JetBlue faces real challenges. The government stopped their American Airlines partnership, and dashed their hopes of acquiring Spirit Airlines. They lose money across the Atlantic and in California, and their strong position in Boston has been eroded. Their operations have been at the bottom of the industry.
During the American Airlines Investor Day on Monday afternoon, an analyst asked whether American would be open to re-starting its partnership with JetBlue. When the government sued to break up the deal, the judge in the case argued that it’s carving up who flies where that was an anti-trust violation. The judge’s decision was clear that a partnership along the lines of how American and Alaska Airlines work together in their ‘West Coast Alliance’ would have been legal.
CEO Robert Isom reminded that they’re actually appealing the decision that struck down the alliance. The judge agreed to imposition of conditions on how they enter new partnerships going forward.
We’re appealing the NEA decision because we don’t necessarily agree with the judge’s ruling. We thought it proved out that customers actually benefited…we want to address that from a precedent perspective.
But Isom also said that “we’ll see how things play out and if there’s an opportunity down the road we’ll take it.”
Vasu Raja backed off that a little but, suggesting that they don’t need one as such.
- circumstances have changed since they entered into their JetBlue agreement
- American had declining AAdvantage enrollment, but that turned around and has continued to grow even without the JetBlue partnership
- New York City customers aren’t flying day trips in short haul markets anymore, and American services trips to Oklahoma and Austin well.
However he said that “maybe there’s something else,” besides the originally-conceived partnership, and their decision-making framework is, “how do we create most value for the New York-originating customer?” They’re “open to whatever makes things better for our customers,” he said.
I don’t think Raja’s skepticism is right, from a New York customer perspective. American doesn’t fly to as many markets – even beyond ‘day trip markets’ – that customers in New York want to go. They don’t fly from New York to Fort Lauderdale or West Palm Beach. They don’t fly to Denver, Salt Lake City, Portland, or Seattle. They don’t fly to Atlanta, New Orleans or Orlando. Internationally they don’t fly to Munich, Frankfurt, Zurich, Geneva, Amsterdam, or Istanbul. Customers are better off with the options and benefits that a JetBlue partnership provided.
AA should have never tried to do the NEA.
They should do an AA-AS style arrangement with B6. The judge that tossed the NEA said the same thing.
AA has to figure out how to deal w/ all of its slots but they still could exchange them – but they can’t give B6 exclusive access to them.
@Tim Dunn – “AA should have never tried to do the NEA.”
Disagree. You forget that *DOT* approved the arrangement explicitly. Then administrations changed, and DOJ decided to sue to block it. Moreover, it was hardly the obvious outcome for the case itself based on precedent.
Obviously it didn’t work out, but from where they were at the time this was launched it seemed to be reasonably likely to work out actually.
@Tim Dunn,
If anything, the NEA, while flawed, and an arrangement that the DoJ under Biden was never going to allow to continue, provided valuable insights to B6’s operation and what routes work and don’t work. You’re forgetting that a prior administration approved it and at the time, in the middle of a pandemic, when the US taxpayer had already funded the industry with $50 billion in backstopping, the NEA had a decent chance to work out.
Should Carl Icahn expand his control over B6 and proceed with an asset sale, American Airlines is probably first in line there to get a large slice of the JFK assets. Delta probably will not. Some of its airline partners might.
The slot trading was perhaps questionable, but it might also have been a more efficient use of them.
My aunt is in some ways a pretty stereotypical New Yorker.
She flies a fair amount for leisure, but not enough that she would earn status from flying alone, so she likes being able to easily earn status by mixing flights and card spend. She also frequently flies to London, and, like many New Yorkers, she has family that moved to North Carolina.
American ticks a lot of those boxes—the most London service, plenty of flying to NC, a straightforward path to status from card spend—but at the end of the day, it’s JetBlue that wins her business because, like many stereotypical New Yorkers, she wants to fly from New York to PBI (and EWR is not New York).
Fixing that—even with just a new B6 partnership—could turn her from being a TrueBlue customer to an AAdvantage one. But American does not seem to realize that flying to the places people want to go is table stakes in New York—and that if you don’t get that business, you don’t get the co-brand spend from the wealthy consumers in the nation’s largest market, either.
jetBlue is failing right before our eyes and it grasping for opportunities.
They try so hard to “be different”.
Obviously it’s not working.
Horrible working conditions and degrading treatment of employees.
I wonder what the FA union is thinking about all of this?!
I see comments from Gary and others saying the previous administration approved it. Yes, the DOT signed off on it but it was silly for both AA and B6 to not also seek the approval of the DOJ. They needed both agencies to sign off on the NEA. Perhaps they thought if the DOT was good with it that the DOJ wouldn’t mind either. It would seem neither did their due diligence in that regard.
Ahhh Vasu the visionary chimes in yet again and puts his foot in his mouth.It’s easy to say advantage enrollment has turned around when, for starters, they literally leveraged the program to get loans during the scamdemic. Then it’s easy to say you have an increase in membership when one has to literally have an advantage number to do anything of substance with the airline from a customer perspective, frequent flier or not.
shoeguy,
your first paragraph was fine.
2 and 3 are not.
AA is not getting anything if B6 fails. Period. Neither is UA or DL and probably not WN.
Slots can be traded but the problem was the joint venture – which the DOT does not allow between 2 domestic airlines.
The fact that AA only flies JFK-MIA (both hubs) and does not fly to FLL PBI shows how pathetic they are in competition. I’m shocked to find out they don’t fly to MCO. I guess AA thinks new yorkers dont like disneyworld
@Tim Dunn,
You don’t know history. If you did, you’d understand that TWA’s assets were sold off piecemeal for years, until it folded into the arms of American Airlines. The same will happen to JetBlue. The assets will be sold off piecemeal, and American will be first in line to buy them (specifically JFK slots and maybe some planes too).
We’re not talking about a JV. AA, B6 are past that.
American’s executives also made the point that there was no urgent need to partner with JetBlue, and that market conditions had changed in New York, especially in the area of AAdvantage memberships. Most companies are open to arrangements that they feel can improve their competitive positions. So this story is a bit of an exercise in meaningless hyperbole.
@TimDunn has a good point. AA is the smallest major in NY. If B6 were to fail or Icahn starts selling slots, parts etc. AA could have the biggest windfall, if AA has the foresight to grab it. I’m sure that the WNs, F9s and NKs of the world would bid for the LGA stuff and probably win them.
Why doesn’t AA just add the 3 Florida flights that NY residents seem to be asking for? They have the slots, they have the planes, I think they have the crew. Add NYC to FLL/PBI/MCO and see what happens. I’ve been seeing these blind spots for years as an AA customer based in DFW. Why are they ignoring this?
@BenG FLL/PBI/MCO are not high yield routes. In fact FLL and MCO are in the top 5 cheapest airports to fly in/out of. I can assure you that if AA can grab 200 of the ~330 slots that B6 will probably sell off under Icahn (the most valuable things in the B6 portfolio) they would love to open some slots to other high yield airports like DTW/ATL/SFO or even smaller ones like MSN/MCI/CMH. Or where ever they can leverage those corporate contracts.
TWA and Pan Am imploded in a different era.
As much as people want to think that merger policy is dramatically different under different administrations, the reality is that there are fairly consistent policies.
The world is very different with 4 megacarriers and just as few mega grocers than was the case decades ago.
AA will not be given the chance to bid on any B6 assets. Period. Full stop.
The DOT will auction off the slots to low cost carriers in order to pry the NYC market even further open before they allow any of the big 3 to gain anything in the NE. We can argue til the cows come home but the wet dreams about B6′ failure and AA and UA fixing their NYC strategic failures are vastly overblown.
Another article where Tim Dunn knows everything?! Say it ain’t so….
2024 will be a good year with the change in administration that’s for sure.
Umm news flash: We don’t change administrations in even years.
AA should look at their slot allocations, especially out of JFK. They blow a slot pair flying to Worchester and have load factors around 40%. Why not move that flight to PHL where pax can connect to way more cities? Just saw their flight with 5 passengers the other day! They fly TWO-THREE flights per day from JFK to CLE, CMH, CVG, IND, and PIT all with low loads, sometimes in the teens on certain flights even on busy days. Basically they burn 1/6th of their slots on these cities above. Yet they don’t fly JFK to STL which is a strong top-20 business market and the largest metro area without nonstop to JFK….could funnel a lot of premium international pax thru JFK. AA should make the best of their NYC slots first, then at least form an Alaska-type partnership with JetBlue (B6). How could this hurt AA if they set it up right? The judge essentially gave them the go-ahead to do it! And if AA fills in their obvious holes in domestic out of JFK but focuses on long haul out of JFK, no slot coordination is needed. B6 literally can’t fly to Rome, Zurich, Frankfurt, Athens, Buenos Aires, Sao Paulo, etc from either NYC or Boston. AA isn’t even using all their NYC slots so they could definitely boost what they have and partner with B6 without coordinating schedules and become a real player in NYC and BOS without burning millions in legal fees defending a partnership that was already essentially given a green light.
I would welcome a recommencement of the AA frequent flyer partnership with JetBlue, but I wouldn’t welcome JetBlue becoming pat of Oneworld.
And if AA and JetBlue get into a frequent flyer program tie-in again and make it fly more easily and better priced with ticketed itineraries involving both carriers at JFK, that would be good for me —but only if they also get an airside transit bus going at JFK.
Doesn’t JFK have more domestic routes on JetBlue than on American Airlines? Maybe that is just what AA needs to get back into the JFK game and not be the NYC area has-been.
The continued incompetence from this guy blows my mind. Also all the sheep (bahhhh) commenting on here. Whenever I want a good laugh from people who know nothing about the airline industry I come here and read the article and comments. Get back to work in your cubicles sheep. Leave the aviation topics and airline discussions to people who are actually in the industry and not “experts in the field of miles, points, and frequent business travel”. Keep it a hobby and don’t give up your day jobs that pay your bills.
“They blow a slot pair flying to Worchester and have load factors around 40%. Why not move that flight to PHL where pax can connect to way more cities? Just saw their flight with 5 passengers the other day! They fly TWO-THREE flights per day from JFK to CLE, CMH, CVG, IND, and PIT all with low loads, sometimes in the teens on certain flights even on busy days.”
Low loads don’t necessarily mean revenue failure. AA’s entire JFK system yield is $0.16. Their ORH yield is $0.53. CLE, CMH, CVG, IND, PIT range from $0.26 to $0.48. All rank in the top 13% of JFK yield markets.
I get what you’re saying though.
Where does the writer gets his sources? How does he know where jetblue bleeds money or the conditions of Icahn’s 2 board seats?
@Charlie Where can I see those yield numbers you referenced? They’re very interesting.