With American Airlines CEO Robert Isom on the witness stand, government lawyers in the anti-trust trial trying to break up his airline’s partnership with JetBlue asked the executive about JetBlue’s “Mint” product – a lie flat business class that operates on certain domestic and short haul international routes (as well as on their transatlantic routes which are not part of the partnership).
Isom explained that he had know idea what Mint was, or what it entailed, never having flown it or paid attention to it, it seems:
He's now clarified that he's aware that Mint "has a domestic first class product, I can't speak to all the amenities they include."
He clarified that he was trying to draw a distinction between domestic first class and international business class on premium domestic routes.
— David Slotnick (@David_Slotnick) October 3, 2022
"With the NEA in place you don't have to worry about JetBlue coming after American for your premium customers, right?" The DOJ argument seems to be that with Mint and the A321T, the partnership eliminates competition on premium transcon.
— David Slotnick (@David_Slotnick) October 3, 2022
It’s a bit odd for the Department of Justice to be worried about competition in the domestic lie flat business class market – that at some point in the future customers might have to pay more for beds in the sky. The focus is usually on the low cost leisure traveler, and low fares, rather than the corporate and luxury market.
However both Delta and United fly non-stop from Boston to Los Angeles. Both fly Boston to San Francisco as well, and so does Alaska. On a connecting basis, even Sun Country flies Boston – San Francisco. And if the government were concerned with competition on the route, they’d allow Air Canada to sell tickets Boston – Montreal – San Francisco (or foreign carriers to operate the route non-stop!).
JetBlue New “Mint” Business Class Seat, Credit: JetBlue
Nonetheless it is both shocking and unsurprising at the same time that Isom would be unfamiliar with the products offered by his alliance partner on routes where they cooperate, not least of which because American Airlines itself just announced that it is introducing a very similar seat on its new Airbus A321XLR aircraft when they’re delivered.
Then-CEO Doug Parker didn’t try out their new domestic product before it went into service or even in its first few months of flying. The airline did not mock up the new cabin, to test out the airline’s primary product they would be selling to customers, and the CEO didn’t feel the need to experience himself before committing to it. In fact it was flying for nearly 10 months before he acknowledged trying it. Isom, as President of the airline, did take it from Miami to New York within its first 3 months of service.
American Airlines “Oasis” Domestic Economy
Until Parker finally flew on the airline’s 737 MAX I suggested to American’s corporate communications team that the CEO should actually try the product if only to be able to say that he’d done so when asked. But according to American’s Chief Revenue Officer, the schedule – rather than the actual travel experience – is the airline’s product. That’s why it is not at all surprising that the details of what the Northeast Alliance flights are selling customers isn’t top of mind for the American Airlines CEO.
On the one hand, good to check on the competition, on the other if I am loyal to my own company I wouldn’t necessarily know that much about the competition or want to give them my money.
“if I am loyal to my own company I wouldn’t necessarily know that much about the competition or want to give them my money.”- Yeah if you’re some underling. If you’re the goshdarn CEO you absolutely have to know what the competition is doing. How else are you going to innovate or at least keep ahead of the competition if you don’t pay attention to what your threats are doing?
You think Musk doesn’t have a handle on what BMW, Mercedes, Porsche, Rivian, etc. are rolling out? That Jobs wasn’t watching Gates and vice versa? Name a decent CEO in a competitive field who didn’t pay attention to the state of the marketplace he was in.
He’s either a liar or an idiot (probably both).
Isom is totally clueless…yet another AA graduate of Doug Parker University.
At least they didn’t ask him how many slots JetBlue has at JFK lol…since he’s still working on his AA homework.
Liar, incompetent, or just lazy. Take your pick.
It’s shocking that the average reader of this blog is likely more knowledgeable
than AA management no wonder why they suck so bad
Clueless to the world
Sad
He’s the President and CEO. . .he had people to do that. Once again our government shows it’s lack of business knowledge. This will be an easy win for B6 and AA. What a waste of time and tax payer money. I would sue the government for my legal expenses once this is over.!
Robert Isom is trying to improve American Airlines after Parker destroyed a once great airline. Mr Isom should distance himself from the mess Parker left.
Other sources note in testimony that at least two AA execs noted that AA has a history of consolidating to eliminate competition which matches exactly what the DOJ said.
When execs admit they really don’t know about the product a joint venture partner carrier offers but do know that AA other execs have long championed an “eliminate competition to make it easier for us” mindset, the DOJ is a whole lot further along than some like Gary might want to believe.
Of course they are nowhere near completing all of their document presentations – they are just letting execs from both sides speak before they show what is in their hand.
As has been noted by others, B6 is delusional if they think they will get to keep the NEA as it exists today and also merge with NK minus the NK NE carveouts – which is the smallest part of the entire 3 airlines’ overlap.
Wow. Knowing your competition is an obvious job requirement, and it might be understandable if JetBlue just added Mint or if it were a foreign carrier.
Why even have a CEO? Gary should apply for the job, clearly.
Dumb “S”!
@Joe_T can you share some insights as to why you think Isom is trying to improve AA? I ask only because from my vantage point it doesn’t feel like he is trying to fix anything so I’m wondering what I’m missing.I don’t see Isom making thing worse, but I also don;t see things improving either.
Wow… First ISOM stands for “I SUPPORT OUR MECHANICS”. Now it stands for, “I Suck On Mediocrity”.
I find it absolutely pathetic that he said that… Since, you know, Judge, he’s talked about it on internal postings. Magically, the videos are taken down from jetnet.
There is not a single way in the world he does not know what about MINT is.
Someone run his ePNR and validate his B6 flying. I assure you- if he’s flown on B6, it’s in the front.
He doesn’t need to know “know”. He could very well be just flying AA, both business and coach, and be ok with it. That said, I’m not so sure about the schedule as a POS part anymore. Have you seen how much they’ve cut back on their flying schedules and how much they keep cutting and cutting. My goodness, it’s like flying Spirit Airlines on steroids!!
You gotta love the AA Brain Trust.
Ironic that tim thinks aa is some mastermind or the only c suite interested in consolidation when NW had a golden share in CO to control their merger attempts to their own interest for years and NW and DL were the first major merger to create the US3. They only couldn’t do it before they were both in bankruptcy and had to figure out their finances.
Apparently the new DOJ standard for Mergers, joint ventures, or the NEA should be a trivia competition about lie-flat offerings from competitors. Yet another great reason Tim didn’t make it far at his beloved Passport Plum HQ.
Is an airline CEO supposed to be a total airline geek and know every speck of paint on every airline livery, every line on every route map, or every minute detail of each of his or her competitors’ product offerings? Or maybe they have more important things to concern themselves with.
Before the latest round of consolidation, airlines were going bankrupt over and over again. Some even went bankrupt on multiple occasions (cough, cough, old US Airways, cough, cough). Even the world’s only “perfect” airline (according to Tim Dunn) – Delta – filed for Chapter 11 protection. I thought perfect airlines didn’t need to file for bankruptcy protection, but I digress.
A Rhetorical question: Which is preferable – six weak sisters constantly filing for Chapter 11 bankruptcy every time the economy has a minor hiccup, only to get totally bailed out by Washington via the bankruptcy process – or three stronger airlines that can survive downturns without the bankruptcy process and minimal support from Washington that can largely be refinanced and paid off?
seriously, Ghost,
he is the CEO of an airline that is on trial for an arrangement that the government said should not be allowed between two domestic airlines.
If he can’t be bothered to be properly briefed on the services that exist between the two airlines, he simply should not be in the job he has or be willing to be deposed.
this isn’t about chapter 11. It is about being knowledgeable about the most high profile products and services of a competitor that you have chosen as an antitrust immunized partner.
Your incessant need to defend such incompetence is beyond mind-blowing.
Tim talking about ghost’s need to defend incompetence incessantly. That’s rich and hilarious, Tim. “Hello? Pot? can you hear me? It’s kettle”
Julie,
first, having first right of refusal for a merger – which is essentially what the golden share was – is not the same thing as jointly managing under government blessing a portion of two airlines’ operations – which is what AA and B6 do. The golden share is not on trial, the NEA is.
second, NW is not DL. NW ceased to exist when it merged with DL which did not inherit responsibility for NW’s past decisions. DL is only responsible for what it did and does with NW from the date of the merger forward.
finally, the real issue is that you and Ghost can’t accept that AA is a business and businesses are compared to each other based on a number of metrics – some of which are common to all businesses and some of which are specific to only companies in your own industry. AA has underperformed DL for years on most metrics and AA has underperformed most of the industry on other metrics – also for years.
Don’t attack people that recognize what everyone else sees which is that when an executive takes the stand in a courtroom to defend a strategy which the company is involved in, he/she better be pretty familiar w/ it. Not being able to explain slot management and your competitor’s key products when you are sitting on the witness stand about the NEA is beyond explanation for anyone that looks at companies objectively.
you may be the
Tim,
Oh, so now we aren’t talking about mergers or joint ventures o, now we’re back to your tired talking points about other metrics. What a standard Tim reply. Go off on AA execs looking at mergers in the past, ignore NW/DL long-standing push for them then deflect deflect on to a new topic that has nothing to do with what anyone is discussing. No one said the golden share was on trial, simply noting that Delta and their NW predecessors included had a long history of pushing for and directing mergers. It certainly wasn’t something unique to AA.
I’d love to see Glen or Ed Bastian get up on a stand and be able to speak about anything aside from their latest italian suit, a Bellini, or pushing away the unions.
“NW is not DL. NW ceased to exist when it merged with DL which did not inherit responsibility for NW’s past decisions. DL is only responsible for what it did and does with NW from the date of the merger forward.”
What a stupid thing to say, Tim. The newly merged Delta was full of management and officers that moved from MSP. Richard Anderson was CEO of NW before he was CEO of DL.
You honestly put yourself into the strangest positions to contort some idiotic line of reasoning to your own view.
@Tim Dunn: “…an airline that is on trial for an arrangement that the government said should not be allowed between two domestic airlines.”
Would that be the SAME government that approved the arrangement in the first place?
Gringo,
the DOT just sent out a notice last week in regard to testimony at the NEA trial that they never gave up their right to to do something further with respect to enforcing antitrust provisions of the NEA and they did not step on the DOJ’s ability to do so either.
Julie,
I will just respond to you by quoting a Seeking Alpha story that just dropped including testimony from the Robert Isom
“American Airlines (AAL) CEO Robert Isom testified on Monday that his airline needed a partnership with JetBlue because Delta Air Lines (NYSE:DAL) had more takeoff and landing rights at New York airports, as well as fewer unionized workers.
Isom noted that Delta (DAL) has run a “nice, reliable airline” with key cost advantages over American.”
AA execs have clearly figured it out; whether you have figured it out or not is immaterial.
The difference is that DL’s business strategies aren’t on trial.
Should we be surprised by the response regarding the Mint product when the highly compensated people at the airline weren’t even aware of the valuable assets (landing slots at JFK) that they lost.
Just an opinion but perhaps AAL wouldn’t have found itself needing a partnership with JBLU had they managed their assets in the NYC area more efficiently.
Isom’s response smacks of – dare I say – good coaching from AA’s lawyers. As CEO, ultimately, he helms the strategic direction that AA undertakes in response to competition. He is going to approve/disapprove initiatives based upon the value of the information provided him by his VPs & directors.
In thinking through this, I ask a reader to consider a semi-analogy. Do you think that Robert Crandall did not know that Braniff was undercutting American at DFW when he placed that phone call to Howard Putnam in 1982?
The obvious differences – (a) A phone call that was recorded which, when submitted as evidence in the subsequent trial, (b) precluded any possible claim of plausible deniability.
In this instance, Isom claiming ignorance is the plausible deniability. I suppose we’ll eventually see what kind evidence DoJ presents to refute such assertion(s), and if it somehow provides an underpinning to DoJ’s broader case.
plausible deniability doesn’t work when AA’s CEO also told the DOJ and judge that AA could not compete with DL in NYC because DL had more slots, DL has a cost advantage, and is a “nice, reliable airline.”
AA knew exactly what it needed and was doing when it formed the NEA. It simply had no other choice so went for broke and is going to play the victim when the judge tells them that what they are doing harms consumers and is contrary to US law and practice – two US domestic carriers cannot do what AA and B6 are doing.
And the DOJ has not presented anywhere near the evidence it has that shows that AA and B6 knew it would be difficult to compete against each other so chose instead to partner in a venture that was deeper than any other two US airlines have had.