American CEO Isom Defends JetBlue Alliance in Court

American Airlines CEO Robert Isom took the stand Monday in Boston during the antitrust trial that started last week against American and JetBlue’s Northeast Alliance and quickly countered assertions from a Justice Department attorney that the carriers could be viewed as a single company, according to Reuters.

“No, that’s not true,” Isom said. “We have our own gate. We have our own planes. We have our own services that make us distinct.”

He also disagreed that American didn’t have to worry about JetBlue going after its “premium customers in Boston,” according to the report, and said that both carriers would “go after all premium customers.”

JetBlue CEO Robin Hayes, the first witness on Sept. 27, also “staunchly defended” the alliance and said JetBlue did not consult with American on pricing and outside of the Northeast Alliance the carriers were “full-blooded competitors,” according to another Reuters report.

However, American chief commercial officer Vasu Raja in testimony on Friday said that “consolidation has been good for us,” according to a Bloomberg report, and that American’s former CEO and current chairman Doug Parker, who also is expected to take the stand, “ is jokingly referred to internally as the ‘godfather of consolidation.’ “

In addition, former JetBlue VP of network planning Scott Laurence, who oversaw the creation of the Northeast Alliance—and who joined Delta Air Lines for a brief stint in January, only to land at American in early March in the same title—testified that Hayes initially was skeptical about the deal, worrying that American “had nearly unlimited resources” to tilt the alliance in its favor, according to the Associated Press.

The Justice Department along with attorneys general from six states and Washington, DC, filed in September 2021 a civil antitrust suit in the District of Massachusetts to undo the American and JetBlue partnership, calling it a “de facto merger” between the carriers in Boston and New York and that it would lead to higher prices.

The airlines had announced the partnership in July 2020 as a way for each to better compete with Delta Air Lines and United Airlines and began codesharing in February 2021 after they received approval from the US Department of Transportation in January. That approval required the carriers to divest some slots at New York’s John F. Kennedy International Airport and Washington Reagan National Airport, and to not coordinate “in city pair markets where they are substantial competitors to each other and there is little service from other airlines. ”

Since the Northeast Alliance launched, American and JetBlue have continued to expand their partnership with new shared routes, especially out of New York and Boston, and with reciprocal benefits for loyalty program members. In June, American introduced its Main Select fare, initially announced as part of the Northeast Alliance since the fare is similar to JetBlue’s Blue Extra fare.

Further, JetBlue CFO Ursula Hurley in September during a Morgan Stanley conference said that the Northeast Alliance in Boston and New York “is really going to help us further catapult our business traffic.” She added that the carrier was “confident in our case” and that the alliance “brought consumer benefits to the Northeast.”

Just prior to the start of the trial, though, American filed plans to cut long-haul service between New York and Santiago, Chile, as of Jan. 4, 2023, per a report by The Points Guy. The item noted that American had planned to use its JetBlue partnership to offer “convenient one-stop options” for passengers flying to and from Santiago. American noted in a statement to TPG that the route was not meeting performance expectations.

The alliance also became a factor this year in the bidding war between JetBlue and Frontier Airlines for Spirit Airlines. Throughout most of the spring and summer, Spirit’s board of directors had rejected JetBlue’s offers, citing their belief that a deal with JetBlue would not pass regulatory approval because of the antitrust suit against the Northeast Alliance. JetBlue, however, ultimately won, and the Spirit vote on the merger is set for Oct. 19.

During the trial this week, a Justice Department attorney pressed JetBlue’s Hayes on whether competition with Spirit forced JetBlue to offer lower prices, according to Reuters. Hayes defended the acquisition, saying it would create “one of the most powerful, disruptive forces that this country has seen.”

The trial is expected to last about three weeks.

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