Department of Transportation has cleared the way for JetBlue and American Airlines to launch the proposed strategic alliance between the two carriers.

According to a statement posted on both airlines’ websites, the DOT agreed to terminate its review of the alliance “in exchange for a series of commitments to ensure the alliance delivers consumers benefits without harming competition.”

Among those commitments, according to DOT, the two carriers have agreed to give up seven pairs of slots in New York and six pairs in Washington. In the coming years, the airlines could be required to relinquish an additional 10 slot pairs at JFK if they fail to live up to certain capacity targets.

The DOT go-ahead comes despite objections from low-cost carriers Southwest and Spirit who told regulators the joint venture could keep ticket prices elevated, especially in markets like New York and Washington, DC. Both competitors had asked for an in-depth investigation of the proposal.

The strategic partnership was first announced in July as a way to enhance service options for travelers, particularly in the Northeast, and to accelerate recovery for both carriers as the travel industry emerges from the pandemic.

The alliance proposes codeshare and loyalty benefits that will give American customers access to 130 JetBlue routes from Boston and New York-area airports, while JetBlue would add 60 routes operated by American Airlines.

The two airlines say they will begin implementing key aspects of the alliance in phases on routes to and from New York (JFK, LGA and EWR) and Boston (BOS), starting in the first quarter of 2021 and phased in over the course of the year.

However the carriers say they will “refrain from certain kinds of coordination in city pair markets where they are substantial competitors to each other and there is little service from other airlines.”

Initial steps include aligning both airlines’ schedules in New York and Boston to ”give customers new flight options, with improved schedules, better connections, competitive fares and access to more domestic and international destinations.”

The airlines say the deal will enable new strategic growth opportunities, accelerate the replacement of small regional jets with larger aircraft, and expand connectivity between each carrier’s network in the Northeast.

The alliance will allow JetBlue to significantly expand its service at New York LaGuardia Airport, as well as in the other New York airports and in Boston. At the same time, American will launch new long-haul international service from New York JFK to Tel Aviv and Athens, “with even more new routes on the way.”

Later this year, members of both JetBlue’s TrueBlue and American’s AAdvantage programs will be able to enjoy reciprocal benefits, including the ability to earn and redeem points or miles on either carrier. Details about reciprocity between the loyalty programs are yet to be announced.

“Through this alliance, we are one step closer to bringing customers even more competition in the Northeast,” said Scott Laurence, head of revenue and planning at JetBlue.

“Customers who love the JetBlue experience can look forward to significant growth at LaGuardia and similarly up to 70 daily flights at Newark, as well as seamless connections onto American’s long-haul network in and out of New York and Boston,” Laurence said.

“With this alliance, American and JetBlue will operate the biggest network for our customers in the Northeast,” said Vasu Raja, American’s Chief Revenue Officer. “We are already planning to launch new international routes to Athens and Tel Aviv this summer, which are just two of many new routes we plan to launch.”

jetblue.com,  aa.com