Even as Spirit Airlines prepares to be acquired by JetBlue Airways, it is insisting that the alliance between JetBlue and American Airlines undermines competition and is bad for consumers.
Spirit Airlines Executive Says JetBlue-American Partnership Adversely Impacts Competition
Testifying in court, Spirit’s Vice President of Network Planning, John Kirby, argued that the Northeast Alliance between American and JetBlue provides a blueprint for other carriers and for the same collusion in other regions, with the net result being higher prices and diminished competition for consumers.
“I view this as opening Pandora’s box.”
Kirby read an email to the court that he had sent Spirit executives after the Northeast Alliance was revealed, arguing that the deal “reeks of antitrust collusion and backroom deals,” specifically concerning the use of slots at New York La Guardia (LGA) and Kennedy (JFK) airports.
He further explained,
“JetBlue is in essence now a feeder airline for American and will do what American wants it to do. American is giving them hundreds of millions of dollars in slots and access to the world’s largest frequent flyer program.”
Neither JetBlue nor American commented on Kirby’s testimony, but the irony was heavy considering Spirit has agreed to be acquired by JetBlue for $3.8 billion. Even so, Kirby added, “It would take a massive amount of divestitures” in order for the alliance to have a net positive effect on consumers.
In a preview of what may be in store for JetBlue, a Justice Department lawyer testified on Thursday that the proposed acquisition of Spirit by JetBlue would allow American “to co-opt two disruptive competitors for the price of one.”
JetBlue has disputed that characterization, arguing the Northeast Alliance and its acquisition of Spirit Airlines are both about creating a larger airline that can better compete with Delta Air Lines and United Airlines. It further argues that average fares have not increased during the 18 months in which the Northeast Alliance has already been in effect.
While Spirit Airlines publicly says that it welcomes the acquisition by JetBlue, I cannot help but to think that Kirby’s testimony shows a lack of trust and confidence in the deal internally. It foreshadows the uphill battle JetBlue faces as it fights for both the Northeast Alliance and the acquisition of Spirit, which puts into jeopardy both efforts.