Tag Archives for jetblue.
Investment banking firm T.D. Cowen says that with the airline not appealing the anti-trust ruling against their American Airlines partnership, an anti-trust settlement allowing their Spirit Airlines acquisition to move forward may be in the offing after Labor Day or at least in advance of a trial set to begin in October.
JetBlue’s deal to buy Spirit Airlines isn’t just being challenged by the government. There’s a civil suit as well, because why not piggy back on government opposition for a payday? Only lawyers made an oops in redactions – and as a result exposed “internal company estimates of plans to hike fares on Spirit planes by as much as 40%.” And this could make JetBlue’s defense of the deal against government anti-trust charges that much harder.
American Airlines has just pulled the trigger on one more element of unwinding the partnership. The airline no longer has access to seat maps for JetBlue flights. They can’t assign seats for customers who booked through them, and have to tell customers to contact JetBlue for seat assignments.
The court wasn’t looking to impose a ‘bait and switch’. The airlines initially argued for a long wind-down of the partnership, to which the government objected. The position of American and JetBlue was, our IT systems aren’t set up to base benefits and mileage-earning on date of ticket purchase rather than date flown. So they couldn’t just grandfather old tickets.
That wasn’t flying as a reason to prolong the partnership. Instead what the two airlines came up with eliminating the ability to add each others’ frequent flyer account numbers to reservations.
During their second quarter earnings call, Chief Commercial Officer Vasu Raja explained why they believe they’ll still succeed in New York, without their alliance with JetBlue.
American Airlines internal reference materials show that they’ve begun the wind-down process for the Northeast Alliance.
American Airlines and JetBlue basically asked the judge to do what the judge suggested would have been permissible: codeshare and partner through their frequent flyer programs. That helps retain some competitiveness in the New York market, attracting customers away from the biggest players Delta and United.
The government though wants the partnership itself fully terminated, not only the parts that were found to be anti-competitive.
The judge’s decision, rather than considering whether consumers would benefit overall, looked at individual markets and saw fare increases – when fares were rising everywhere due to inflation, supply chain issues and strong demand. The judge discounted expert witnesses for the airlines because they were working with airline data while giving weight to government experts. And the judge argued that the combination was per se illegal, since it reduced competitors, rather than looking at its effects to see more actual competition.
The Department of Justice successfully sued in District Court to block American Airlines and JetBlue from continuing to cooperate in their ‘Northeast Alliance’ where they divvied up which carrier flew to which city, and shared revenue.
The judge’s decision cites some pretty interesting coordination over pricing that happens in the airline industry prior to and outside of this alliance. Competitors talking about pricing, and in particular how to raise prices, is forbidden, and yet they seem to do it in plain sight without actually saying “let’s do the crime” so that they can get away with it.
On Friday a federal judge rules that the American Airlines-JetBlue partnership violates anti-trust laws, since they go beyond frequent flyer reciprocity and divvy up which airline flies to a given destination and share revenue.
Most of the coverage of the ruling says that the partnership is over as a result of the judge’s ruling. As a matter of law that’s wrong – there’s plenty of avenue to appeal and drag this out for a long time. But maybe what kills the deal will be JetBlue?
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
