Insider Video: Why JetBlue Might Not Buy Spirit After All—a Court Will Decide

hi I'm James Shilling law and I'm here with a familiar face uh Bill McGee who's the senior fellow for Aviation and travel at the American economic Liberties project well why do we have Bill on uh this morning uh well today uh allegedly and we're doing this granted a day earlier uh is the day when the Department of Justice is is going to trial against to try to prevent the merger of Jet Blue and spirit so Bill is actually up there to go see the trial in his in his role as senior fellow uh for the American economic Liberties project this is a huge thing for them and actually a huge thing for aviation in this country and we wanted to get his take uh on the uh on the whole deal and what was going on it's been a while I mean it's been a few months since the this lawsuit was originally filed and uh you know everybody's acting like this is going to go through but we'll have we'll talk to Bill about that and what's going to happen and you're going to find out about that and more on Insider travel report well Bill first of all good to see you you're you're actually up in your hotel room waiting to go waiting to go into into trial I guess we it's we're actually talking on Sunday night but uh you're going to be down in and around there on Monday talking to people and then uh Tuesday hopefully unless it gets delayed again this trial is finally going to get started and is a trial right yeah that's right yeah good to see you James as always um I'm in Boston it has been postponed a few times the judge had had to postpone it due to another case but we're set to uh to start up on Tuesday hopefully um and what ex what exactly is this trial just I I sort of defined it there but but tell us what is what is exactly Happening Here sure so for the first time in a very long time the Department of Justice is uh suing two Airlines to uh prevent a merger and uh those two Airlines of course are JetBlue and spirit and it's being held in the federal courthouse here in Boston and it's worth noting that this exact same Courthouse this time last year in October and November of last year uh there was also a lawsuit filed by the doj and in that case it was JetBlue and American that was not a merger that was the Northeast Alliance you made yeah I was going to talk to you about that one we'll talk about that a little later because I'm kind of curious whether is this the same court and the same judge it's the same court but a different judge okay that's what I wanted to find out about now why why does the department Justice really want to prevent this merger who is it saying he's being harmed and and in fact this is what your organization also is saying being harmed but who is going to get harmed by this merger consumers uh entire cities and regions of the country and labor and that's sort of the the list that we always see when there's Airline consolidation um we can get into the nitty-gritty on the specifics with spirit and Jeet blue but I think to step back for a moment we really need to look at this moment in time we are at a place we have never been in the in the airline industry I know that sounds like I'm you know crying uh panic and and maybe getting hyperbolic it's it's just a fact you go back and you research it and you see that going back more than a hundred years before World War I when the first tickets were sold in 1914 um we have never had this level of concentration and so few Airlines talking scheduled passenger Airlines we now have 12 we had 10 up until two years ago and we haded Breeze and aell um we have 12 airlines in the United States for comparison's sake in the mid1 1980s there were more than 80 schedule passenger in United States right um when you talk about major carriers um we remember not not ancient history but going back into the late 80s and early 90s when there were 13 15 major carriers in the United States today we have the big four and American Delta United and Southwest control 80% of the market right is a level of concentration we have simply never had at no point in the 20th century before the regulated era during the regulated era or in the deregulated era did we have four airlines that all had 20 or 25% of market share and you know we're in oligopoly and I also want to point out I mentioned Breeze and aello they started up in 2021 a lot of people don't realize we just went through the longest period in American history without a new entrance carrier we went all the way from from 2007 when uh Virgin America came on the scene where's Virgin America now oh that's right it's not here anymore due to a merger with Alaska right we went 14 years from 2007 to 2021 without a single new entr Airline that's pretty amazing yeah it really is and it is a direct a direct violation of what the deregulation act in 1978 promised to do which was to open up the you know the gates to um to uh new entrance and more competition and we have less competition and so before we you know we talk about spirit and Jeet blue which I'm happy to do I think it's important to point out that the context of where we are now we we are at a time now where a lot of people are complaining about the airline industry and I would argue that um consolidation is a big part of it people don't always connect those dots but for us we have the awful service that we've seen in in recent years the the the the withholding of of refunds the the cancel flights the the uh you know the the lack of reliability the lack of Civility all of it a lot of it has to do with in my view the fact that we have so little competition and some places in the country are much much worse than others right now uh Jet Blue has been kind of acting like this is a done deal uh it's been making payments to Spirit shareholders as per I guess the contract of the merger because it is the acquirer uh and and what happens if if the deal doesn't go through first of all and why is is it why is it doing things like that why is it acting Spirit not so much but um Jeet blue definitely has been acting like this is a done deal and forget about this this court case yeah well you let's be clear Jeff blue is the aggressor here right they're the they're the one that courted Spirit not the other way around right and um you know you you raise a good point because I see comments like that a lot too where it's like well when our merger goes through and I'm always reading it and saying out loud and talking to myself and saying you mean if not when right right um but on the other hand I guess in a weird way I understand what JetBlue is is saying because historically over the last 20 or 30 years the Department of Justice has basically had a huge rubber stamp and approved merger after merger after merger so the airline industry was in a mode where it was like they said they wanted to do it they could pretty much guarantee they could do it this is a different doj James I can't stress it enough this department of justice is very different than anything I've seen in my entire time in the industry and you know I've been around a while uh I started working in the airlines in 1985 so we're talking you know 38 years and you know that in my in my last role as a as an adviser to uh consumer reports for more than 20 years I testified numerous times against mergers in the house and in the Senate Continental Uh u United American US Airways Northwest Delta we you know we either file comments or I testified in person and we lost every time right every single time okay and sometimes there were some concessions and it was all window dressing the doj just got out a huge rubber stamp and the dot was silent well in 2023 I think a lot of people in the industry may not realize this we have a different a different regime in place now is much more aggressive not just with Airlines as you know in all kinds of sectors but this is the first time I've seen the doj be so uh proactive for consumers in trying to block a merger and it's worth noting the dot has weighed in and and the dot has virtually been silent for for decades on mergers um the day that the doj filed the suit back in the spring that very same day secretary Buddha judge at the dot went on TV and he said that the do was opposed to this merger too they're taking a back seat to the doj so the do we'll see how the trial goes but both of these departments have come out against it it's you know I know I sound like I'm I'm you know uh getting hyperbolic but the fact is this is unprecedented to have this level of opposition so we're we're in a different era and I also want to point out when I say these things it's really not political because you know when you start talking about 20 30 40 years you're talking about multiple administrations and both parties it's not as if oh this was Trump or this was Obama no it this it's going back to the to the Reagan years you know right right now let's let's look at it from Jeet bl's point of view and what they've been saying what what is blue contend are going to be the benefits of this transaction I know for a fact that some people who uh some flyers who are not crazy about Spirit you know I I think Spirit actually probably has gotten a lot better over the past few years but it has a a somewhat uh not so great reputation and so some consumers say well if JetBlue takes over it's going to be the JetBlue service that a lot of people do like including me uh they they have pretty good service uh and so we figure that that will transition although I sometimes wonder how quickly and easily they're going to be able to dig all of the spirit Fleet and and make it turn it into all of JetBlue but what what are the what are the benefits that JetBlue says uh are of of its merger with h Spirit yeah I think the fact is and I've analyzed this pretty closely and I have for for over a year now um JetBlue's promises are false I'm being as blunt as I can be um JetBlue is saying that they want to grow larger so that they can provide an Al alternative to the big guys to the to the to the big four well the fact is that is not what they are going to be doing if they swallow up Spirit okay jet Blue's cost structure is so much higher than it was we both remember when they launched in 2000 at JFK and um you know they were a breath of fresh air to an extent and they did have a a a lower cost uh model and a lower Fair model in many cases and um you know they were they were offering an alternative the fact is now you know that cost structure has bloated over the years as happens with Airlines with labor with you know look at look at where the places where Jet Blue flies this is not the root map of an ultra lowcost carrier you know that just saw a press release over the weekend they're adding more cities in Europe they're in absolutely you know we we've been following them they have have moved to Europe and are mult offering multiple cities now and they're all over the US and and uh right so this this is not this is not a lowf fair alternative and and the way that I position it is rather than trying to fight the big four what JetBlue is trying to do is expand the oligopoly and become the big five five yeah well they keep they keep talking about that and that's and I think yeah I'm sorry I just gonna say you know let's go back to that that trial last year the Northeast Alliance to me it's it's saying two very different things at once to say well we want to merge with spirit and be this funky you know lowcost alternative okay on paper that sounds good but in reality what were they also doing they were they had it wasn't a merger but they had a de facto merger through this marketing alliance with American now which is it I mean if I was one of the attorneys for the doj and I was you know cross-examining a JetBlue executive this week I would say just who is it that you want to be because you're saying two very different things are you a big guy or are you a spunky you know alternative to the big guys well I think they have made it clear the alliance with American meant they were working with American not against it they're not here to prevent an alternative they'll swallow up the largest Ultra lowcost carrier in the country with Spirit that's what spirit is and spirit will disappear overnight virtually you know as these things go with with mergers in terms of their Fair structure and let's not remember you know in recently there was the process of um filing papers for this hearing and in so doing uh it came to light in media reports that inadvertently someone on the Jet Blue Team um revealed internal memo that stated the exact opposite of what JetBlue has been saying publicly that they're trying to keep the fairs low in fact an internal memo that was made public from an air JetBlue from the JetBlue side said that fairs are going to go up on Spirit rootes by about 40 per. that's even higher than the estimates okay maybe not all Roots but some routs they were estimating up to 40% to be clear well okay so they are making the case for the doj and for folks like me who have been saying this all along you are not going to swallow up spirit and then have spirit's cost structure and fair structure you're just not no um you know now I'm happy to talk about Spirit too I don't know if you want to go there well spirit Spirit has been um you know one of the things that Spirit really hasn't been saying much publicly about this where that was you know sort of taking the lead because of course Spirit was all set to merge with Frontier right exactly and and that's where this all this whole story starts there and I don't think we can talk about spirit and Jet Blue without first talking about spirit and Frontier right I mean here's here's how it all plays out last year more than more than 18 months ago spirit and Frontier announced a merger right two genuine ultra low cost carriers I know we have a lot of terminology in this industry ultra low cost low cost you know Legacy Airlines there a lot of different models but there's no question that spirit and Frontier are in a different class in terms of fairs than Jeet blue is that's not up for debate that's just you know that's just that's accepted nobody has called um Jet Blue an ultra lowcost carrier they're not they offer service you know with with um more amenities and you know cabin amenities and you know international service like we were talking about Frontier and spirit offer dirt low fairs you know and and offer a much different product and I'm happy to about that product but well that product is more you know pay as you go and and you had to pay almost one of the challenges I think for both carriers from my experience was that you know I didn't really want to I want I I'm a one price kind of guy and you can't get that in Airlines anymore but um you know I wanted to have I knew with with spirit and with Frontier I'd be paying for the seat I'd be paying for my baggage I'd be paying to get on the plane almost uh you know wasn't what I paid initially might not be the end all fair so no exactly you're exactly right and you know I'm happy to expand on that with the spirit thing but I you know again just to just to be clear here spirit and Frontier announced a merger last year and Jeet blue woke up saw this and panicked I mean that's really what we're talking about here JetBlue which was already you know in this alliance with American and had its own plans for where it was going suddenly saw that if spirit and Frontier merged they would they would Zoom all the way up to being the fifth largest carrier in America right and then Alaska and then and then JetBlue and JetBlue would be falling further in the size rankings and Size Matters to these guys and you know market share matters you and I over the years have heard dozens if not hundreds of Airline Executives say well we're not focused on market share we're focused on profitability sorry that's bull they always care about market share and so uh you know basically Jet Blue broke up the frontier marriage he did very you know and just let's remember I mean there's plenty of media reports you don't have to take my word for you can go back and Google it there were all these statements from Spirit and Frontier putting down Jeet blue saying oh no no no we don't want to merge with them no that's not a good deal Jeet blue just kept sweetening the pot to the point where it was like well they couldn't say no so Frontier dropped out Jeff blue stepped in uh but look let's talk about the ultra low cost model spirit is a very problematic Airline you know that for years wearing my consumer Advocate hat that I have been critical of spirit so have many others I'm Not Alone by any means it's documented you know everything that I'm saying here James for the most part this is an opinion you can document it you pull up the Department of Transportation monthly rankings and you see the you know all of the US carriers that are ranked from two months previously for their ontime performance cancel flights consumer complaints sandal baggage spirit is usually at the bottom or right near the bottom and it has been for years we all know they have the worst seats in the industry 28 inch seat pitch the leg room is just it's not only uncomfortable it's unhealthy and it's unsafe during an emergency evacuation right I and many others have been criticizing Spirit but we you know I'm saying two things at once and I don't think that that is problematic I think it's fair to say two things at once a spirit is a problematic Airline we'd like to see them improve we'd like to see the seats be better we'd like to see as you pointed out rightly more transparency with all these fees we'd like to see a lot of things we'd like to see them improve their service right but B we don't want to see them go away because they do bring in the low fairs to the markets and you know you and I worked together back in the 1990s and I was thinking about it the other day when we worked at a trade magazine travel agent and I was writing about the airlines I did a story here's I'm going to bring a name up from the past kiwi International Airlines remember them you remember them carrier they were based at Newark Airport and I think you were the editor that assigned this story to me if I'm if I remember correctly this is Circa 1993 or so right and I was looking at kiwi's uh operation they flew out of Newark and Newark as we know is part of the greater New York area even though the long gone mayor LaGuardia was upset about that um you know in airport parlament it's part of New York Newark is and they flew from Newark to Midway Airport in Chicago while American and United both have hubs in uh in O'Hare so they were flying basically hour between uh like LaGuardia and and uh O'Hare different airports same markets and I went in and looked at the prices and I was shocked this was 30 years ago kiwi I think had four flights a day and let's say it was 10:00 a.m and noon and 4m and 800m on those hours American United fairs dropped by hundreds of dollars and then an hour later they were back up hundreds of dollars right that explains what's still in effect now 30 years later the ultra lowcost carriers come in they force the big guys to lower their fairs and when they're not there their fairs go back up it's as simple as that it's not more complicated than that and how do we know it's still happening the Department of Justice excuse me the Department of Transportation uh every quarter puts out an an airfare report right and again it's you know it's data that's a couple months old but it's very reliable and it shows you that the lowest fairs in the country are in markets where there's Spirit Frontier Allegiance aello Breeze carriers like that sometimes Southwest sometimes Jeff blue not as much as it used to be and the highest fairs in the country are roots that are dominated American Delta United period and that's it so that phenomenon from 30 years ago is still happening so why are we at American economic Liberties project opposed to this merger one of the big reasons is fairs because spirit is going to disappear I've already said on the record I'm not trying to pretend spirit is a better carrier than it is we want to see see Spirit be a better carrier right but there's no question Spirit brings low fairs to markets and this is the point that I think a lot of people Miss I was talking to a friend of mine recently and uh you know he was asking me what I was doing I was saying I was going to Boston he said oh Spirit he said I would never fly Spirit a lot of people have that sentiment right you know they're terrible I wouldn't fly them I said okay that's your right and he said um you know I don't really care he said I don't care if they go bankrupt I don't care if they merge what do I care I'm never goingon to fly them and I said let me ask you something you live in the New York area but you have a home in Florida right he said yeah I saidh how often do you go there he said about four or five times a year I said you better care about Spirit then yeah I said okay absolutely because Spirit flies and and other Ultra lowc cost carriers you look at a map of Florida and it is inundated with the ultra lowc cost service I mean they're all flying there I you know when I lived in Connecticut I flew both a V and Breeze to Florida you know right and so you have this situation where people like my friend they benefit from spirit's presence without ever getting on board a spirit airplane and when I explained it to him he said oh okay I get it now you know and I said you don't want to see Spirit merge and disappear because you'll be paying more to go to Fort Lauderdale on Delta or United or American it's that simple and so um I think people have to understand the ultra lowcost carriers it's not about market share spirit is trying to make it about market share and I think I won't say it's a false argument it's relevant but it's not the most relevant point to say well we don't have the market share of American you okay well that's true you you don't you're not that big but on the roots where Spirit flies they have a huge impact and I I went in and did a deep dive recently I spent a lot of hours looking at Spirits root map and I saw dozens of roots where in in big cities by the way like Chicago ohare and and uh and in Detroit where Spirit has a huge presence 19 uh nonstops out of Detroit I looked at the competitors and in many cases it's spirit and United or spirit and American or spirit and United and American well let's take a wild guess if Spirit goes away and that's what will happen if it's you know merged with um Jet Blue what do you think America United are gonna do the fairs on those Ro they're gonna rise them they're goingon to be rising absolutely and that's what we've seen with every merger ever and and there's no way that Jeet blue is going to maintain Spirit complete root map that that no Airline ever does after a merger they'll be they'll be reducing service you know ing certain routes reducing number of you know flight frequencies and fairs are going to go up so you know those are the reasons we're opposed to this this is not good there's been too much consolidation and we've got to stop the bleeding in this industry yeah and so so in you're obviously higher fairs is one of the damages that would occur in this case but also service to certain communities I would assume as well right yes absolutely and and I've been doing a lot of research uh aside from the this merger um in the last couple of months American economic literac project has been working on a lot of research we're getting ready to to reveal some of that soon and I would certainly hope I get an invitation from you to come and talk about it a little bit more abely the time comes but um we've been working on uh an issue that we call Regional inequality we didn't coin the term others call it that too but we've been speaking to members of Congress and we are really getting their attention because I think when you talk about the airline industry and you talk about Regional inequality there's a sort of uh misconception that you're speaking uh basically of small and Rural communities only that's a big part of it don't get me wrong okay there are there are places in this country entire States we've gone through and looked at it state by state and there are states in this country Montana Idaho North Dakota South Dakota they don't have low low Ultra lowcost carriers they don't have lowc cost carriers they don't have hubs and you know they have a much lesser product they have they have trouble getting service you know since deregulation they don't have the roots that they used to have they have to basically go to Hubs and then on from there and they're paying through the nose right and you know they're mostly served by Regional partners of the airlines right American Eagle and you know Delta and United their connection partners and so that's that's a part of it no question but we've gone in and and done a little bit of a deeper dive and we've done a lot of research on cities that are nobody would call small and nobody would call Rural we're talking St Louis Pittsburgh Cincinnati Cleveland what do they all have in common they have all lost major Airline hubs due to mergers right right and you know I sat there and I testified time after time as I mentioned and many others did too and we sat there and we said you know after these mergers they're going to be closing hubs they're going to be reducing flight frequencies not because we were so brilliant or we had a crystal ball it was it was clear I mean that's why you merge you know American wasn't going to acquire tw's Hub in St Louis and operate hubs in Chicago St Louis and Dallas look at a map of the United States draw a ruler between Chicago Dallas and St Louis and you see they're a couple hundred miles apart in a straight line virtually no way are they going to run all three of those hubs so they shut the Hub in St Louis right well I get it from if I was an airline executive I get it okay I get it I mean like I understand they're running a business and they want to run it as profitably as they can do but when you go back to the pre-regulated era which was supposed to be so awful and the more I research it I realized not at all made a lot of sense a city like St Louis would not have the dir of service that it has now would not have you know so few non-stops the effects that this has on these big communities so we're speaking to members of Congress from locations that you know have uh have these these former hubs and when you lose a hub uh we don't even know the full economic impact I can't give you a dollar amount but I do know that you know cities like St Louis and Cleveland they have lost entire corporations have picked up and move because they're like well they they we don't have daily nonstops we're not going to have our sales staff you know connecting in Dallas and Chicago all all day you know and so they move somewhere else and so we're saying we need to look at the harms of deregulation and the harms of all this consolidation and now it's different model here I mean I can hear the the you know folks saying okay fine but that's the big guys that's not spirit and Jeff blue right but it is a different model but yet some ways it's not I understand it's not a hub and spoke in a traditional sense but they have what they call Focus cities all the small guys have Focus cities Southwest invented the term they have focused cities as well technically you know you and I can get wonky and talk about you know buying a ticket from a to c and connecting in B and the contact of carriage it's not technically a hub and spoke operation but many people fly Southwest on two back-to-back tickets you have different rights as a consumer on two back-to-back tickets but still you know people will take Southwest from Baltimore to Dallas and then Dallas to San Diego and okay but it's not a hub and spoke well these focused cities you know Spirit has seven or eight of them so does Jet Blue so does Frontier they all have Focus cities Southwest has many and focus city is another way of saying that just that that they are focused on that City and they have a ton of flights out of there well if I was you know reliant on spirit for service and for non-stops and for low fairs I'd be really worried if I lived in Detroit right now uh as I said they have 19 non-stop routs out of Detroit they have a bunch of non-stop routes I think it's uh 11 uh don't hold me on that one but it's it's quite a few out of Chicago O'Hare and so you know these are Big markets we're not talking about you know little spoke cities and when they leave fairs are going to go up and the number of flight frequencies is going to go down no absolutely now um is there any way that you your group or even for consumers if JetBlue gave up more of the assets of spirit that it is going to be acquiring in fact it's already says it's giving up or selling certain assets I believe in LaGuardia I think in Boston as well uh uh is there a way to make this merger happen that you don't think that would would it would be okay that uh but it doesn't doesn't sound like it from what you're saying to me but but is there a way to reduce the amount of what they're buying uh so that it's more palatable I'm sorry for shaking my head while you're still talking but okay can answer is no and no and no right um I'm not I'm not getting KY with you I'm giving you a straight answer no and I'll tell you why and and and and I'll explain it and I think we're being very fair here um when I first got to American economic Liberties project last year about 18 months ago in the spring of 2022 the very first thing I did for them they reached out to me and they said would I write help them write comments to file with the Department of Justice and the Federal Trade Commission on mergers in all Industries while I was doing the airlines of course other my colleagues were doing the other sectors and I wrote comments for them and I explained that what we need in this country right now is a moratorium on airline murgers that's why I used the term before stop the bleeding this is this is an industry that is broken and needs to be fixed and the solution is not to allow more consolidation right and so what we said and I'm very happy about this we do have some good news here what we said in early 22 as 2022 was we need to have an accounting of all the harmful effects of all the merges that have been approved because as I said I sat there in Congress I sat right next to Executives from United and continental and American was and they you know they were saying well we hope this is going to be great and it's going to be good for labor and good for consumers and good for cities and all of this well we know it hasn't been in many cases some places benefit of course I'm not trying to trying to uh not be fully you know transparent about this some places will benefit many places will not and so you know if you live in one of those cities that has lost a hub due to a merger you have not benefited you don't even have to fly you might have lost your job because of it you know right and so um what we said was we have not even had an accounting of the harmful effects that we've already seen yeah no one in the government not the government accountability office not the Department of Transportation Inspector General not the Department of Justice no major investigation has been done to say okay what were the promises with all these mergers and then what was the reality how did it hurt labor I mean labor look you know we have seen not tens of thousands but hundreds of thousands of layoffs in the airline industry over the last 20 years it's been you know it's been decimated and so much Outsourcing you know we've talked about that of course Outsourcing of aircraft maintenance overseas to El Salvador to China it's it's you know how however you want to look at it whether it's the effects on cities and communities or whether it's entire regions or on consumers or on you know on labor so we said last year look first we need to to categorize you know the the harms here let's catalog them and um I'm very happy to say that you know as we know the FAA reauthorization act has been dragging on in Congress but there is pending um we did get um some of the language that we recommended it's in there and we hope it will make it all the way through the Senate right to have the government accountability office have the GAO that works for Congress have them do a major study to say okay well this is what American and US Airway said was going to happen and this is what happened and you know so in the meantime we're saying no enough of those days of saying well we'll give you some concessions we'll give you some slots and we'll put another rubber stamp we're saying no stop the bleeding there should be a moratorium on all mergers this is a bad merger and and I know I I keep hearing it every time I I speak to um a reporter I'll see a comment underneath the article where I'm quoted as saying you know that we're in opposition to this merger well this isn't like the big guys in some ways it's worse because the big guys they were all offering High fairs so United and Continental didn't take any low fairs out of the market neither did American and US Airways right these guys will yeah so absolutely now let's go back to the earlier comment uh you you mentioned and we knew happened last year when the Department of Justice Su sued in the same federal court not the same judge as you said to prevent what they call the socalled Northeast Alliance between American and Jet Blue which was ironic because uh JetBlue at one point was promoting the fact of this Alliance and at the same time when they started uh their their deal to try to get uh uh spirit they were saying the E almost like the evil big four and yet you're saying wait a minute you're part of the big four because you got your Northeast Alliance so that was interesting uh we always thought that was an interesting thing and I quite frankly thought the Northeast Alliance was not all that it was cracked up to be I often had problems not knowing which the terminal I was going to uh if I was American or Jet Blue I didn't know what and and the synergies of that that Alliance never were bore fruit and yet it was struck down uh when the justice department ued and while Jet Blue didn't said it wasn't going to proceed an American for a while said oh we we'll try to keep will'll object to that we may appeal that's sort of Gone Away what are the chances because of that because of the same court uh we're going to see a similar result here where the Jet Blue will not be able to make it its acquisition of Spirit Well we hope the chances are very high and um you know and that's that's that's what we hope to see come out of this but um you raise a great point because uh I'm not an attorney but if I was and if I was working for the Department of Justice I think I would you know and I'm sure they have this is a very smart Department of Justice these days I'm sure they are combing through all of the statements that were made this time last year in the very same Courthouse okay right where Jet Blue was making the case for the American Alliance they are saying two different things here you know we look at corporations as corporations if we looked at corporations as people Jeff blue right now I think would need an intervention I think was a person it was your friend you say listen let's go out and you know let's go let's have some coffee and talk you know what's going on with you you're in love with American but you're also in love with Spirit they you know they have nothing in common what is where are you going what you know are you having an identity crisis I mean I'm kidding around to an extent but I'm not it's like you know how on the one hand can a corporation say we want to align with American Airlines we want to offer you know a superior product and we want to have you know all the things that come with being a full service Airline first class service and lounges and international connections and all that stuff and we also want to be with the airline that will charge you for a carry-on bag or will charge you you know for a seat assignment and we'll give you a 28 inch seat pitch you know so your knees are in your chest like well which is it you know what what what do you want to be so when I when I hear this that you know that jet blue is trying to fight the you know the oligopoly it's like by merging with them practically no it's like they want to be they want to be part of the club too right exactly and so to me you know it is not JetBlue versus the big four this is about JetBlue expanding the big four into the big five absolutely no which will no doubt be much worse for Americans and now instead of saying well the big four have 80% of the market will be saying the Big Five have 87% of the market and that's not going to be good now um let's say things work out the way that uh uh your group wants it to see wants to see that the merger is prevented it and so you have Jet Blue Back separate and spirit separate what happens to both those carriers as we go forward it's an excellent question and I you know I wonder do they have plan B's do they you know has Jet Blue gotten to the point where all their eggs are in this basket and it's all about the merger or bust because that would not be good you know they should be worried you know here I am giving advice to Airline Executives like to listen to me but I mean you know uh I I my view Jeff blue should be worried about you know putting out the best product they can and expanding but to just you know mergers are the easy way out and unfortunately the government allowed it for decades right it was like well we've got to get bigger so we'll just do you know and mergers are messy don't get me wrong I'm not saying they're easy but they're easier than you know than than growing from within in some ways you know and you know when I testified against all those murders as I pointed out in Congress it was you know a little bit of my person history and you know I'm the youngest in a large family right I'm the youngest of 11 and I mastered this argument by the time I was a teenager of saying well you let them do it so you have to let me do it right I want to stay out over the weekend or I want to go out late or I want to spend an overnight or something and I would point to my older siblings you know and my parents who were like old and tired were like yeah whatever you know um well that argument can work for teenagers okay yeah right but it shouldn't work for companies and I sat there in Congress and like you know I just was shocked that each of the successive mergers they would point to the last one and they they literally say that like a teenager that you know the United well you let Delta Northwest do it so you got to let us and then American and US Airways came along and said well you let them so you got to let us that's right that's hardly reason for the Department of Justice to you know act on behalf of the American people as they did in those days like I said this is a different doj and um you know I think they're doing the right thing but spirit and JetBlue need to improve their service internally and and that's how you grow they we we as I said we need to have a moratorium on consolidation consolidation is harmful and no one is going to be able to convince us that merging is going to be good for consumers it's not yeah well they seem to be jet blow on its own is growing internationally which is a good thing uh spirit seems to be adding Roots last time saw uh their results that they just came out they're not doing too bad uh spirit right grown in market share in recent years right I mean there's still of course much smaller than the big guys but they they have steadily grown so that they are now the the largest Ultra lowcost carrier and that's a big part of you know our opposition here is saying you take Spirit out of the market and let's be blunt that's what happens when you merge spirit is gone you know and with it the spirit fares okay um hopefully the 28 in seat pitch too we want to see that go away but not through a mer but you know spirit will be gone and then the fairs are going to go up yeah well actually recently I see a lot of news coming out of Frontier they seem to have survived there would be a merger uh that didn't go through with spirit and they seem to be doing just fine right exactly and so you know there are there are troubling signs for some of the the smaller carriers at times because you know it's it's tougher to be a smaller carrier particularly like during coid and you know with when you have these crisis um they don't have the you know the sort of uh cash flow and resources that the larger guys have but um one of the things we're trying to come up with at economic Liberties are some ideas on resiliency for the industry so that we're not always going crisis to crisis and then going to Congress and asking the taxpayers to bail them out right and so these are Big Picture problems that we're trying to tackle but the the the suggestion that mergers are the answer they're not right no it doesn't it seems to be absolutely the case now um we obviously go out to about 127,000 travel advisers the folks that you used to cover and write about uh uh is there anything else you want to tell them about how this affects them and obviously you've talked about how it affects their clients but how does it affect uh travel advisers well I think they know much better than I do how consolidation harms that sector of the industry too whether you're talking on the corporate travel side you know and as you know I used to write for trade magazines on that side and also you know of course on the uh on the retail side you know Leisure side with travel agents um the the less competition they have the harder it is for them right I mean I you know a big part of my role when I was at business travel news in the 1990s was talking to travel managers about well how are you playing off you know Continental versus US Airways or how are you playing off Northwest versus America West I'm using names that don't exist anymore right why because of mergers right and that was a big part of it right that you had some leverage I mean you're negotiating you know you have leverage if if if Airline a is not doing right by you or by your your your your employees or by your clients then you start talking to Airline B well what is consolidation do it it removes options from the table right and so uh you know I haven't um you know worked as a journalist on that side of the business in in many years but if I were now I think those are the questions I'd be asking them as how do you deal with this when suddenly you go from you know 15 major carriers to to 12 to 10 to eight and now we have basically four and Southwest is sort of a hybrid and you know but in terms of the big you know the big six they're the big three now you know so yeah you're right consolidation now just on a timing question the trial starts we hope today as this appears today uh how long is it expected to go for is any estimate well it it's uh it's been slotted for four weeks minimum but I I'll point out that last year um I did not come to Boston I watched it it was live streamed right the Northeast Alliance trial and that went two months it was expected a month and it went two months it started in early October and wrapped up around Thanksgiving um and I want to point out there's another growing problem and that has to do with um public access to these trials you know these corporations are asking for stuff to be off the Record and for it not to be covered and uh American economic abilities project we are a th% opposed to this and so I will point out last year one of the reasons I didn't come to Boston for that trial was I and many others were live streaming and I had it on virtually every day I'm not saying I was watching it eight hours a day but I would you know see who was testifying and I was in and out all the time and I had easy access and I would look at the names of others who were on there and I saw major reporters for major you know coverage of the airline industry they were on there as well all the time well the the the reason I'm here in Boston among other things is um this will not be live streamed really this one um that the the court said that that was a coid error uh policy and so it will not be live streamed so it's going to be tougher to have coverage and there are some things going on that my colleagues at American economic Liberties project are dealing with in other trials where there are motions to have stuff sealed important critical aspects of Trials so we have another fight going on here which is look this is all in the public interest these are public corporations they're affecting consumers and we need to know what's going on and but Jet Blue has taken some steps to try and have some stuff uh you know uh concealed and we're all for complete trans transparency on all of this so I'll be talking about that too um I'm on uh Twitter SLX some people refer to one as the others we all know what I'm talking about uh as William J McGee you can find me pretty easily and um I'm going to be live tweeting today Tuesday Wednesday all day long both days um and responding to you know to what's going on in real time and um but I'll continue to do it but it's going to be more challenging when I'm not in Boston I may you know want it'll be it'll be harder for you to do since you can't really get access to it no um now where can our viewers go out to find out more about this case obviously go to your your your exer what do you call it now a Twitter or an X told that you still call it TW even though it's called X you're not calling it Xing but go to go to your feed there and obviously you can go obviously to the uh URL for American Liberties right right and you'll see you'll see that we're putting statements out about that as well and um we have put out several uh documents that uh Express what our talking points are on why this is harmful in much greater detail than I've provided you tonight you know I mean specific numbers for cities and things like that okay what's what's the URL again for that American uh that is economic Liberties American economic if you if you search for American economic Liberties project you'll find it okay great well Bill great to talk with you again um very big case up there to uh that is going to have a great effect on our Airline Service uh if it goes forward either way um and uh really I mean I'd like a lot of the carriers involved I mean I I fly JetBlue a lot I fly the bigger carriers um but uh you know we've also started covering all the new wave with aell and uh you know Breeze in fact I just earlier this earlier this month we interviewed Dave neilan uh so that was an interesting interview so what he's trying to do as well Circle the guy that that founded dead blue absolutely no it's amazing circle now well you know you know the story anybody who wants the old Airline guys never go away they just start new Airlines right or they try put it that way and then you know we mentioned kiwi before kiwi got its name from The New Zealand bird because it's the only bird that cannot fly yeah and um kiwi was founded by people that had been laid off from Eastern American and excuse me pan and TWA and so they were they were grounded birds from PanAm and TWA and they founded kiwi so old stories we're looking at here so oh no absolutely and I remember back when you and I were at travel agent magazine together and we were and PanAm and TWA disappeared overnight and our publisher there's no way panm and TWA are gonna go away and we're like it's gonna happen what are you talking about well look my I mean my first job post Airlines was working with you at travel agent magazine and I had just come from PanAm so you know I don't know if you're aware of this but um my Airline career seven-year Airline career it ended through a merger because M shuttle was acquired by Delta right and it became the Delta shuttle and I was married at the time and I was told um you're one of the lucky ones we're going to offer you a similar position as an operations manager for the shuttle and I said great I'll continue to work at LaGuardia wonderful and they said no you'll work out of our office in Atlanta and I said well when do you need me to be there and they said uh Monday and this was on a Thursday oh my God and I said I'm married we have a home we have you know my my wife is in school um you know uh I can't move to Atlanta in 96 hours and that ended my Airline career so I I'm intimately familiar with these issues I mean there was that tremendous wave of mergers and bankruptcies in the 80s and 90s you know um but we don't seem to learn much from it and and part that drives me crazy is why aren't we going back and analyzing this and so that's why we're happy that we want to see this go GAO provision get into the FAA reauthorization act look first thing is let's measure the harm so we can say this is how much it cost the people of Pittsburgh or the people of Cleveland or the people of Cincinnati St Louis so we can measure the harms of all this consolidation now we can start talking about how to fix it absolutely well Bill great to speak with you and we will definitely speak with you maybe at when we find the results of this trial to see what happens then and then we'll speak to you again when you have all this research and data about the effect of Airline mergers in the past and uh you know we can talk some more in depth about that but again always informative and always a a really great analysis of what's going on with this merger and I've been wait I didn't even know until I got the note that the trial was starting this Tuesday and uh yeah yeah so that's why we're you know we're out there uh trying to let people know about it and let people know that I'm there and you know let the media know if anyone wants to to to reach out to me I'm happy to do that as well while I'm here in Boston or when I get back home but um we're just you know letting people know that this is not a small merger people look at it well it's not as big as you know United and Continental that that's not accurate actually in some ways it's even more harmful the more consolidation we get the worse it gets and when you start taking when you start picking off the smaller players that are offering the lower fairs that affects everybody you know continental United maybe only affected you if you lived in cities where you're relying on them here you don't even have as I said you don't even have to fly Spirit but the spirit goes away you're going to pay for it absolutely well Bill hopefully we'll see you soon good luck up there back when we when we have a verdict and we we really hope that's the verdict that we want okay we we'll be back in touch then and uh good luck up there hopefully you don't have to spend too much time in Boston but it sounds like you're gonna have to commute a little bit back and forth yeah I have a feeling I'll be coming back again okay good to see you Bill thank you and I'm James shillinglaw for Insider travel report

Channel: Insider Travel Report

Views: 1,800

Keywords: Alan Fine, James Shillinglaw, Insider Travel Report, travel agent, travel advisor

Id: EFBC3mlQYsA

Length: 49min 52sec (2992 seconds)

Published: Tue Oct 31 2023