American Airlines and JetBlue entered into what they called ‘the Northeast Alliance’ in order to become more competitive against larger rivals in key markets. As the number three and four carriers in New York, neither were large enough to be really competitive with United and Delta. But slot restrictions and gate availability meant that neither could grow. This was their solution to create a third real competitive alternative.
The government just won at trial to break up the alliance. The judge permanently enjoined this partnership from continuing and from further implementation, beginning in 30 days. One expects an appeal.
Ironically, the two airlines had gotten government signoff prior to launching. Then – without any new information – the government reversed course once the deal had already started.
- After waiting too long past the allowable statutory period in which to oppose the American Airlines – JetBlue Northeast Alliance, the Department of Transportation entered into a settlement to approve it in which the two airlines gave up slots at New York’s JFK and LaGuardia airports along with Washington National Airport. They also committed to give up additional slots if they did not grow passenger capacity in New York.
- Despite approving the arrangement late in the Trump administration, the Biden Administration’s Department of Justice sued to undo the partnership – violating a key tenet of the rule of law. It isn’t supposed to be the whims of the people in power that matter before the law.
The two airlines coordinated over which one flew a given route, but weren’t allowed to discuss pricing. Customers of each airline were given frequent flyer benefits on the other and could earn and redeem miles across the two carriers.
With slot restrictions, though, the total number of flights couldn’t change – and the total number of seats had to grow, increasing supply and reducing price, while creating sufficient scale for the two airlines to be big enough to become a viable competitor. Delta and United, naturally, opposed the deal and got the Biden administration to side with them. We’ve been waiting since the fall for a verdict.
I haven’t been a fan of many of the moves made by current American Airlines management, and I’m skeptical of mergers and anti-trust exemptions in a world where incumbent airlines are protected from competition through foreign ownership restrictions and government-imposed restrictions on which airlines can fly into congested airports.
However this is a case where customers actually benefit, competitors don’t like it, and whether the Justice Department realizes it or not they’re carrying water for cronyist corporate interests and not passengers. Blocking this partnership takes out American Airlines as a viable competitor in New York, reducing competition. Sad.
If Gary’s right and this means the end of competition in the NYC market, good. I don’t fly B6 and only fly AA if I absolutely have to. I actively avoid those two airlines because of B6’s unreliability and highly overrated service, and AA…do I really need a reason to actively avoid them? I will carry on using UA for my NY-area travels and stay out of this whole fight by staying in EWR (with the occasional flight to LGA if I’m going to Long Island).
And, Tim, you do carry the water for Delta. Fine by me. A lot of people elsewhere say that I carry the water for United, but I at least have the capability of admitting when UA is clearly in the wrong, like with their catering, especially in Polaris, and their insistence on flying A319s and A320s that are clearly on their last legs. You never admit when Delta is in the wrong, most recently defending them for the HND nonsense they’re trying to pull. When I started to read avgeek sites, I had a dislike for Delta. Your relentless cheerleading has caused me to actually hate them.
@Tim Dunn,
“And, no, I don’t carry the water for DL”
While your views on competitors have improved the past few years, you still carry water for DL – which is your right.
Regarding the NEA, I was actually enjoying the setup. AA has down-gauged their West Coast operations significantly and having partners such as AS/B6 helped alleviate it quite a bit. I was certainly able to take advantage of it.
My guess is that AA/B6 will go the route of AA/AS – while not better than the NEA, it would be fine for most (but not all) AA/B6 travelers.
Possibly adding B6 to OneWorld would be great as well.
Regarding B6/NK merger, I have no clue.
You really meant to say simply “you are right” precisely because I understand why Delta is the largest market cap airline and has a track record of the highest profitability.
Because I understand why Delta is at the top of the industry doesn’t mean I carry the water for them. I just understand business.
@Gary
Tim Dunn and I operate on the same ATC frequencies, per se, but he’s totally off base with some off his comments on this post which are even worse than on the newer NEA post. Especially on the points where he argues that DL is becoming less and less profitable relative to its peers. We may operate on the same frequency, but it’s clear he forgot to read ATIS today.
`It isn’t supposed to be the whims of the people in power that matter before the law.’
Right, like we don’t see that happening with lots of other things.
PS Are ‘Tim Dunn’ and ‘DCS’ (Hilton fanboy) the same person? In either case he should get his own blog and stop boring us here.
@LK
We just call him “Tim Dumb” here, watch as he argues with Gary on semantics on the more recent write up on this subject! He’s a constant irritant to all on the av travel sites! He’ll argue with a potted plant, best to ignore him!