic travel. Dallas, Houston, Austin, Charlotte and Phoenix are among the most in-demand.

Northwestern University law professor James Speta told Reuters that American's alliance with JetBlue in its current structure is "more likely than not" doomed. "My speculation would be that JetBlue and American would very much consider revising the Northeast Alliance," he said.

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