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American Airlines exec defends JetBlue deal at antitrust trial

Six days in, the government is still struggling to prove that the alliance is harming consumers.

BOSTON (CN) — Pushing back against claims that his company’s joint venture with JetBlue violates antitrust laws, a top American Airlines executive insisted Thursday that, far from limiting competition, it has allowed American to finally offer a legitimate challenge to Delta and United’s longtime domination of the New York and Boston markets.

“We built a new hub!” exclaimed Vasu Raja, the company’s chief commercial officer, on the sixth day of trial. “Usually a new hub means billions of dollars, turmoil, consolidation and bankruptcy,” he continued. “We did it with this one deal.

“Our loyalty program will soon be No. 1 in New York!” Raja bragged with boyish glee. “No one thought American could do this.”

The U.S. Justice Department wants to halt the joint venture that allows the two carriers to coordinate schedules, share revenue and offer reciprocal frequent-flyer benefits. The deal was approved by the Transportation Department after a six-month review and took effect in February 2021.

Raja said the result has been more flights and options for consumers, noting that total daily seats for the carriers in the two markets have grown from 16,925 to 20,296, and that numerous additional domestic destinations have been added.

Plus, Raja said, optimizing schedules so that JetBlue customers can transfer to American international flights has for the first time made numerous overseas routes profitable. “It gives us opportunities in the Middle East and India that we never had,” he said.

Before the tie-up, American flew nonstop to 31 of the top 50 destinations out of New York, Raja explained. Today the company flies to 47 and is working on the last three.

Raja was asked about the government’s contention that the time slots at JFK Airport in New York that the Transportation Department had forced it to give up as part of the deal weren’t actually valuable because they were in the early morning and evening hours and thus required planes to be held at the airport overnight.

“Seriously?” Raja asked incredulously. “We’ll take them back if they don’t want them!”

Raja said those slots are extremely valuable because people want to fly out of JFK first thing in the morning to the West Coast and the Caribbean. He also said that maintenance is usually performed overnight, and New York is the ideal place to do it because it has the largest number of trained technicians.

Although the key issue at trial is whether the deal harms consumers, Raja noted that it had helped American’s pilots and flight attendants. “There are more jobs and people get paid more,” he said.

Raja came across as straightforward and engaging. Justice Department lawyer Bonny Sweeney grilled him, picking away at some minor points but appearing to make little headway. Once or twice she seemed to abandon a line of inquiry because she couldn’t find the correct exhibit.

The government’s strategy since the start of trial has been to call airline executives and try to get them to admit that the joint venture is anti-competitive, but the approach so far has given company officials a platform to expound on the deal’s benefits for the public without offering any proof that it has resulted in fewer flights, more limited options or higher fares for consumers.

U.S. District Judge Leo Sorokin hasn’t tipped his hand but today he appeared increasingly warm toward the defense. After Sweeney ended her questioning, Sorokin asked Raja about the details of the revenue-sharing arrangement, which led to a jovial 15-minute conversation in which the two bantered like old school chums.

At one point Sweeney introduced a private text message in which Raja had responded to a colleague by writing, “No shit.” It was presumably designed to embarrass Raja, but Sorokin responded with a hearty laugh. “If I’d known that that would get such a good response,” Raja joked, “I’d have used colorful language more often.”

At another point Sweeney introduced a chart and American’s lawyer, Daniel Wall, complained that it should have been provided to the defense team ahead of time. “Noted,” Sorokin told Wall. “But I’m not worried about your ability to respond.”

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