American Defends its Alliance with JetBlue at Antitrust Trial
Antitrust trials usually don’t have the same gravitas as other court proceedings, but the Department of Justice’s lawsuit against the American Airlines/JetBlue Northeast Alliance produced some newsworthy moments this week.
The trial began on Tuesday in federal court in Boston.
The DOJ and six individual states filed suit against American and Jet/Blue, claiming the Alliance creates a monopoly, reduced competition, and would lead to higher airfares.
But one American executive took the stand on Friday to dispute that.
“Consolidation has been good for us,” Vasu Raja, American’s chief commercial officer, said according to Bloomberg News. “What consolidation looks like in the future, we don’t know.”
Ostensibly, the Alliance was to create better offerings for travelers going out of major hubs in the Northeast, particularly in Boston and New York, where JetBlue has a huge presence. But the government claims it borders on a monopoly, and U.S. Senator Elizabeth Warren (D-Mass.) sent a letter to Department of Transportation Secretary Pete Buttigieg urging him to block the JetBlue/Spirit merger as a result.
That merger also created a bit if irony in the trial as well.
When JetBlue expressed its interest – even threatening a hostile takeover – in merging with Spirit, it was Spirit’s upper management that expressed disinterest in JetBlue and preferred to merge with Frontier. The reason? Executives at Spirit were hesitant because they didn’t think a merger with JetBlue would receive regulatory approval in the wake of the DOJ lawsuit over the Northeast Alliance.
Money won out, of course, and Spirit shareholders opted to go with JetBlue. But those feelings apparently are still out there, as evidenced by the testimony of John Kirby, Spirit’s vice president of network planning.
“JetBlue is in essence now a feeder airline for American and will do what American wants it to do,” Kirby testified. “American is giving them hundreds of millions of dollars in slots and access to the world’s largest frequent flyer program.”