American Airlines and JetBlue had their partnership broken up by a federal district court when the Department of Justice won its anti-trust suit and JetBlue decided not to appeal, in order to focus on its acquisition of Spirit Airlines instead. That anti-trust trial is about to begin.
The two airlines stopped selling each others’ tickets. They stopped allowing customers to add their frequent flyer numbers to each others’ tickets. They stopped allowing customers to redeem their miles for each others’ flights.
This week (3) more elements of the partnership end:
- As of Sunday morning October 29, American Airlines no longer has a priority agreement to protect passengers on JetBlue during irregular operations. Now JetBlue is like any non-partner airline, where it’s very difficult to get the airline to put you on them when your flight cancels or faces an extended mechanical or crew-related delay.
- As of midnight Sunday night American Airlines will no longer pass phone calls through to JetBlue. This was helpful for those with status to get their call answered on a priority basis by American, and then have their call handed off – instead of having to start over as a general member facing long hold times.
- The bus between the American Airlines and JetBlue terminals at New York JFK will cease operating after 11 p.m. on Tuesday, October 31. This was meant to make it easier for passengers to connect mostly between JetBlue domestic flights and American Airlines international operations.
Here’s the internal memo:
Until recently, things looks reasonably bad for JetBlue’s Spirit acquisition in the courts. They would be (1) removing capacity from the market when they take seats out of Spirit planes to make them more comfortable (so higher prices), and (2) removing Spirit’s capacity entirely from the ultra-low cost carrier business model. Whereas the JetBlue-American Airlines deal promoted competition by making the two airlines together viable against Delta and United, especially in New York, JetBlue’s acquisition of Spirit really should mean less low fare competition.
However Spirit Airlines is losing money. They are parking planes and suspending hiring of pilots. JetBlue now has a legitimate case to make that they plan to grow, while Spirit doesn’t, and so this deal will mean more seat capacity and more competition, not less.
I wish American and JetBlue together litigated the anti-trust case further, because this partnership had clear consumer benefit and without it, as Scott Kirby is fond of reminding us, nearly all of the revenue growth and profit in the industry is accruing two two airlines – Delta and United. It’s sad to see American and JetBlue fully dismantled by the federal government (DOJ) after it had been agreed to by the federal government (DOT), undercutting the principle of rule of law in the process.
just think what AA could have done if it had used covid recovery to rebuild its own airline instead of trying to subcontract out its presence in the NE under illegal terms.
Gary can repeat it til the cows come home but there is no consumer benefit if the gain is delivered by illegal activity… doesn’t matter what companies or products or services are involved.
I am already seeing much lower fares on transcontinental flights now that AA and JetBlue can no longer collude and have to compete for my business.
Most valuable benefit; well worth the ones AA passengers (phone calls?) lost.
DOT may have signed off on the partnership but I don’t believe the DOJ did. Why the carriers would assume the DOJ wouldn’t care just because DOT didn’t, defies logic with the legal teams both companies have.
Tim
You’re an idiot. Aa did rebuild itself with a focus on clt and dfw. The NEA was an enabler of that
Speak from your brain instead of your lower end and you might an audience that doesn’t involve comment sections of better writers, like Gary
If you want to chat, do so with some kind of coherent thought
Maybe Spirit Airlines will go bankrupt if they don’t merge. I wonder if the federal government wants to have their assets bought in bankruptcy by Delta or United. The governments case against the merger seems corrupt.
TIm – we all know you are a Delta fanboy who spits off the word “premium” ad infinitum, but you clearly are an idiot when it comes to legal issues. Leave the anti-trust analysis to the lawyers. Yes, I know, the D. Ct. ruled against the NEA – but if you had any legal knowledge you’d know it was a poor decision at best. At worst, it was flat out wrong.
@Tim Dunn “just think what AA could have done if it had used covid recovery to rebuild its own airline instead of trying to subcontract out its presence in the NE ”
I realize that you think ‘competing with Delta is or should be illegal but with this sentence you seem to forget that New York LaGuardia and JFK airports are slot controlled – they can’t just build out in New York.
REALLY bad writing and very misleading. The way you made it sound is Spirit is parking planes because they do not want to. grow….the fact is they are parking planes because they HAVE to park Neos until parts come in. Jetblue will have to follow
wow. they’re coming out of the woodwork.
Max,
CLT and DFW are not in the Northeast.
Gary,
AA has had an abundance of opportunities for 2 decades to rebuild the NE.
Do you realize that the ENTIRE reason the DOT (not the DOJ) allowed the whole slot swapping process that AA and B6 morphed into the NEA was because AA was UNDERUTILIZING its JFK and LGA slots.
It is perfectly legal for AA and B6 to compete with Delta and vice versa. All 3 of the benefits that you highlight here could have been implemented and retained if the NEA wasn’t built around antitrust immunity which AA and B6 singularly sought in the NEA, something the DOJ has never given to any other 2 US domestic airlines – other than the ONE YEAR exception in Hawaii that you noted.
AA made yet another strategic miscalculation.
Get over your grudge that it had anything to do with Delta and accept the reality that AA is far weaker now relative to DL than it has ever been – all because of AA’s decisions.
Oh Timmy
You don’t even understand when people respond to you
“ just think what AA could have done if it had used covid recovery to rebuild its own airline”
They did. It was called paying down debt via their highest margin hubs.
You really need to chill sometimes
You just sound dumb and like you can’t read
no, Max,
AA engaged in an illegal business activity and they were told to desist and disassemble.
other carriers including DL also paid down debt but they weren’t told by the DOJ or any courts to desist from their business practices.
You’re supposed to be in AUS drinking, MAX.
Give it up. AA is a strategic failure and Gary is only regurgitating the NEA for the umpteenth time because he knows that I will wind you up, the NEA is still dead, and he gets the page clicks.
You are being used.
I am having fun with you while watching college football
@tim dunn – enough with this “illegal business activity” competing with Delta isn’t illegal.
A single district judge made an outlier decision, after the federal government (DOT) even signed off on the deal. JetBlue decided not to appeal and just focus on the Spirit acquisition, figuring that AA+B6 made B6+NK harder to defend. That’s why the Northeast Alliance ended.
50 years of legal precedent in anti-trust where the focus is consumer benefit weighed heavily towards the legality of the partnership.
Was it the most conservative thing they could have done? No, but when the federal government literally told them it was fine if they divested some slots and committed to divest more if they didn’t grow capacity through upgauging, it was more than a reasonable plan to push forward. Then the administration changed, and decided to sue to break it up anyway.
@Tim Dunn – first you said AA should have spend the pandemic building up in the Northeast, now you’re shifting to saying they should have done it 20 years ago? Doug Parker made a dumb move when he was CEO of US Airways selling his slot and gate portfolio at LaGuardia to Delta. But that’s another matter. And AA was underutilizing its slot portfolio in NYC because their size made them uncompetitive. Now, I think even that was a mistake – Vasu Raja managed network and saw money losing flights in his portfolio, he wasn’t responsible for overall revenue then so credit card uptake didn’t benefit him. A successful card portfolio needs to be relevant in the biggest spend market in the country.
Gary,
you mostly have the facts right but come to the wrong conclusion.
the facts that you miss is that it was Scott Kirby and Doug Parker that got rid of the 25% of USAir’s LGA slots and not a decision that AA made.
Those two clowns then proceeded to think they outsmarted DL by getting a total of 60% of slots at DCA – which the DOJ was was a bridge too far and required them to divest.
Delta has never controlled more than 50% of the slots at any federally slot controlled airport and DL, unlike AA and UA, has never had the government tell them to use or lose their slots because of misuse.
and yet Delta has the largest slot portfolio in the US and is the largest at 2 of the 3 slot controlled airports – LGA and JFK.
Crushing the NEA was not a one-off or arbitrary decision, Gary. Continuing to cling to that notion proves that you can’t deal w/ reality.
No 2 US airlines have ever been allowed to have antitrust immunity for domestic flights except for the brief, short experience in Hawaii which was time-limited when it was allowed.
AA could have spent the pandemic rebuilding ALL of its hubs but it frittered away its PHL hub while chasing a NYC strategy that was illegal – and they knew that when they created the NEA.
AA has a lot of potential but the Northeast is not one of the areas or regions where they will ever succeed – because they have misplayed their hand over and over and over again.
And it is DL that is set to dominate the NE as UA is forced to shrink in EWR, an airport that is completely incapable of supporting the amount of traffic that UA is pushing through it when bad weather hits – even with the schedule cuts UA is doing.
DL is the largest airline in both BOS and NYC, UA is the largest airline at NO major NE metro area but just at EWR and IAD, while AA is the largest at PHL and Washington DC.
The NEA was a massive distraction and strategic failure that has and will cost AA.
It’s dismantling was not a surprise and was not the result of any nefarious efforts by the feds.
@Tim Dunn writes, “the facts that you miss is that it was Scott Kirby and Doug Parker that got rid of the 25% of USAir’s LGA slots and not a decision that AA made.”
That’s a reaction to my writing “Doug Parker made a dumb move when he was CEO of US Airways selling his slot and gate portfolio at LaGuardia to Delta. ”
Only in your world is my stating that US Airways selling assets to Delta ‘getting facts wrong’ when you state yourself that the facts are US Airways sold assets to Delta. Go figure.
Now, your characterization of “AA could have spent the pandemic rebuilding ALL of its hubs” is off. They couldn’t. But it’s their own fault. (1) They paid too many pilots to retire early and didn’t keep the pilot training pipeline active, so they didn’t have the pilots to do this. And (2) They retired Airbus A330s, Embraer E195s, along with Boeing 757 and 767 fleets so they didn’t have the planes to do this either. Delta/United/Southwest all managed to avoid furloughing pilots, and neither United nor Southwest retired fleets.
American made strategic blunders. But that has nothing whatsoever to do with the Northeast Alliance. The JetBlue partnership gave the the scale to compete against Delta and United in New York. None of the network rebuilding would have allowed them to do this. They simply lack the slot portfolio to compete at scale in New York on their own. You can repeat all you want that this was ‘illegal’ based on the ruling of a single district court judge, but it’s truly a stretch.
@Tim – with this comment “No 2 US airlines have ever been allowed to have antitrust immunity for domestic flights” you demonstrate, again, that you do not understand antitrust law. Your statement is not the relevant standard. The test is not “for domestic” flights. Take the win – a court decided (improperly) that the NEA should be blocked. Take the win. But stop pretending you understand antitrust law. You don’t.
Gary,
I am simply noting that it was US’ decision to get rid of slots at LGA that handicapped them.
AA – well before the merger – said it wanted the FAA to eliminate slots at LGA and JFK post 9/11. The FAA relaxed slot controls, DL added flights, the FAA reinstated slot controls and all of the “new” slots that DL created were grandfathered in.
AA and DL had almost identical numbers of JFK slots pre 9/11. B6 was given an amount of slots roughly equal to each of AA and DL, creating 3 fairly equal players.
DL built its JFK portfolio ON ITS OWN, not largely from leases or purchases.
AA by its own efforts AND BY THOSE OF US, spent 20 years trying to get rid of and not use the slots it was given.
AA was not using slots early pre-covid, less than 5 years ago.
The NEA was AA and B6′ attempt to overcome their slot disadvantage to DL.
DL played by the rules and used its slots and added flights when it could, while AA and B6 both could have added flights and created more slots; AA asked the FAA to destroy slots. B6 couldn’t figure out which way was straight up.
UA lost slot controls at EWR because it didn’t comply w/ usage requirements
DL is THE ONLY ONE of the 4 big NYC carriers that has played by the slot rules and taken advantage of opportunities to grow when it could.
AA shot itself in the foot all by itself. and then it married the person that screwed it over so US mgmt could destroy AA even further.
The NEA can’t fix that mess and you shouldn’t begin to think that the government owes AA anything for their errors or punish DL because it thought more than six weeks down the road.
btw, lots of good articles this weekend. rather than anecodotes or trashing any specific carrier.
I’ll ALWAYS participate in these types of articles and respect everyone’s opinion.
OCT,
history doesn’t need interpretation.
Until the DOJ allows 2 US airlines to have antitrust immunity for domestic flights, that is THE LAW of the land.
You simply want to argue because AA got caught doing what it knew was illegal. They shouldn’t have wasted their time on the NEA but they did – and are now paying the consequences.
@Tim:
“The NEA was AA and B6′ attempt to overcome their slot disadvantage to DL.”
Wrong. The NEA was AA’s attempt to overcome its own lack of strategy. AA may be mismanaged – for instance, as Gary points out, AA looked at revenue from NY flights without considering the corresponding revenue from CCs. AA lacks vision. AA fails to earn a premium (and Tim, “earning a premium” is completely different from “being premium” – Papa John’s may earn a premium compared to Domino’s, but neither IS premium); AA’s probably isn’t lack of slots – it’s coming up with a coherent strategy for the slots it has. AA “being too small to compete” does not mean it necessarily mean it lacks slots. It is a failure to seek out and win corporate contracts (which both you and Gary have noted), among other issues.
@Tim – quick question – has DOJ allowed two airlines to merge? The answer is yes. 2 airlines can merge; they can also coordinate IF it is not anticompetitive. THAT is the law of the land. Stop pretending you know antitrust law.
And Tim, I am not arguing because “ because AA got caught doing what it knew was illegal”. As a PHL captive, I was opposed to the NEA because AA’s strategy damaged what it already had in PHL. I am arguing because you don’t understand antitrust law (and don’t know the different between earning a premium and being premium – there is a difference).
I hated the NEA. But the court’s opinion was a poorly constructed and worded decision. Just plain bad law.
@Tim – just to be clear – and hopefully shut you up – there is not one antitrust standard for airline mergers and a different one for “alliances” – the standard is the same.
and you do realize that there are a host of things that happen in a merger, not the least of which is eliminating the fences between the two companies and putting up other fences between the merged company and other companies?
AA specifically knew that antitrust immunity with a domestic competitor was not allowed but they did it anyway.
They are now paying the price for having the audacity to move forward on something that was guaranteed to be overturned.
Tim – I told you before – “take the win”. The NEA was blocked by a bad decision.
Your comment is idiotic. Moronic. What does thus even mean – putting up fences between the merged company and other companies?
“and you do realize that there are a host of things that happen in a merger, not the least of which is eliminating the fences between the two companies and putting up other fences between the merged company and other companies?”
Pure stupidity. And you still don’t understand the different meanings of premium.
At least I can admit when I’m wrong. I was wrong when I said the NEA decision would be overturned on appeal. You just change your mind. (Haneda slots.) This is what people can’t stand you.
I’m out of here. You’ll just post more drivel.
I’m sorry but I have nothing about which I need to apologize.
The NEA was flawed from the beginning and I said it.
Mergers do have limits between what companies can do with other companies and also eliminate those restrictions between a company and its merger partner, once it is approved.
If DL chooses not to bid for any HND slots, I’ll admit it – but the DOT has neither opened a route case or indicated to whom it will award the ex-DL PDX frequency.
I am taking the win on properly calling the NEA.
As long as Gary and others keep arguing about ill-gotten consumer benefits, I’ll keep stating my position.
While I understand why people liked the NEA, what they fail to understand is United’s and Delta’s position in the argument. They both, but especially Delta, FOUGHT tooth and nail, gate by gate for their positions in NYC- and paid fortunes over the years to do so. American/US Air made so many missteps and poor decisions that they essentially gave away any position they had to competitors. So it’s hard for me to agree that they should allow two of their competitors to essentially merge at these hyper competitive airports because they are weaker, when one of them is weaker because of poor management. That’s just my take.
Shut up Tim Dunn!!!
TWAviator,
well said except that DL really didn’t pay massive amounts for their slot acquisitions in NYC.
They just understood and played by the rules and had a long-term view of what it took to succeed and have executed flawlessly against 3 major competitors that have ALL made major strategic mistakes just in NYC.