The US Department of Justice (DOJ) is investigating a northeastern US alliance between American Airlines (AA, Dallas/Fort Worth) and JetBlue Airways (B6, New York JFK) on competitive grounds, The Wall Street Journal reported.

While the investigation has not been made public, both airlines have implicitly acknowledged it, with American Airlines underlining in a statement that both it and JetBlue were "fully cooperating" with the DOJ.

The investigators are concerned that the alliance could lead to anticompetitive changes affecting key US northeastern hubs. Both airlines maintain that the cooperation would be beneficial to passengers.

The investigation is ongoing, and the DOJ has yet to reach any conclusions. However, the department's final ruling would be subject to overruling by the Department of Transportation (DOT), which has the final say on competition matters in the aviation industry.

The DOT approved the alliance on January 10, 2021, with the two airlines unveiling the first batch of codeshared and coordinated routes in February 2021.

However, despite the January approval, the DOT's proceedings regarding the alliance are still ongoing following a complaint by Spirit Airlines (NK, Fort Lauderdale Int'l) filed on April 1, 2021. The low-cost carrier responded to JetBlue's request for a change in traffic rights allocation concerning its services to Ecuador, alleging that the request proved collusion with American Airlines beyond the approved scope.

"The timing of JetBlue’s proposed change suggests that the two carriers are coordinating outside the scope of the alliance. On March 8, 2021, American filed a request to move its seven Dallas/Fort Worth-Quito Int'l and seven Dallas-Guayaquil frequencies to Miami Int'l such that all 42 of its Ecuador frequencies would now operate from Miami. Only two weeks later, JetBlue applied to move seven of its Fort Lauderdale Int'l-Quito frequencies to operate a double-daily between New York JFK and Guayaquil. [...] These moves raise obvious questions of either explicit or tacit coordination," Spirit Airlines indicated in a DOT filing.

The LCC alleges that even though services to Ecuador are not a part of the Northeast Alliance, they need to be taken into account together with approved slot arrangements at JFK and codeshares in the Florida-New York market. As a result, the network rejigging would give the two airlines market dominance on Ecuador routes both from Florida and New York.

"Spirit believes the Ecuador changes are part of a larger plan to control the New York-Florida market, including both the New York and South Florida markets to Ecuador," Spirit said.

According to the ch-aviation capacities module, American Airlines currently has a 51.1% market share by capacity between the US and Ecuador. JetBlue is the second-largest airline on the market with a 19.9% market share by capacity. Spirit has a modest 4.9% share and offers the fewest seats to Ecuador among all US passenger airlines serving the market.

The LCC appealed to the DOT to deny JetBlue's request for additional Ecuador frequencies and open the matter to the public for consultations. The DOT said it was "evaluating the matter".

JetBlue responded to Spirit's filing on April 12, 2021, calling for its immediate dismissal.

"The issues raised by Spirit and Eastern Airlines [whose complaint from April 1 pertains only to competitive issues on the US-Ecuador routes] are not germane to this docket, and should be dismissed entirely or, failing that, addressed elsewhere," JetBlue said.

The airline acknowledged that Spirit had been vehemently opposed to the Northeast Alliance but called the LCC's arguments "baseless". Even if the complaints are not dismissed, it underlined, they should not hold back the DOT's approval of the request concerning the Ecuador routes.

"The state of the airline industry is very much in flux right now as the recovery from the depths of the COVID-19 crisis begins. Especially where carriers must make dynamic responses to unprecedented and fluid market conditions, such requests should be promptly adjudicated," JetBlue said.