American Airlines appealed the antitrust ruling against its ‘Northeast Alliance’ with JetBlue to the Supreme Court this week.
Meanwhile, JetBlue CEO Joanna Geraghty appeared on the Airlines Confidential podcast this week along with airline President Marty St. George. Host Scott McCartney asked about the airline’s partnership plans, and Geraghty waxed poetic about the Northeast Alliance with American Airlines.
Since the M&A path with Spirit didn’t work, and we’ve got some significant headwinds on organic growth due to our Pratt & Whitney engine situation with a number of aircraft on the ground, we think partners would be a nice boost to earnings but also to relevance for customers.
You know, the NEA there was a lot of great work that happened there. Very frustrating that the Department of Justice didn’t see it that way. But even if you pull out some of the more challenging aspects, so schedule coordination, revenue share, at the heart of it customers liked that expanded JetBlue network. So as we think about potential partners, that’s what we’re focused on is how do we provide more opportunities to fly on another carrier, to earn and burn points on another carrier, and hopefully our JetBlue travel products platform – that’s a fantastic platform for customers to book vacations…
As a 5% player we definitely think owning the Northeast from a relevance perspective, and the Caribbean and Florida is great, but customers also want to travel a bit further and we want to provide an opportunity for them to do that through a partnership.
(Emphasis mine.)
The ‘more challenging aspects’ are the ones that the District Court had an issue with between JetBlue and American, going so far as to say explicitly that a partnership more like American Airlines has with Alaska Airlines involving earn and burn and reciprocal elite benefits would have passed muster.
And the deal made both American and JetBlue relevant, especially in the New York market to New York customers. It gave them plenty of flights with which to compete with Delta and United for customer loyalty. It let them deliver elite benefits across a full set of routes. And it made them competitive for co-brand credit card spending as well.
JetBlue has made no secret of its plans to find suitable partners, and during its third quarter earnings call St. George said “it certainly could be with American” again.
Then during January’s earning’s call, they confirmed they were in talks for a partnership in line with the anti-trust ruling,
We’re having conversations with a number of carriers right now to discuss the potential for future partnership. The judge in Massachusetts obviously laid out a framework that would be acceptable under at least the prior administration.
They loved the Northeast Alliance with American. It may have been even better for them than American, especially since American waived payments from JetBlue that would have been due to cover losses under the revenue-sharing arrangement no doubt!
So now they are in talks to revise something like it that conforms more closely to the antitrust ruling against that partnership. They just aren’t saying that those talks are with American – though “it certainly could be with American.” Regardless, Geraghty is pushing to build something like it.
I sure do hope it’s American! As someone who flies DCA-BOS regularly, the free wifi would be great!
In this 2nd Gilded Age, these big businesses should have no trouble merging, if they want to. They are already practically colluding against consumers anyway–manipulating their prices, routes, and loyalty programs on a whim (and rarely in our favor, as consumers). So, there will be little to no anti-trust enforcement, less competition, more market manipulation, as long as everyone who seeks to do so remains loyal to the new king–regardless of facts, reality, morals, consequences, etc. I’m not a fan of that outcome, but if it’s going to happen anyway, may it please lead to us getting to access Admirals Clubs while flying jetBlue. For now, it’s ‘smoke if you got ’em’ and accept our new overlords. We’ll ‘deal with it’ and ‘clean up the mess’ after this house of cards finally comes crashing down.
AA def needs Jet Blue’s network to be relevant to me as a NYC area based flyer.
The regime in Washington will look the other way and bless any and all mergers and obviously the B6/AA NEA benefitted both airlines, who were lapped in the late 2000s first by Delta, who smartly exploited every opportunity to grow NYC and invest billions to make it happen, from terminal improvements and network expansion, to courting local businesses to grab corporate travel wallet share, culminating in 2009 with Delta swapping slots with a foolish, badly run USAirways, furthering its grip on LGA. United on the other hand got Continental’s biggest prize, which was the EWR hub, mess as it is, it does what DL can’t, and that is to offer a global network under one roof. DL and UA have large chunks of the NYC market, leaving B6 and AA in the dust. The future of B6 is a merger with AA, not with WN or any other airline. AA and B6 complement each other in the Northeast and a tie up makes sense. AA would have to wind down or cut a lot of FLL flying given the MIA hub, but apart from that, combining the two makes much more sense than an AS/B6 merger or a B6/WN merger. More consolidation in the industry will happen. Wall Street will invent more gimmicks to allow financially challenging mergers to proceed. B6’s days as an independent carrier are coming to an end rapidly.
@lavanderialarry — It seems we are somewhat in agreement. I just wish AA would adopt B6’s Mint, both the nicer, newer interiors for that ‘premium’ hard-product, and also, the better food. Likewise, as I said above, if JetBlue could have actual lounges, then such a merger is not inherently ‘bad’ for those still willing to pay for it. It could be an opportunity to merge ‘best practices.’ Or, they can do what usually happens in these situations, and cannibalize each other, sell off the ‘good’ things, and get rid of a lot of staff, all so that a few at the top can profit immensely. Hmm. I wonder which will be the outcome here? Yeah, I’m expecting the ‘profits over people’ option. *deep sigh*
They should just do the partnership as prescribed by the Bidumb DOJ, and then just engage in tacit collusion. You don’t need to explicitly coordinate schedules, nudge nudge wink wink.
@Mantis — ‘Wait, it’s all collusion…always has been.’ *nudge nudge wink wink*
I hope that AA just ignores B6, lets them die in a hideous fashion, and robs the corpse of what they require at the rat-infested hellhole tragically named after the great John Fitzgerald Kennedy.
Mint is shint.
What’s more competitive – fewer strong players – or many weak ones?
That’s the question, IMHO.
@1990- excellent idea, if AA wants to “focus on premium” they’d be smart to adopt B6’s Mint product, even the service in steerage is a better experience overall. Hell, hire whoever is on that team at B6 and adopt it across the board.
But….this is Bobby Isom and his team of cheap cronies we are talking about. It’ll be a sh*tshow.
“under the prior administration” is pretty irrelevant here. I wouldn’t be at all surprised if the current one said, “Yeah, sure, whatever. We don’t care.”
The AA legal team botched it the first time and since then, nothing has changed
Please allow American and Jetblue to merge!
Delta has a monopoly at JFK.
United has a monopoly at EWR.
AA AND JETBLUE OFFER MANY OPTIONS!!
@DunkinDFDubya — Thanks for the vote of confidence. Heh, it probably won’t happen (AA adopting a Mint-like level or service), but one can dream. At the very least, if this merger goes through, let those with access (like via the Citi Exec card) flying jetBlue access Admirals Clubs.
@John — Oh, come now, while EWR Terminal C is a United hub, and JFK T4 is a Delta hub, there’s still relatively robust competition in the NYC-area and even already at those airports (EWR’s new Terminal A is fairly evenly distributed between the competitors, and JFK T8 is a decent American operation). It’s not like DL at ATL or AA at DFW—those are practically monopolies.
Still say Jet Blue and Alaska would be an awesome partship.
He’ll, NO to American Airlines! I have had one bad experience. My daughter has had more than one. Other people I know do not want to hear about them. I enjoy flying with Jetblue. The thought of a merger with American Airlines is just not palatable.
Delta dominates both LGA & JFK and United rules EWR. A Northeast Alliance keeps all in check by involving a forth element (JetBlue). I feel the past ruling was more influenced by the then administration as opposed to the rule of law. With the current administration, would be best for B6 to find dance partners ASAP while the window of opportunity is open.
Other possibilities include the development of T6 at JFK which will directly connect with JetBlue’s T5 home base. Lots of opportunity to provide domestic thru service to foreign carriers populating T6.
Also, might be wise to join one of the airline alliances.
@Exit Row Seat — Hmm. ‘Rule of law,’ you say? Good one. Yeah, the ‘law’ is going to matter a whole lot less than ‘money’ and ‘fealty’ moving forward. The current administration does not care at all about anti-trust enforcement, so long as the company’s leaders are ‘nice’ to the king. Let’s be real, if American and jetBlue want this, they’ll get it, not because of law, but because they ‘kissed the ring.’
AA & B6 need to merge, full stop
I disliked the partnership as a Frequent Flyer with AA. I lost all my benefits: free extended legroom seats, first class upgrades and free luggage. Why would I want that?
The new regime will certainly rubber stamp it. Oligarchy …. I mean monopoly is back in vogue.
@1990 my condolences for your loss, typically it takes about 6 months to get over such events.
This is what happens when your CEO and COO run the airline into the ground and have to rely on another airline to get them through hard times. If this doesnt happen, they’ll go the way of Spirit.
10 year + Mosiac member; Level 3 this year. The partnership with AA (at least from a JetBlue flyer point of view) was a DISASTER! Complete train wreck. If I don’t have the same perks (No change / cancellation fees and free same day switching) the partnership is useless. And to make it worse I would be told I can make changes and then when I tried I could not. In fairness when I got a supervisor on the phone, she apologized for how bad it was, told me it was a disaster and credited me my refund. If they do it, figure it out, have very clear concise rules, etc