Assessing the impacts of northeast alliance between American airlines and JetBlue airways

Abstract

This paper investigates the impacts of Northeast Alliance (NEA) between American Airlines and JetBlue Airways on market concentration and airfares on routes to and from the four pertinent airports in Boston and New York regions. Using panel data covering quarterly domestic flight schedules and airfares for 11 U.S. airlines during the 2019–2021 period, we apply difference-in-difference method and find evidence for positive and significant NEA effect on market concentration on routes out of BOS, and negative and significant effect on routes out of EWR, but no significant effect for routes out of JFK and LGA. The overall NEA effects, including all four airports, are not significant. Furthermore, our airfare estimation results indicate that NEA has led to higher airfares on routes out of BOS, JFK and LGA, but not on routes out of EWR. These findings are valuable to supplement the recent antitrust investigation by the U.S. Department of Justice of this alliance.