The CEO of American Airlines said Monday that his airline needed a partnership with JetBlue because Delta Air Lines had become stronger through a merger before American, had more takeoff and landing rights at New York airports and fewer unionized workers.
Robert Isom also admitted that Delta has “run a nice, reliable airline” and enjoys some cost advantages over American.
The Justice Department and six states are suing American and JetBlue in federal court over their regional partnership in the Northeast, which government lawyers are calling a de facto merger. Isom defended the agreement, which has been in place for more than a year, as did JetBlue CEO Robin Hayes last week during a trial in federal court in Boston.
Hayes, however, once had second thoughts about the deal, called the Northeast Alliance, or NEA, because of American’s size advantage over JetBlue.
Laurence, who later jumped to American after a month-long job at Delta, testified that Hayes was concerned that American “had almost unlimited resources” to tilt the alliance in his favor. Despite Hayes’ concerns, American and JetBlue announced their deal six months after Laurence’s text message.
The Justice Department is trying to convince US District Judge Leo Sorokin to scrap the partnership, under which American and JetBlue work together to set schedules and share revenue, though they are not allowed to collaborate on prices. Lawyers for the government argue that the deal limits competition and will increase rates.
American and JetBlue say the government has no evidence the deal hurts consumers. Instead, they say it will help travelers by creating a stronger competitor for Delta and United in New York and Boston.
American and JetBlue say they couldn’t grow in New York on their own because they couldn’t get enough new takeoff and landing times, called slots, at congested airports. JetBlue resorted to unusual tactics, including red-eye flights, and tried to get slots from other airlines.
“How was that?” JetBlue’s attorney, Richard Schwed, asked Laurence.
“It went wrong,” the executive replied. “I don’t think our competitors were interested in seeing us get more access.”
The trial is expected to last another week, but it could be weeks or months before Sorokin rules: there is no jury.