American Airlines and JetBlue Airways announced a Northeast alliance in 2020. This is now facing some major scrutiny from regulators.
Continue reading: Details: DOJ Challenging American & JetBlue Alliance
Share your questions, experiences, and thoughts below.
This is halfway between an alliance, an acquisition, and nothing, and its sort of the worst for all people. I was looking at a B6 trans-atlantic flight for next month, but as an AA flier, WHY would I do that? There is no AA benefit for me flying B6 to London, no benefit for me collecting B6 points when I already have AA status, and thus I don't book B6. This reminds me of other 'partnerships' where the larger airline sucks the value out of a smaller one until the smaller one can't exist without the larger entity any more...and thus HAS to be bought. I just don't see this helping the market other than helping AA retreat from actual operations more than they already do.
Does anyone else think its lowkey funny that American, the world's biggest airline, needs to rely on Jetblue, in NYC, the financial capital of the nation?
They don't communicate fares to each other but the fares just happen to be identical 100% of the time.
American and JetBlue should find a private equity firm who will create a SPAC vehicle so they can just merge and be done with it. This would solve each of their challenges in the markets they want to grow in. AA can't build out JFK and BOS on its own as the costs would be prohibitive. B6 is an overhyped airline with glossy products but poor operational reliability and lacks a lot of bells and whistles to accompany its premium offerings to make them compelling (lounges, etc..). Merge them and be done with it. They need a SPAC. They can't afford to merge using traditional methods.
If this whole thing gets nixed, I think PHL flyers will benefit - AA's TATL growth at JFK comes at the expense of PHL as their primary TATL hub.
Huhhh??? How would a SPAC help them grow share at congested airports? They're both already publicly traded companies. A SPAC does little in terms of DOT/DOJ approval, all it does it use the easier process of a merger vs a traditional IPO. I also don't understand your point of them "not being able to merge using traditional means" involving a SPAC would only dilute shareholder equity more. Respectfully, I don't think you have any idea of how this type of M&A works or the overall advantages/disadvantages of SPACs.
It's one thing to say on paper that they can't coordinate prices. It is another to look at the market and see what has been happening. There is also the perspective of asking what the market players would have done without the alliance. Of primary concern is to consider whether AA would have added feeder flights for their new long-haul routes. Naturally the airlines will claim that the new routes only made sense because of the alliance. The DoJ will be considering whether this is true. The alliance was no doubt a CHEAPER way for AA to get feed, but the question for competition is whether (in the absence of the alliance) AA would have added their own routes which would have competed against B6.
Let's be real for a minute: airlines do alliances because they prevent competition and increase profits. You can say that mileage earning and status recognition are good for consumers, but forgone competition leads to higher prices that easily swamp these benefits for the average flier. The DoT has gone this route of "blessing" certain anticompetitive behaviors out of a sense that monopoly profits for some are balanced by greater flight choices for others. IMHO, if this actually worked, we would still have fully regulated airlines.
The primary concern with the AA-B6 is the abililty to swap slots at two of the three airports that have slot controls. AA has been underutilizing its slots in NYC for years and came up with a plan that would basically allow them to pass the slots to carriers where they saw benefit rather than returning them to be redistributed. Remember, that slot controls were lifted at Newark when United failed to fully utilize its slots. If any part of the deal is revoked, it will likely be the slot transfer mechanisms.
American is overhubbed in the NE and has shifted the focus to NYC; American has put PHL on hold to develop NYC w/ B6 but they have failed in most of the same markets from other hubs so their NE strategy doesn’t look much different from their China strategy – which has been to shift flights between multiple hubs other than DFW. The primary problem w/ AA’s international flights in NYC is that AA has to fix its average fare underperformance in international markets relative to DL and UA from NYC – which B6 cannot help. B6 might feed enough traffic to help American but the percentage of connecting traffic on B6’ flights will be low – which basically allows B6 to grow in markets for a fairly small benefit of increased connections, many of which AA could carry over its own network from other hubs. AA is simply trying to turn around its presence in NYC which has been shrinking for years – and the B6 partnership doesn’t fix that.
As for talk of a merger, AA and B6 have such dramatically different unit costs that a merger would eliminate service in B6 markets; AA has been shrinking for so many years because their costs are so much higher than their competitors including Delta.
And the real question is whether this deal was given the appropriate review at the DOJ given its scope in limited access markets due to slot controls such as NYC and WAS. DOT was more focused on getting AA to use its own slots rather than considering the economic benefit if they were redistributed.
And the DOJ and DOT are both reviewing other changes to slot controlled airports to increase competition.
Could this be political payback for not being as aggressive on vaccine mandates as united and delta?
Can’t imagine why this wouldn’t be the usual rubber stamp approval given all the other mega mergers that have happened in the past few decades. As an AA loyalist, this move does nothing for me. As an international passenger, I’ve avoided JFK as much as possible and even left Delta for US Air over a decade ago to escape the relentlessly long entry bottlenecks at Customs and Immigration. I occasionally go through JFK on AA flights from MXP and it’s much quicker these days in that terminal and with Global Entry but I have no desire to go back there on a regular basis. I’d hate to see PHL wiped out as a TATL hub. I’ve been routing through DFW during the pandemic and I’m hoping PHL will come back to close to pre-pandemic strength by 2023.
DOJ might be sending out a message that they will not approve AA and AS or B6 merger easily anytime soon.
But if purely on AA and B6 alliance, I don't think there would be any antitrust issue, as long as Delta is there. Will it be bad for JFK, probably as fewer airlines means easier to collude.
JetBlue is a “overhyped” airline ? When was the last time you traveled in coach on both AA and JB ? AA is the “Spirit Air” of major air carriers. Their seats are tight and uncomfortable, they changed their contract to basically screw over customers when they cannot get passengers to their destinations, and they are arrogant as hell.
If they merged, I guarantee most, if not all JB coach customers who are used to the newest jets, high quality IFE systems, spacious leather seating, friendly staff and free snacks and beverages, would run, not walk, over to Delta.
The government is doing AA and Jetblue a favor. This alliance never made sense. The companies' cultures couldn't be more different, aircraft configurations totally different, policies, food, lounges etc etc.
How has aa underutilized slots?
AA slots are utilized fully within the governance structure of those slots. Just because you disagree with their deployment or that aa has occasionally been legally authorized a waiver doesn’t mean they’re underutilized. They’re utilizing them full under the guidance they’re supposed to.
Right… because New York airports and Boston are just full of open slots and gates for aa to randomly grow a new hub.
They have different features because they are different companies.
That does not mean they cannot be complimentary to one another.
B6 has frequent delays, irregular operations and thus not reliable for business travel. AA gets a bad rap and not all of it is undeserved but I fly AA a lot in all cabins, domestic and international and find it quite consistent with friendly crews, clean planes, and flights to places I need to get to. Arrogant as hell?? Maybe check the tone of your post. Am not a defender of AA but I have had good and bad experiences across all carriers. B6 isn't exceptional.
The DOT noted that American has not used its slots in accordance with slot usage requirements for years including in 2019. They simply have not used their slot portfolio in NYC to the same percentages that Delta has. The whole basis of the DOT's approval was to allow AA to improve its usage but to "partner" with B6 in order to have them operate some of the flights that AA had long ago determined it could not profitably operate.
In the meantime, Spirit and Southwest have repeatedly commented that AA should be forced to divest their unused slots so that other carriers could grow. Since Spirit and Southwest's smallest aircraft are larger than AA's regional jets and B6's E190s, any slots used by those two airlines would put more seats into the market. AA is not required to operate its slots to fully usage requirements for years.
Blocking the ability of competitors to gain access to AA's underutilized slots is bad enough competitively but AA and B6 can coordinate their schedules so that they do not have to add flights in any market but rather increase the number of flights. They can selectively pick markets where they can gain but not necessarily add the maximum amount of new flights that a competitor might add.
The DOJ is filing the suit and not me.
AA is already distant 3rd in the NYC metro region which is why I don’t understand they are so adamant in investing so much. They have PHL - a northeast airport almost completely to themselves for a fraction of the cost that is a prime European/African transfer hub. NYC has literally every airline in the world flying into it which makes it incredibly difficult to operate. They launched Tel Aviv from NYC when US Airways flew packed planes from Philly - many Jersey residents purposely drove to Philly rather than NYC to take the Tel Aviv flight because they didn’t want all the tolls, traffic, and high parking fees. AA better be careful because if anybody else encroaches in PHL they risk losing dominance in a prime space. Frontier is betting big on PHL and since AA moved more international to NYC, there are less connecting passengers in Philly so many locals are willing to fly Frontier for less frills. Alaskan partnership makes sense due to lack of west coast dominance but having a prime airport in the northeast like PHL all to yourself? This never made sense.
PHL-TLV never made money. AA is indeed a distant 3rd if not 4th in the NY market, but it still holds a lot of corporate contracts there.
Six states including Mass, DC, Virginia, CA, AZ and Florida are also part of the lawsuit. It doesn’t speak well for AA-B6 when multiple states - both Dem and Rep led - that host AA and B6 hubs don’t like the idea and are joining the DOJ in the case.
AA is leaving several key long-haul domestic routes entirely to B6. I’m not sure I recall a time a major player left a market and prices didn’t go up…
Again.
AA has utilized its slots in accordance with the requirements of usage which is why they haven’t been taken away.
Making stuff up doesn’t help, Tim.
You’re hatred toward aa and weird affinity toward Anything that helps Delta is silly.
Delta enjoys a virtual monopoly east of the Hudson River in New York. It obviously can't stand any kind of serious competition at JFK, BOS, and LGA. Spirit simply wants more slots. It wouldn't surprise me to see some additional money show up in Sen. Blumenthal's campaign coffers courtesy of Delta and Spirit. As Mark Twain observed. "We have the best government that money can buy."
Sleepy Joe Biden’s administration at work.
I suspect with the California influence in this administration, there are more feds in on the Bribery scheme Gavin Newsom has going on with United Airlines.
More likely political payback for not playing along with Gavin Newsom’s bribery scheme with United.
except that Delta doesn't have a majority of slots at JFK or LGA. in fact, Delta has a lower percentage of slots than American has at DCA and less than United had at EWR when that airport was slot controlled.
Delta clearly just offers service that people are willing to pay for in order to gain the revenue premium from NYC that it does.
you are free to argue otherwise but the DOT - which signed off on the NEA - says otherwise and it isn't hard for anyone that has access to historical schedule data to see that they, not you, are right.
When you deny actual facts and argue that someone that understands the actual facts has some issue with American, you are showing your bias, not mine.
American is the only carrier that shrunk in NYC in the 10 years prior to covid including merger partners.
AA would be the largest carrier in NYC if it had retained all of the slots it and USAirways have had at LGA and JFK.
Delta has 59% more slots than the next biggest carrier at LGA, American. They have the closest thing to a dominance at LGA than anyone is allowed to have. Delta may be a fine carrier but put aside the Kool Aid. They're doing well east of the Hudson because they have, by far, the most frequencies and destinations out of the preferred airport, LaGuardia. It has little to do with people paying a premium for product when you have the best schedule and network from the preferred airport.
DCA isn't relevant to the NEA discussion since it's not in it but thanks for always trying to play with facts to make an incorrect point.
I understand the facts. You obviously don't. No slot has been taken away from AA because they've utilized the slots or had waivers for the slots as authorized by the FAA. I understand you don't like how they use them.
You're making incorrect assertions as you always do. If you were right, AA would've lost slots or had them taken away. They have not.
Stop making stuff up and you won't get called out on it. AA has never had a slot taken away from it. Why? Because they've used them as they're legally allowed to do or had a waiver due to covid or runway construction. Your beloved Delta would've, no doubt, jumped at a chance to take slots away if AA had actually been underutilizing them.
Again... Tim Dunn with the fake facts.
US Airways swapped the LGA slots with Delta long before the merger with AA then the DOJ forced even more divestitures of LGA slots for the US-AA merger to go ahead, making Delta already more dominant than they already were at LGA (and they were already bigger than the combined AA-US was at LGA or JFK). Acting as though AA has been shrinking slots as a combined company is just wrong and you know that. But it's hardly the first time you use small unrelated facts to piece together an incorrect story.
Delta has the most slots but they do not have a monopoly - virtual or any other kind which is what the previous comment said.
And, USAirways DID swap 1/4 of the slots at LGA to Delta for far fewer number of slots at DCA; then AA-US as part of their merger was required to divest a nearly identical amount of slots as Delta gave up at DCA. Of course Southwest and Jetblue, not Delta gained the divested DCA slots, but DL got a much stronger slot portfolio at LGA while AA got more low cost carrier competition at DCA.
Also, slot controls were lifted at both JFK and LGA after 9/11. Delta gained many slots by adding flights when the slot controls did not exist and then when the number of flights that were being operated were grandfathered into new slots. AA's request to the FAA at the time? that a percentage of existing slots would be eliminated to reduce the number of flights.
Parker WAS the CEO of USAirways when the DL-US slot deal was done, he has overseen AA's shrinkage in NYC since the merger (AA is the only airline that is smaller at DCA than it was 10 years ago including merger partners), and he is the same CEO that is arguing that AA is disadvantaged in NYC now.
AA had the opportunity to be larger in NYC but squandered slots under Parker's leadership at US Airways and then under AA's network strategy over the past 10 years - since the merger.
No need to argue w/ me. The DOJ and 7 Attorneys General have made their case and it is compelling. AA and B6 have reached levels of schedule domination that is unprecedented in the industry even via mergers - and in the few months since the NEA was implemented, AA and B6 have jointly dumped capacity into multiple markets hoping to drive out competitors. The DOJ has documented it all. The chances of AA/B6 being retained in its present form - esp. re: slot swapping and schedule coordination are slim to none.
You clearly do not understand the facts of the case.
The DOT documented in the NEA that AA had underutilized its slots based on FAA usage guidelines. Rather than having the slots revoked, AA and B6 concocted their plan to coordinate schedules, be able to swap slots at LGA and JFK, and the DOT agreed based on promises that AA/B6 would increase capacity above baseline flight levels - which still do not take them fully back to FAA slot usage requirements for multiple years.
absolutely nowhere did I say that AA has had a slot revoked. Underutilizing a slot is not at all equal to having slots revoked.
This has nothing to do Delta but AA's failure to use its slots and its attempts to come up with a way to avoid having the slots revoked.
The DOJ is not suing Delta. They are suing American and JetBlue. When you get a grasp on the facts of the case and understand who is involved in the case and who is not, we will be able to discuss what is at stake.
of course it is someone else's fault because you fail all by yourself.
The AA-B6 alliance is not UA's responsibility or fault any more than AA's failure to sustain a single year round longhaul market from ORD except for LHR. There isn't a shred of evidence that Delta or United had anything to do with the DOJ/ 6 states plus DC lawsuit.
Honestly I am fine with this alliance, as long as it will not lead to a merger. I am 200% opposed to another merger with major airlines in the US. Airfares have risen significantly since the last merger.
JetBlue is a wonderful airline and AA sucks. But their networks make sense for both of them to coordinate.
On a very selfish note, maybe DOJ can force JetBlue to restart flights to LGB as part of the deal... LOL... Joking aside, I agree with Ben and maybe there is more towards the deal than we are all able to see.
What’s funny is that the NEA was sold as just domestic with some intl routes that jetblue didn’t have the means to operate such as TLV. But as you look on the jetblue app you can buy tickets that codeshares ie coordinated with AA/B6 on the JFK-LHR routes.
“As JetBlue starts offering transatlantic flights, this is not part of this Northeast agreement, so JetBlue will be operating independently there, and won’t in any way be able to coordinate with American”
For example on the app you can book:
6:55 PM 6:50 AM+1
JFK LHR (AA flt 4460)
6h 55m
8:45 PM 8:40 AM+1
JFK LHR (AA Flt 4466)
6h 55m
10:05 PM 10:10 AM+1
JFK LHR (Jetblue Flt 007)
7h 5m
Sure looks like a coordinated effort on London to me.
Funny how the world’s largest airline now needs help from JetBlue and Alaska. The best thing for competition would be…
1 American Airlines hire a customer focused CEO and up their service standards. That would win back plenty of customers.
2. Encourage JetBlue and Alaska to work together and in effect create a 4th major airline.
"There is no AA benefit for me flying B6 to London"
There's not *meant* to be an AA benefit for flying B6 to London.
AA want you to fly AA/BA to LON, they don't want you to fly B6 there.
AA are semi-happy for you to fly B6 domestically, especially if it connects to one of their own flights, but they're not going to incentivise you to fly B6 longhaul, why would they?
What does this mean for the reciprocal benefits supposed to be happening this fall? I just bought a bunch of jetblue flights in december banking on that…
Didn't B6 add a bunch of routes in direct competition with AA, including expanding to MIA? Or was that done to placate an action such as this?
Well, where was the DOJ when America West/US Airways bought AA - or was it the other way around? Not to mention UA/CO and DL/NW? All eliminated significant competition, left some markets basically controlled by one carrier and stiffed others. PIT comes to mind.
As fun as it may be to watch Doug Parker sweat, this is somewhat ridiculous. The DOJ had no problem letting the damage be done over the past 20 years, and THIS is the thing they're jumping on. Give me a break.
JFK is a “HUB” of American, why they need feeding by JetBlue???
The only reason is American trying to acquire JetBlue to eliminate competition at both JFK and BOS.
most US airports are not slot-controlled. The DOJ complaint specifically says that one of the offsets of mergers has been divestitures that allow competitors to grow a presence. The very limited slot divestitures that were part of the AA-B6 agreement do not produce enough slots to be usable by any competitor to change the competitive landscape.
PIT is more competitive than it was as a USAirways hub but it has far less air service.
AA and US have a very long track record of closing hubs pre-merger but then failing to do so since the merger in order to make their remaining hubs strong enough to compete; AA has multiple hubs in the NE which directly overlap with B6.
AA should have fixed their own NE hub problem rather than trying to hold onto so many hubs that most underperformed to the point that they had to seek another airline to fix AA's own underperformance.
everyone that wants to criticize what the DOJ - plus 6 states and DC - should read the DOJ's complaint
I think this is the problem with your post:
"While competition between American and JetBlue is no doubt being reduced, this does allow the two airlines to compete more efficiently against Delta and United, and that is good for competition"
Competing "efficiently" is not the same as competing. With AA and B6 not competing on certain Boston/NYC routes, fares will go up on those routes. That doesn't benefit consumers, most of whom aren't engaged in frequent flier programs.
I don't know if these objections actually past legal muster, but the alliance isn't good for competition - the best competitive environment would be AA, UA, DL, B6, Alaska, Virgin America, Southwest, etc all robustly competing in these markets. Southwest doesnt compete, Alaska basically bought Virgin to eliminate it from the market, so all you really have now are AA, UA, DL and B6. B6/AA combining reduces competition further. The one issue for DOJ is that maybe AA effectively leaves the NYC/BOS markets without this kind of alliance, which is counterproductive.
This has brought so much money and many new jobs to B6 there is no way they will back out. They were hiring during the darkest pandemic days because of this alliance and in some way is what helped them get through
Didn't AA and B6 set up a reciprocal frequent flyer relationship? You should be able to book and fly on B6 and collect AA points, right?
This lawsuit makes makes the assumption that business travel is going to rebound. If business travel doesn’t rebound by the end of 2022 than working remotely on Zoom will be the new normal indeed. No mention of Southwest and Frontier being allowed to offer service from Islip McArthur to Tampa , Orlando , and Fort Lauderdale. If ticket prices go up you would only have the economists to blame due to the labor shortages , reduced flight scheduling , and rising fuel prices. American and Jet Blue have every right to challenge the NYC turf that United and Delta already have in a chokehold. This lawsuit has no merit.
Based on what I've seen, American and jetBlue combined have fewer than Delta. So ...
I've also read that Delta has a long history of lining politicians' pockets. Not illegal, but then again, campaign contributions are little more than legalized bribes.
With exceptions. The Transatlantic exception is understandable, and not secret.
Domestic routes: AA/B6 are friends.
Transatlantic: AA/B6 are frenemies.
Book and earn miles accordingly.
Your purely political biased personal opinion is not really needed in this adult convesation.