Details: DOJ Challenging American & JetBlue Alliance

Details: DOJ Challenging American & JetBlue Alliance

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American Airlines and JetBlue Airways announced a Northeast alliance in 2020. This is now facing some major scrutiny from regulators.

American & JetBlue face DOJ lawsuit

This week the Department of Justice’s antitrust division has filed a lawsuit, arguing that the arrangement between American and JetBlue is bad for competition. The claim is that this alliance threatens competition and will lead to higher fares, and this seems to reflect the Biden administration’s aggressive stance on antitrust enforcement.

For some context on this agreement, American and JetBlue first announced their new alliance in July 2020, and it launched in early 2021. With this partnership:

  • American is trying to grow its long haul network out of New York, and JetBlue will be providing much of the feed for this service, thanks to its excellent network to & from JFK
  • In order to gain approval for this deal from the Department of Transportation, American and JetBlue had to give up some slots in New York and Washington
  • The two airlines are allowed to coordinate schedules within the scope of the partnership, but they aren’t allowed to discuss fares or pricing strategies
  • American and JetBlue have rolled out reciprocal mileage earning, and it’s expected that later this year the airlines will roll out reciprocal mileage redemptions and elite perks

This new alliance is part of a much bigger shift on the part of American, whereby the airline is increasingly relying on domestic partners. While American has JetBlue on the East Coast, American also has a close partnership with Alaska on the West Coast, as American builds up a long haul hub in Seattle.

American has been adding long haul flights out of New York

What the lawsuit argues about the American & JetBlue alliance

The 42-page lawsuit was filed in the United States District Court for the District of Massachusetts, and it’s some fascinating reading, even if you’re not usually into this stuff. First of all, I love the general sass of government lawyers, especially when they’re writing something that will be widely read. Let me summarize a few key parts of the DOJ’s argument.

American Airlines is “the largest airline in the world” and JetBlue is “a uniquely disruptive low-cost airline” (is the DOJ doing advertising for JetBlue here?), and the two airlines have entered into an “unprecedented and anticompetitive pact” (is this actually unprecedented?).

Here’s the gist of the complaint:

Under their so-called “Northeast Alliance,” the two rivals have quietly agreed to share their revenues and coordinate which routes to fly, when to fly them, who will fly them, and what size planes to use on flights to and from four major airports: Boston Logan International Airport (“Boston Logan”), John F. Kennedy International Airport (“JFK”), LaGuardia Airport (“LaGuardia”), and Newark Liberty International Airport (“Newark Liberty”). By consolidating their businesses in this way, American and JetBlue will effectively merge their operations on flights to and from the four airports—which collectively account for two thirds of JetBlue’s business. In so doing, the Northeast Alliance will eliminate significant competition between American and JetBlue that has led to lower fares and higher quality service for consumers traveling to and from those airports. It will also closely tie JetBlue’s fate to that of American, diminishing JetBlue’s incentives to compete with American in markets across the country. The United States and Plaintiff States bring this action to prevent the hundreds of millions of dollars in harm to consumers that will occur if these two rivals are permitted to maintain this modern-day version of a nineteenth-century business trust.

The lawsuit uses some quotes from airline CEOs against them:

  • American CEO Doug Parker talked about how “with fewer airlines, there are fewer of us trying to get the same number of customers,” and has stated that “domestic consolidation” remains one of American’s “long term projects”
  • Just months before creating this alliance with American, JetBlue CEO Robin Hayes stated that he believes “mega-carriers are large enough,” and doesn’t “think it’s in the interest of consumers or airline workers to allow giants to get even bigger and more powerful,” and that “all the power in the hands of a few very deep-pocketed airlines has implications for consumers in the form of reduced options, high fares and often poor service”

What’s perhaps most interesting about the lawsuit is that it really puts a lot of faith in American’s management, and very much paints JetBlue as the victim:

  • American had vowed to “win BOS back” even before entering into an agreement with JetBlue, which would have caused American to add lots more routes, and compete more fiercely with JetBlue; instead American won’t compete as much in Boston
  • Before the partnership was announced, a JetBlue network planning executive stated that “one of the most common trends in JetBlue’s 20 year history is easily stealing share from AA and eventually winning,” and the incentive to do that is now largely gone
  • American knows a merger with JetBlue wouldn’t be approved, so American seeks to “co-opt JetBlue through an unprecedented domestic alliance,” and American “seeks to align JetBlue’s economic incentives with its own through a far-reaching partnership based on the same kinds of alliances that American has used to consolidate international air travel”
  • Since two-thirds of JetBlue’s business is in the Northeast, “JetBlue itself recognized the danger posed by this close dependence,” and two months before this alliance was introduced, JetBlue warned its Board of Directors of being “co-opted by Connie [American] manipulation”
  • “If JetBlue complies with American’s wishes, the Northeast Alliance gives American ways to reward JetBlue; if American doesn’t like what it sees from JetBlue, the Northeast Alliance gives American the tools to punish JetBlue and bring it to heel”
  • Speaking of the alliance, it’s stated that “it gives American executives new opportunities to engage regularly with JetBlue executives, and gives them carrots and sticks with which to reward or punish JetBlue depending on the actions JetBlue takes”
JetBlue is being painted as the victim in this partnership

Is the American & JetBlue partnership bad for competition?

I’ll be the first to say that airlines in the United States need to be reigned in and sometimes have way too much freedom. Going into reading this lawsuit, my general take was that the American and JetBlue partnership is actually good for competition. Why?

  • American is legitimately turning JFK into a long haul hub, with new flights to Delhi, Tel Aviv, and more; it’s highly unlikely that American would have launched these flights without feed from JetBlue
  • I think a vast majority of frequent flyers would agree that reciprocal mileage earning and redemption opportunities, as well as reciprocal elite perks, benefit consumers
  • American is otherwise now a distant third in the greater NYC area — Delta has a mega-hub at JFK, United has a mega-hub at EWR, and this partnership allows American to compete with both of those airlines more efficiently
  • The airlines don’t even have the ability to coordinate pricing, but rather the airlines just work together on scheduling to make their networks complementary (and to be clear, on some level all airlines indirectly coordinate pricing — kind of how between Los Angeles and San Francisco, virtually all airlines have $49 entry level fares)
  • 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
  • If you ask me, these kinds of partnerships are the sweet spots, compared to a merger — consumers get upside, but you still have a distinct competitor in the market

How do my feelings change after reading the lawsuit? There are obviously some valid points here, but personally I think the DOJ is approaching this all idealistically rather than realistically. The DOJ is giving American way too much credit when it comes to its ability to execute a strategy, and is painting JetBlue too much as the victim here:

  • Could American build up operations in Boston and New York without JetBlue’s help, leading to more competition? Sure, in theory, but you really think American’s management was going to be able to execute well on that? Like, have they been following the airline for the past decade?
  • 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
  • I don’t believe American would have expanded internationally out of JFK the way it has done without this alliance; so while this might not be amazing for domestic competition, I do think it’s good for international competition
  • I don’t think American holds all the cards here — if JetBlue were to yank the agreement on its end, American’s long haul network out of JFK would be in big trouble
  • This seems like too little too late — if the DOJ were worried about competition, stopping the mega-mergers of the past 15 years would have done a lot more than trying to stop this alliance that is ultimately intended to compete with two greater NYC area giants; of course these DOJ lawsuits on some level reflect who is in office, so I get that it’s not that simple
I don’t see JetBlue as the victim here

Bottom line

The Department of Justice is challenging the American & JetBlue strategic alliance in the Northeast, which launched earlier this year. With this, the two airlines can coordinate schedules, allowing American to turn JFK into a long haul hub, while JetBlue provides most of the feed.

As the DOJ views it, this new alliance greatly limits competition, and gets rid of the incentive for American and JetBlue to compete. It’s essentially being argued that American is taking advantage of JetBlue here, and that the latter airline holds no control.

I’m curious to see what comes of this…

What do you make of the DOJ challenging the American & JetBlue alliance? Do you think the alliance is good or bad for consumers?

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  1. D3kingg

    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 ,...

    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.

  2. Kyle

    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

  3. Anthony

    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...

    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.

  4. Creditian

    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.

  5. stogieguy7

    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,...

    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.

    1. Tim Dunn

      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.

      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

  6. ramcm7

    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?

  7. Mark

    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…

  8. Markj

    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.

  9. Brent

    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...

    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.

  10. Adrian

    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...

    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.

  11. INS Vikrant

    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.

    1. Tim Dunn

      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.

  12. Radio

    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."

    1. Tim Dunn

      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.

    2. Maxpower

      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...

      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.

    3. Tim Dunn

      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 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.

    4. Radio

      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.

  13. Wilson

    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…

  14. Tim Dunn

    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.

    1. INS Vikrant

      CA joining due to Gavin Newsom’s bribery scheme with UAL.

  15. Dan

    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...

    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.

    1. shoeguy

      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.

  16. Omar

    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.

    1. Sal

      They have different features because they are different companies.
      That does not mean they cannot be complimentary to one another.

  17. Eskimo

    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.

  18. Donna

    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...

    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.

  19. Eric

    Could this be political payback for not being as aggressive on vaccine mandates as united and delta?

    1. Mike

      That’s the dumbest thing I’ve read today.

    2. INS Vikrant

      More likely political payback for not playing along with Gavin Newsom’s bribery scheme with United.

  20. Tim Dunn

    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...

    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.

    1. Maxpower

      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.

    2. Tim Dunn

      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...

      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.

    3. Maxpower

      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.

    4. Tim Dunn

      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.

    5. Maxpower

      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...

      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.

    6. Tim Dunn

      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...

      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.

  21. Laurel

    They approved the AA US merger and now they're worried about this?!

  22. Andy 11235

    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...

    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.

    1. Maxpower

      Right… because New York airports and Boston are just full of open slots and gates for aa to randomly grow a new hub.

    2. Tim Dunn

      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.

    3. Maxpower

      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...

      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.

  23. Scott

    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...

    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.

  24. Evan North

    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.

  25. shoeguy

    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...

    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.

    1. DaveFromBoca

      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...

      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.

    2. shoeguy

      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.

    3. 305

      Yikes that’s not even remotely close to how a SPAC works

  26. RJB

    They don't communicate fares to each other but the fares just happen to be identical 100% of the time.

  27. sharon

    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?

  28. Joelfreak

    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...

    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.

    1. JAXBA

      "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?

    2. SeattleFlyer

      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?

    3. JAXBA

      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.

Featured Comments Load all 55 comments Most helpful comments ( as chosen by the OMAAT community ).

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Kyle

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

JAXBA

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.

Radio

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.

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