I recently shared my take on why I think the US airline industry needs consolidation. To be clear, I’m of course pro-competition, but the issue is that with how the industry has evolved (both on the cost and revenue side), some airlines can’t turn a profit, and that’s not good for anyone in the long run.
When I think of US airlines that are a potentially attractive acquisition target, JetBlue is the first airline that comes to mind, so I wanted to talk about that a bit in this post. We’ve seen JetBlue try to acquire two different airlines (first Virgin America, and then Spirit Airlines, and both deals ultimately failed). But if you ask me, JetBlue is in a better position to be acquired, rather than to acquire another airline.
Let me state upfront that I have absolutely no reason to believe anything will happen on this front, but I think it’s fun to talk about nonetheless.
In this post:
JetBlue has a lot of potential, but also challenges
From a passenger experience standpoint, JetBlue is pretty great (operational performance aside, though that can at least partly be attributed to general constraints in the Northeast). JetBlue tries to offer a superior experience, from seat back entertainment, to free Wi-Fi, to more legroom, to free drinks and tasty snacks. Most importantly, JetBlue has a strong market position in both Boston (BOS) and New York (JFK & LGA), which should be very lucrative markets.
The issue is, JetBlue has for years struggled with profitability. Unlike Spirit, JetBlue isn’t in a dire situation, but rather the current management team is slowly and steadily working to make the airline profitable, after years of losses. The airline has good momentum, though there are still challenges ahead:
- JetBlue is trying to increase revenue from its TrueBlue loyalty program, as you’d think this would be an area where there’s a lot of potential, given the markets in which the airline has its biggest presence
- JetBlue really needs to offer a first class product across its fleet, and it’s something the airline is reportedly working on
- JetBlue’s desire to fly long haul routes really doesn’t seem to be working very well, and JetBlue needs to decide how it’s going to handle that in the long run; there’s no way JetBlue is making money on its transatlantic operations
- To reduce spending, JetBlue has deferred many new aircraft deliveries to 2030 and beyond; while this might help the airline narrow losses, it certainly doesn’t help the airline become profitable in the long run, especially since JetBlue’s whole logic for acquiring Spirit was to grow and become a national competitor to the “big four”
JetBlue could be a huge asset to other airlines
The way I view it, there are three possible JetBlue acquisitions that could make sense (and one that I just think is totally unrealistic). Let me share them, roughly in the order of merit, as I see it. I’m viewing this in terms of which airline would have the most upside from JetBlue’s assets, from its market positions, to its fleet, etc.
JetBlue & American combination
Strategically, American acquiring JetBlue would make the most sense. Well, that assumes that American management could actually commit to any sort of a strategy beyond just flying domestically from Charlotte and Dallas.
We’ve already seen American and JetBlue try to operate a Northeast Alliance, which was blocked by the Department of Justice. If a merger could be approved, it seems like there’s quite a bit of upside:
- It would allow American to expand in New York and (to a lesser extent) Boston, which really seems like a missing part of American’s strategy, in terms of beefing up long haul connectivity, and increasingly compete against Delta and United in the Northeast
- American could fly JetBlue’s A321LRs much more profitability, as part of the oneworld transatlantic joint venture
- It feels like in general JetBlue would benefit greatly from joining oneworld, much like Alaska has
Simply put, American needs to do something to build momentum and compete, given what a financial mess the airline is compared to Delta and United. If nothing changes, the airline will just become increasingly irrelevant, which isn’t good for anyone. Admittedly a merger isn’t some magic pill that will solve everything, but along with a new strategy and management team…
JetBlue & United combination
This might sound counterintuitive given their lack of overlap, but I could actually see quite some merit to United acquiring JetBlue:
- United has been trying to get back into New York (JFK) rather than just Newark (EWR), but hasn’t been able to get slots; an acquisition would allow United to reestablish a presence in New York, which has been a strategic goal
- United doesn’t have a hub in the Southeast, and has reportedly been exploring expanding into Florida more, so it seems like it could benefit from JetBlue’s presence in Fort Lauderdale (FLL)
- United would benefit from JetBlue’s aircraft, and there’s quite a bit of fleet commonality there, plus JetBlue’s interiors are already somewhat comparable to how United is retrofitting its aircraft at this point
- Much like with American, United could fly JetBlue’s A321LRs much more profitable than JetBlue could, especially across the Atlantic out of New York and Newark
- United has been dealing with a constant aircraft shortage, and is trying to get to the next level in terms of competing with Delta, so JetBlue could get the airline access to lots more planes
JetBlue & Alaska combination
Keep in mind that back in the day, JetBlue and Alaska were fighting against one another to acquire Virgin America. Alaska ultimately won, though paid quite a pretty penny for the airline. Arguably Virgin America would’ve been better suited for JetBlue, given the complementary route networks, commonality in aircraft types, etc.
Now we’ve seen Alaska acquire Hawaiian, and I can’t help but think that JetBlue and Alaska could be good complements to one another. For one, they’d allow Alaska to be a “national” competitor, by beefing up its East Coast presence in some markets that can be lucrative.
Alaska also belongs to the oneworld alliance and has much more robust airline partnerships, so has more potential to leverage JetBlue’s position in the Northeast to its advantage, including in partnership with American.
Now, I think Alaska probably has its hands full already trying to figure out its current merger, but in theory I could see this becoming interesting some point down the road.
JetBlue & Delta combination
In theory I’m sure Delta would love to acquire JetBlue, in the sense that it could knock out its biggest competitor in both Boston and New York, and have an ultra-dominant position. However, I have to imagine that such a combination wouldn’t receive regulatory approval no matter what, since it would be impossible to argue that there’s any real consumer benefit there.
Could a JetBlue takeover get regulatory approval?
While all of the above sounds great, I think there’s probably an obvious question here — could any of these deals actually get regulatory approval? That’s far from my area of expertise, though I have two thoughts.
First of all, I don’t know if ya’ll have heard, but there’s a major election in less than a week, and I imagine that could shape the viability of a merger. I would imagine that a merger would be more likely under a Trump administration than a Harris administration.
That being said, I think even the DOJ under the Biden-Harris administration may have some second thoughts after managing to get the Spirit merger blocked, given that Spirit has transformed its business model, and is reportedly considering a Chapter 11 bankruptcy filing (though now there are talks of a possible merger with Frontier, which would be great).
The whole reason for blocking JetBlue’s takeover of Spirit was to preserve ultra low cost carrier competition in the United States, despite the fact that Spirit executives made it clear that the airline wasn’t making money, and had no viable path to profitability.
So I’m not saying any combination would definitely get approval under either administration, but I certainly think the case could be made. In the case of American, it would allow the airline to become a more viable competitor in the Northeast. In the case of United, it would allow the airline to compete with American and Delta more directly in the Northeast, and expand in South Florida. And in the case of Alaska, it would make the carrier more of a national competitor.
Bottom line
While the situation isn’t as dire as at other carriers, JetBlue is struggling to turn a profit, though is slowly moving in the right direction under the current management team.
Long story short, it just feels to me like the value of JetBlue would be much greater if it were part of a larger airline, which could really unleash JetBlue’s full potential, from the carrier’s valuable presence in places like New York and Boston, to being able to fly Airbus A321LRs in long haul markets profitably, to increasing loyalty revenue from JetBlue’s customer base.
The airline industry is highly cyclical, and at this point, a majority of the industry’s profits are consolidated among a couple of carriers. Something has to change for all the other players in the market. Like I said, I have no reason to believe that any carrier would be targeting JetBlue, but I figured it was a fun hypothetical to throw out there.
Anyone see merit to JetBlue being taken over by another carrier?
With Southwest Airlines new Elliot heavy board of directors and Rakesh Gangwal as the New Chairman of Board of Directors. WN evolution into a EML seat assignment airline and HUGE war chest could easily make a competitive play for JetBlue. This is No Longer The Southwest of the last 52yrs. Both airlines are culture heavy with their employees. JetBlue market share is a Huge hole in WN network. Unlike the AirTran merger JetBlue dominates BOS,JFK...
With Southwest Airlines new Elliot heavy board of directors and Rakesh Gangwal as the New Chairman of Board of Directors. WN evolution into a EML seat assignment airline and HUGE war chest could easily make a competitive play for JetBlue. This is No Longer The Southwest of the last 52yrs. Both airlines are culture heavy with their employees. JetBlue market share is a Huge hole in WN network. Unlike the AirTran merger JetBlue dominates BOS,JFK and FLL so WN would inherit a losing battle against Delta this time around.
The biggest historical problem with B6 is that the board uses the company as their personal ATM. Nothing gets put back into the company, it is quickly reinvested into “business partners”, that are conveniently owned, by the board.
Given the mess with Spirit (blocking that is looking like a dumb move - I have to wonder if they couldn't have fought that one through the courts, since Spirit going into bankruptcy while the DOJ was complaining about competition issues would have looked stupid), I'm not sure whether JetBlue would be up for another tango, but I think Alaska makes the most sense...
...and that'd make the result basically what I projected at the...
Given the mess with Spirit (blocking that is looking like a dumb move - I have to wonder if they couldn't have fought that one through the courts, since Spirit going into bankruptcy while the DOJ was complaining about competition issues would have looked stupid), I'm not sure whether JetBlue would be up for another tango, but I think Alaska makes the most sense...
...and that'd make the result basically what I projected at the time of the VX merger: That the three of them (AS, B6, and VX) would end up under the same roof eventually, so as to create a "fifth major carrier" in the US.
Who’s left for Southwest to dance with beside Allegiant?
Alaska
IMHO if B6 is going to be 'taken over' it will be by a hedge fund/investment group/Carl Ichan in cooperation with a foreign airline. Im not going to rehash the points made ad nasium but most are valid.
First, not a single airline can eat up B6 alone, as AS just got HA, and any big 4 would effectively reach 20% if they merge with B6 by itself. That is to say, DOT and DOJ will go after it if a merger involving B6 and another US airline ever happens.
If B6 ever gets merged, it is more likely to be devoured by more than one carriers. American is not an effective...
First, not a single airline can eat up B6 alone, as AS just got HA, and any big 4 would effectively reach 20% if they merge with B6 by itself. That is to say, DOT and DOJ will go after it if a merger involving B6 and another US airline ever happens.
If B6 ever gets merged, it is more likely to be devoured by more than one carriers. American is not an effective competitor at NYC area, so taking B6's JFK / LGA slots would be their priority. UA has the smallest share at LGA and wants to get back to JFK, so giving them some JFK / LGA slots also makes sense. Delta, however, has a market share at LGA more than AA and B6 combined, so I guess it would not likely get LGA / JFK slots if B6 sells them, just like AA at DCA. This is the similar story at LAX. However, B6 has 223, which only Delta runs in the big 4, so having Delta taking them over would be a good choice.
Just wishful thinking: if B6 ever gets merged, it's more likely to give away half its JFK / LGA slots to AA, and the other half to UA. Maybe more than half to AA given UA has its EWR hub. Maybe most of BOS slots to UA, and others to AA to compensate NYC slots. AA are likely to take most of B6's LAX slots. For JFK terminals, T6 are likely to be given to AA/AS and T5 to UA. B6's 223s are likely given to DL and 320s shared with all big 3s, could also to the new ULCC that formerly bears the name Spirit.
AS/B6 from a strategic perspective, and likely the only one that would that could get DOJ approval (though it would still be very difficult). Fleet commonality is an issue. AS got rid of the former VA A320 fleet, but that was at a different time. AS will now be incorporating an Airbus fleet from HA, so maybe there's room for a mixed fleet. AND, those HA wide-body aircraft might be interestingly used from the East...
AS/B6 from a strategic perspective, and likely the only one that would that could get DOJ approval (though it would still be very difficult). Fleet commonality is an issue. AS got rid of the former VA A320 fleet, but that was at a different time. AS will now be incorporating an Airbus fleet from HA, so maybe there's room for a mixed fleet. AND, those HA wide-body aircraft might be interestingly used from the East Coast....depending on how they are branded.
AA/B6 would be next logical. B6 is almost entirely domestic/Caribbean, and we all know that AA's international strategy has been a mixed bag, very reliant on the oneworld reliance (which is not a bad thing)....so 2 domestic oriented airlines combining strengths is compelling.
With either AA or AS, B6 would get the oneworld connectivity, which would make the alliance a NAm powerhouse.
UA, hmmm...does UA really need JFK given their fortress EWR operation? Yes, they would like a JFK presence, but is it worth the investment?
DL, not going to happen. DL is already strong enough at JFK/BOS....which is another reason DOJ would not approve.
WN...nope, their operations are so disparate that it doesn't make sense.
Finally, about the unions...a tricky think to manage.
*oneworld alliance...)
The big 3 are too big and nobody wants to see them get any bigger. No way that would ever happen. Alaska acquires Jet Blue and it becomes a national airline overnight; that’s the only tie up that makes any sense.
Certainly not American under the current management. This bunch could screw up a one car funeral!
American Airlines is notorious for acquiring airlines and then dismantling them.... Reno Air, Air Cal, TWA...
A merger between B6 & AA would result in the same thing.
An Alaska merger is quite intriguing AND UA/B6 has much to be said for it as well.
Why is a WN/B6 merger not even in the discussion. With Southwest’s new “Even Better” plan putting it much more in line with JetBlue’s current product (extra leg room, assigned seats, red-eye flying, etc) on top of little route overlap, Southwest doing Hawaii and JetBlue doing Europe, high cash position of Southwest, fleet diversification that Southwest may need, somewhat similar culture, and activist investors on both sides. SWA network with the JetBlue product would seem...
Why is a WN/B6 merger not even in the discussion. With Southwest’s new “Even Better” plan putting it much more in line with JetBlue’s current product (extra leg room, assigned seats, red-eye flying, etc) on top of little route overlap, Southwest doing Hawaii and JetBlue doing Europe, high cash position of Southwest, fleet diversification that Southwest may need, somewhat similar culture, and activist investors on both sides. SWA network with the JetBlue product would seem to complement each other quite nicely and give Southwest access to Airbus, the Northeast, Caribbean, and South America while giving JetBlue access to Hawaii and all of middle America.
Quite frankly, Southwest does not do well in competitive markets with other airlines hubs which describes all of JetBlue’s network
if Fort Lauderdale really does fall apart for Spirit or JetBlue, it might make sense for Southwest to rebuild there
That's nonsense. Southwest does do very well in competitive markets. They fly point to point and often don't specifically always fly to the same major connecting hubs for that reason.
Southwest has 24M vs 36M of UA at DEN. Southwest does 18.5M passengers from MDW vs 23.7M and 13.3M by UA and AA from ORD. WN also does 16M from DAL, almost as much as the non-AA traffic from DFW. Similar with other combos like...
That's nonsense. Southwest does do very well in competitive markets. They fly point to point and often don't specifically always fly to the same major connecting hubs for that reason.
Southwest has 24M vs 36M of UA at DEN. Southwest does 18.5M passengers from MDW vs 23.7M and 13.3M by UA and AA from ORD. WN also does 16M from DAL, almost as much as the non-AA traffic from DFW. Similar with other combos like HOU vs IAH or BWI vs IAD/DCA.
Southwest is directly competing and gaining a large amount of customer traction from the exact same cities/metro areas as big 3. Southwest is literally a larger domestic airline than UA, which wouldn't be possible unless they competed with the big 3 airlines.
and yet WN has pulled down larger positions at ATL, EWR, PHL, IAH etc
WN does best when it can dominate airports which it does at BWI, MDW, HOU, DAL
And UA quite simply let WN grow as much as it did at DEN - which is why UA is fighting as hard as it is to claw back what it lost; UA at DEN was the only legacy carrier hub where it wasn't the...
and yet WN has pulled down larger positions at ATL, EWR, PHL, IAH etc
WN does best when it can dominate airports which it does at BWI, MDW, HOU, DAL
And UA quite simply let WN grow as much as it did at DEN - which is why UA is fighting as hard as it is to claw back what it lost; UA at DEN was the only legacy carrier hub where it wasn't the largest carrier for domestic local market share - even though UA has clawed that back
My statement is correct.
WN does not do well in other airline hubs.
WN's strength is in medium sized not hub markets as well as major leisure cities such as Florida and Las Vegas.
WN does quite well in Chicago
...at an opposite airport from AA and UA's hubs - and WN gets significantly less revenue per seat for the same markets than AA and UA.
There is a reason why WN is pushing hard to get BNA to expand so it can pull down ATL even more.
And I would get that WN doesn't go to DFW but to other airports in the N. Texas Metroplex.
feel free to check back and prove...
...at an opposite airport from AA and UA's hubs - and WN gets significantly less revenue per seat for the same markets than AA and UA.
There is a reason why WN is pushing hard to get BNA to expand so it can pull down ATL even more.
And I would get that WN doesn't go to DFW but to other airports in the N. Texas Metroplex.
feel free to check back and prove me wrong but I don't see WN buying B6 unless it is their aircraft assets... I don't think they will try let alone succeed at building operations at JFK or BOS.
I’d prefer to see Jet Blue acquire American to get some of the management shook up. Would solve some of Jet Blue’s scale woes and give the combined larger airline more of an exciting vision.
I don’t think AA has the financial position nor the strategic wherewithal to pursue a merger with B6. Everyone except AA sees the NE is a weak point in AA’s network, but AA seems perfectly content moving everyone through CLT and DFW.
What happens to JFKs T5?
Leave it empty so that the rats that infest that place have a central location to play.
I can actually see both Admins approving an Alaska Air tie up, whether a purchase or merger of "equals". I would personally want a tie up with American buying JetBlue. AA gets their LGA/JGK slots back, improves in Boston, gets smaller LR planes for thin routes (biggest complaint from loyalists like myself is the map hasn't really been expanding in years), and another place in Florida to have a base. Either way they end up...
I can actually see both Admins approving an Alaska Air tie up, whether a purchase or merger of "equals". I would personally want a tie up with American buying JetBlue. AA gets their LGA/JGK slots back, improves in Boston, gets smaller LR planes for thin routes (biggest complaint from loyalists like myself is the map hasn't really been expanding in years), and another place in Florida to have a base. Either way they end up in OneWorld, which at one point a few years ago was the plan all along.
United and Delta makes zero sense to me. They are the strongest 2 of the US airlines and already are very strong in the NE. The Florida conversation is a blip really, as even B6 has cut back there recently.
Arguably the US needs more airlines and competition not less. Fares are significantly higher than for similar trips in Europe despite taxes being lower and fuel costs generally lower (also due to tax). I've worked in DFW area a few times and have thought about a few days trip away and fares to most domestic destinations are exorbitant compared to flying from NYC where there is at least more competition due to petty much most...
Arguably the US needs more airlines and competition not less. Fares are significantly higher than for similar trips in Europe despite taxes being lower and fuel costs generally lower (also due to tax). I've worked in DFW area a few times and have thought about a few days trip away and fares to most domestic destinations are exorbitant compared to flying from NYC where there is at least more competition due to petty much most carriers having some presence there unlike DFW area where it's either AA, WN or nothing on most routes. A RT for some destinations only 1.5-2.5hrs away were for $400+ most days. A $400 flight from NYC will get you much further in most cases with more competition there keeping prices lower. Fly from an airport in Europe (even a large dominated hub like BA at LHR) and you could still get flights to destinations 4-5 hours away for half that price and it's not uncommon to pick up Euro fares for under $100rt on something like easyJet (who are still significantly better than Spirit/Frontier)
And you can also make the case that what the US can really support is five national airlines (UA, AA, DL (puke), WN, and AS) and one large ULCC (Spirit/Frontier merged). Europe has three large airline conglomerates and three large ULCCs that dominate, and their population is 70% greater.
What a braindead analysis. 70% more population means nothing, when the US still has a vastly higher GDP than the cumulative EU.
It actually doesn’t though. The combined GDP of the EU + the UK is higher than the USA. But the EU isn’t a country so it doesn’t really translate into global power.
If AA and jet blue merge then the FAA would make them give up most b6 slots and move out the terminal to let united and southwest move in TO JFK. they will also have to give up slots at FLL AND MIA
If delta buys them same thing will happen in JFK
United will have to give up slots at EWR and LGA.
Southwest would have the easiest path dealing with...
If AA and jet blue merge then the FAA would make them give up most b6 slots and move out the terminal to let united and southwest move in TO JFK. they will also have to give up slots at FLL AND MIA
If delta buys them same thing will happen in JFK
United will have to give up slots at EWR and LGA.
Southwest would have the easiest path dealing with regulations. No real NYC routes and they cut back big time in FLL this year moving most international flights to Orlando.
Alaska has its hands full with its new merger and the oneworld partnership will pose a problem with regulators
There are only 3 slot controlled airports in the country. JFK, LGA, and DCA.
No slot controls at EWR, FLL, MIA.
Not sure what the heck you are talking about.
If AS did not merge with HA, AS-B6 is very reasonable. Now it is much more likely for DOJ to block AS-B6 merger.
Alaska is the only airline that would have any chance of regulatory approval due to how complementary their route networks are (much moreso than Spirit). This would create a true competitor to the big 3 (and Southwest), allowing them to focus on expansion outside of their respective coasts. But more than route networks JetBlue needs to be in any alliance. A nationwide network is necessary to attract business travelers whose companies pay top dollar for...
Alaska is the only airline that would have any chance of regulatory approval due to how complementary their route networks are (much moreso than Spirit). This would create a true competitor to the big 3 (and Southwest), allowing them to focus on expansion outside of their respective coasts. But more than route networks JetBlue needs to be in any alliance. A nationwide network is necessary to attract business travelers whose companies pay top dollar for flexible tickets, and JetBlue simply doesn't have this despite operating on a hub and spoke business model.
Couple of points:
- Jetblue transatlantic operations are its most profitable part.
- Jetblue has lot of real estate of value, besides the airplanes and the pilots work group.
The best match would be Alaska, while the easiest plug and play would be United.
A couple of opinions stated as such):
IF JetBlue merges -
I think the best candidate is probably American - but that combination would require massive divestitures, especially in south Florida. The main reason American would want to merge with JetBlue is obvious - to strengthen its position at JFK, and maybe Boston. Any merger involving American would probably have to be an all-stock transaction, as American already has a lot of debt and...
A couple of opinions stated as such):
IF JetBlue merges -
I think the best candidate is probably American - but that combination would require massive divestitures, especially in south Florida. The main reason American would want to merge with JetBlue is obvious - to strengthen its position at JFK, and maybe Boston. Any merger involving American would probably have to be an all-stock transaction, as American already has a lot of debt and doesn't need more. Maybe JetBlue should acquire American. LOL.
A Delta or United combination with JetBlue would most likely not pass regulatory muster. It would strengthen both carriers in New York to an extent that it would produce a carrier that would virtually dominate the market.
Alaska is a definite possibility, but its probably got its hands full digesting Hawaiian.
Just some thoughts.
you continue to believe that AA and B6 should be allowed to merge despite the fact that they have both had access to the national assets to be much larger than they are but also have tried to cooperate more deeply - and yet aren't developing a relationship which they legally could.
And you also forget B6' size in FLL which is still large even as AA is the largest airline in S. Florida. Competitive...
you continue to believe that AA and B6 should be allowed to merge despite the fact that they have both had access to the national assets to be much larger than they are but also have tried to cooperate more deeply - and yet aren't developing a relationship which they legally could.
And you also forget B6' size in FLL which is still large even as AA is the largest airline in S. Florida. Competitive problems in Florida can't just be overlooked because you want to fix AA and B6' strategic failures in the NE
Jet Blue is one of the most enjoyable flying experience. It will get watered down by the legacy airlines and be just
another mediocrity.
Alternate Theory #1:
B6 has hunkered down in BOS, JFK, FLL, & SJU. There, it would be an excellent acquisition from a Euro airline which would own 49% of the stock and private investment holding 51% percent. This would give the Euro airline access to some very slot restricted airports in the north east and connections to all the midwest and west. UL, DL & AA, DOJ, & DOT would all throw a fit,...
Alternate Theory #1:
B6 has hunkered down in BOS, JFK, FLL, & SJU. There, it would be an excellent acquisition from a Euro airline which would own 49% of the stock and private investment holding 51% percent. This would give the Euro airline access to some very slot restricted airports in the north east and connections to all the midwest and west. UL, DL & AA, DOJ, & DOT would all throw a fit, but it's similar to the arrangement with Delta & Virgin Atlantic, so no one can really carp that much. Therefore, B6 would need to join Star, Sky, or Uno to leverage the purchase. To fortify its position, B6 would acquire Silver Airlines and change the name to JBExpess to fortify the B6 focus cities with commuter service (see prior Alternate Theory in a prior posting about Jet Blue from yesterday).
Alternate Theory #2:
The The DOJ & DOT would object if one of the Big Three acquired B6 and its slots in the North East. If B6 could hang on for a few more years, AS would pick them up to extend its coverage along the east cost and become a true nation wide airline. Very similar to the various mergers like USAir, Midwest, Ozark, Republic, etc, which eventually developed into the Big Three. Don't make such a fuss about MAX vs NEO. Boeing is so screwed up, AS would be happy with the capacity and footprint. In this situation, it would develop into the Big Four legacy carriers with Southwest as the 5th. Spirit & Frontier would address the ULCC crowd in a separate merger.
Alternate Theory #3:
Both B6 & AA would declare Chapter 11 & Chapter 22 respectively and then merge. Some of the slots at JFK & BOS would be dived out among the other airlines, but AA would still have a net gain in the long run. FLL would be demoted (just like STL was with TWWA) due to MIA being and Hub, but any spare capacity would be directed to LAX as fortification against DL, UA, and AS.
Think of it as a game of chess; vast number of moves and multiple strageties
It is articles like this that prove that 1. there is way too much competition in the cards and miles blog space and 2. that all of the miles and blog operators throw way too much content onto their site to try to bulk up their readership and 3. that Ben is, at his core, an avgeek with all the associated negative stereotypes. No rational person that understands the industry could suggest that B6 could...
It is articles like this that prove that 1. there is way too much competition in the cards and miles blog space and 2. that all of the miles and blog operators throw way too much content onto their site to try to bulk up their readership and 3. that Ben is, at his core, an avgeek with all the associated negative stereotypes. No rational person that understands the industry could suggest that B6 could be acquired by any of the big 4 - and not just for competitive reasons.
JetBlue is a lower cost producer - has a lower CASM - than the big 3 (AA, DL and UA). A merger of a low cost small airline with a high cost larger airline will ALWAYS result in higher costs for the final entity. Very little of B6' network would work at AA, DL or UA's costs which would result in any such transaction simply being an asset acquisition by a legacy carrier which the DOJ understands and which every agency of the government will work to block - just as they did with B6' attempts to acquire and dismantle Spirit.
AS is a well-run company and simply is not going to see value in acquiring another airline for a good long time, esp. one that has no moats or fortress hubs, something AS does well.
As hard as it is for some to accept, B6 just might die a slow death just like Eastern. Some assets were sold off before.
The notion that AA could run B6' transatlantic flights better than B6 is beyond laughable. AA loses money flying the Atlantic, has A321XLRs on order itself, and faces the same problem that AA and B6 face in the NE which is that they made huge strategic mistakes which allowed competitors to grow - mostly DL. It is not the government's job to allow critical government assets to be further concentrated in the hands of an even fewer players to become larger.
UA also made the clearly wrong decision to leave JFK years ago and then even before that failed to operate its EWR hub according to FAA slot restrictions so EWR slot controls were dropped. It is, once again, not the American people's responsibility to fix UA's strategic mistakes.
DL has managed to see the value of LGA and JFK as well as BOS and is the larger carrier at all of those airports even though it does not have a majority of flights at any of those airports - in complete contract to AA at DCA or UA at EWR. There is no case for allowing DL to get any of B6' assets other than in a free-for-all in which any carrier can add flights - which is what DL did at JFK and LGA post 9/11.
The problem w/ NYC aviation is the lack of infrastructure to support many competitors and the large successful hubs which DL operates at LGA and JFK and UA operates at EWR. There simply might not be room for any other hub - that is true at ORD where AA underperforms UA and at LAX where DL has taken a wide lead over AA and UA. The notion that there can be more than one large successful competitors in the same industry simply is not supported by reality elsewhere in the country
If the US was serious about opening NYC to more competition it would sue the Port Authority to remove the perimeter restriction at LGA; it has no commercial reason to exist any longer and forces LGA slots to be used by a high percentage of small regional jets; only DCA- also w/ a perimeter restriction - has a smaller average aircraft size.
And then remove slot restrictions from JFK which would allow any carrier that can make JFK work serve the airport - but it would also have to allow DL to grow even more and UA to return.
AA and B6 simply have control of two many underperforming slots in NYC to allow them to continue to be protected.
DL and UA have done what they have to do to win in NYC while AA and B6 have not. DL is 18% larger than NYC in the number of flights out of all 3 NYC airports. LGA and JFK are limited by the FAA's inability to staff ATC while EWR is operating as high as it can due to the configuration or EWR's runways.
Operationally, NYC can support more air service but is constrained by the LGA perimeter and by the poor utilization and performance of AA and B6 which doesn't benefit consumers w/ lower prices but costs stockholders.
FLL is a mess competitively but has been overscheduled for years. way too many carriers are chasing the same amount of revenue which is why WN and then B6 and now NK are cutting back.
Continuing to allow bad mergers and reward poorly run companies is why the US only has two economically viable airlines right now and DL is the most profitable not just domestically while UA has the largest international network but wants to grow alot more domestically - if it can get the assets it needs.
The solution is to allow the free enterprise to work, make national assets available to as many players as possible but not reward or protect poorly run companies.
Thankfully this article like every other will fall off the front page and people will lose interest.
AS has fortress hubs? What, ANC?
(SEA isn’t a fortress hub, obviously)
I think the argument against an AS/B6 tie up, aside from needing to spend some years digesting HA, is that the route network would be very dumbbell shaped, basically nothing except spokes more than 75 miles away from the Atlantic/Pacific coasts. No midcon hub like SLC/DEN/DFW/DAL/MSP/ORD/MDW. Very hard to flow traffic and planes. And building out a new hub ain’t cheap or risk free.
coward,
you can not call SEA a fortress hub for AS if you don't want but they operate over half of the flights at the airport and have the largest market share. They connect large numbers of passengers over SEA not unlike what DL does at ATL, DTW, MSP or SLC or AA does at is fortress hubs.
Your point about the resulting network is the real issue. and the fact that DL has...
coward,
you can not call SEA a fortress hub for AS if you don't want but they operate over half of the flights at the airport and have the largest market share. They connect large numbers of passengers over SEA not unlike what DL does at ATL, DTW, MSP or SLC or AA does at is fortress hubs.
Your point about the resulting network is the real issue. and the fact that DL has managed to take by far the leadership position in BOS and NYC so AS would be in a very different position on the east coast than it is in SEA.
I'm confused by your definition of fortress hub vs a simple hub. Definitionally speaking, any hub does those two exact things, which is have the largest market share and connect passengers.
SEA is by no means a fortress hub for AS. It's especially not comparable to actual fortresses like CLT, PHL, DFW, SLC, ATL, DTW, and MSP run by AA/DL.
By your claim, ORD would also be a fortress hub for UA since they have...
I'm confused by your definition of fortress hub vs a simple hub. Definitionally speaking, any hub does those two exact things, which is have the largest market share and connect passengers.
SEA is by no means a fortress hub for AS. It's especially not comparable to actual fortresses like CLT, PHL, DFW, SLC, ATL, DTW, and MSP run by AA/DL.
By your claim, ORD would also be a fortress hub for UA since they have the largest market share and connect a large number of passengers there too, but it's clearly not since it's a dual hub w/ AA having a quarter of the market share as well.
SEA, PDX, and now HNL.
Tim Dunn (if that's his real name) - the retired CEO of 12 different extraordinarily profitable airlines - has pontificated. Nothing personal. I'm merely questioning Mr. Dunn's (if that's his real name) qualifications to dictate the proper way for real airline CEOs and points/credit card writers to run their businesses. It would be one thing if he (if he is a he, not a she) simply offered opinions. But he states his/her opinions as irrefutable...
Tim Dunn (if that's his real name) - the retired CEO of 12 different extraordinarily profitable airlines - has pontificated. Nothing personal. I'm merely questioning Mr. Dunn's (if that's his real name) qualifications to dictate the proper way for real airline CEOs and points/credit card writers to run their businesses. It would be one thing if he (if he is a he, not a she) simply offered opinions. But he states his/her opinions as irrefutable fact. And anyone who reads his response to those who dare to question his/'her opinions is evidence of his assertions of perfection. He cites data, but I've never seen him'her provide any. Mr. Dunn (if that's his/her real name) consistently implies that his/her heart-throb, Delta Air Lines, is the world's only PERFECT airline. And anyone who dares to criticize his/her heart throb should be imprisoned (euphemistically speaking). As for the plethora of airline points and credit card blogs, the marketplace, not Mr. Dunn (if that's his/her real name), will sort out which ones survive and which ones go under. The reason I'm being sarcastic about Tim's name is because of his recent condescending criticism of those who use monikers, such as myself. No one really cares about who I am. I'm just a 75 year old retired curmudgeon. I simply have opinions - but I try to state them as such.
if you are going to talk about airlines, you have to have some basic knowledge of airline data. I don't cite anything that isn't publicly available. The fact that you and others don't know those facts doesn't make them wrong.
And you, like others, want to attack the messenger because you can't accept the message.
in this case, it is entirely possible that B6 might just figure out how to turn the company around and...
if you are going to talk about airlines, you have to have some basic knowledge of airline data. I don't cite anything that isn't publicly available. The fact that you and others don't know those facts doesn't make them wrong.
And you, like others, want to attack the messenger because you can't accept the message.
in this case, it is entirely possible that B6 might just figure out how to turn the company around and remain a niche player.
And it is also possible that they will simply fail and the national assets they use will simply be available to multiple other carriers
Yeah, Ghost. "Mr/Ms Dunn" seems to have a particular love in attacking you personally for your america west time whenever you say anything. Who knows why but perhaps it makes him feel better about his life... But it is the tell tale sign of an internet troll and he/she is.
While a little aggressive, I agree with most of these observations. In particular, the eventual death of B6. There is a sharp divide between what AVgeeks want (preaching the gospel of Mint) vs the company's dwindling finances and operational efficiency. Post failed Spirit merger, B6 will likely be scrapped for parts in the long run. I suspect it was the same alternative for the AS/HA merger - HA's finances just made the facts clearer to regulators.
A B6 & Delta combination should be the only option. My son can type up a 15,000 page brief that would put the DOJ asleep and it would easily get approved after they see his success in the comment sections of other successful travel blogs.
Why not Southwest?
Why not JetBlue and Southwest? That would really expand both networks into areas they don’t have a strong presence and diversify SWAs fleet helping out with the Boeing delivery and quality problems. Also JetBlue just announced it is expanding extra legroom offerings which SWA is moving towards.
I feel like they've been very clear they won't fly anything but 737's. Even when they had the opportunity with the Airtran purchase to operate smaller 717's and IIRC said they were excited for them, leased them off to DL. B6 is almost solely Airbus with some Embraer's mixed in. So unless WN purchases for the slots, routes, and leases/sells off the aircraft. I don't see it happening.
You could say the same thing about Alaska when they bought Virgin. Alaska trashed all the buses and went all 737. I think Southwest is looking harder and harder at fleet diversification the longer the Boeing woes drag on.
I agree, I heard a staggering statistic today that Boeing has a 5400 aircraft backlog, good for Boeing long run but it is going to take a minute for them to sort out their house; labor/quality control and competitive aircraft order wise - airbus is winning in the near term... the decision not to re imagine the 737 sort of aircraft was a poor short term financial decision, decent frame but my least favorite plane...
I agree, I heard a staggering statistic today that Boeing has a 5400 aircraft backlog, good for Boeing long run but it is going to take a minute for them to sort out their house; labor/quality control and competitive aircraft order wise - airbus is winning in the near term... the decision not to re imagine the 737 sort of aircraft was a poor short term financial decision, decent frame but my least favorite plane to fly on in coach as it continues the 17-17.5 seat width, reasonable for a fairly short jaunt but not much more. We flew on a TAP A 321 international configuration in coach last year for a short domestic trip and was really impressed by the comfortable cabin and seats. WN those Airbus frames are worth a look!
Please not Alaska. Alaska is a great airline with a strong West Coast operation. They're well-run, but it's also because of that, they don't innovate at all. AS dismantled all of Virgin America's nicer first class seats and they'll do they to JetBlue's Mint product.
No one will harmoniously blend their route structure; it’s all about asset acquisition. If it would be a regulatory challenge to merge with Delta, certainly the same with AA or United. In fact, the Northeast Alliance was itself shot down by the DoJ. Of the options listed, a merger with As would pass.
Lets be very clear, airlines announce new flights or increased frequencies to these gate or slot restricted airports all the time.
AA/UA/WN/DL can all very much decide to acquire JFK slots if they want to. In fact, Delta has very much done that over the past two decades.
But if they aren't willing to pay $75+ million for current slot pairs, no way any of them will be paying billions for B6.
AA, will be in Chapter 11 in a few years, so it's not buying JetBlue.
Alaskan has its hands and balance sheet full.
So it's United or nobody. However United has lots of 321 planes coming and even more 737s, so they don't need anything JetBlue has on order. ( JetBlue just deferred it's orders)
But realistically what will UA get? It doesn't need any you European cities. They already go over...
AA, will be in Chapter 11 in a few years, so it's not buying JetBlue.
Alaskan has its hands and balance sheet full.
So it's United or nobody. However United has lots of 321 planes coming and even more 737s, so they don't need anything JetBlue has on order. ( JetBlue just deferred it's orders)
But realistically what will UA get? It doesn't need any you European cities. They already go over them all.
Sure they get JFK slots but let's not kid ourselves. They've done fine without them.
United does not need fort Lauderdale. They've already got a fortress there.
It's "ALASKA Airlines", not Alaskan.
Here’s a wild one: Sell the mint equipped aircraft, merge with Allegiant. That would be interesting :)
I know AA leadership cannot run AA, and I doubt B6 leadership could run a combined AA/B6 so it seems for AA/B6 to work you would need an entire new leadership team
AS makes most sense, but maybe not for the next 5 years or so
The only one of these options that doesn’t have major anti-trust issues is AS. You could actually argue that an AS/B6 merger is a pro-competition move as it creates a new national scale competitor. It may not happen for a while, but it makes sense.
The others all just make the Big 3 bigger and I’m not sure the consumer benefits in any way.
AA buying B6 would create a third real airline option in the New York area, which regulators should look favoribly on (although they may not).
Suggested strategy: AA uses B6's domestic network and a subset of its own, but shifts a lot of its slots to long-haul, pulling airframes from PHL for that (gradually de-emphasizing PHL).
That's exactly what they planned with the NEA.
Court case docs show that AA wanted to de-emphasize PHL and make New York the real TATL gateway. That's why ATH and DEL were done out of JFK.
They will extract too many concessions if they even allowed this, nixing most of the value. So wouldn’t happen until they are in liquidation. Only the slots and routes are worth anything
For the failing firm defense to work, the acquirer needs to prove smaller players have no interest in the target assets. Even then, Alaska didn’t rely on that argument to acquire Hawaiian. JetBlue-Spirit threw red flags in discovery. Frontier-Spirit would have better odds. JetBlue remains far from failing—no chance the legacies do M&A under this antitrust regime. DOJ/FTC regards the last big airline merger with AA as a failure for consumers.
The airline most likely to pull it off and get regulatory approval would be AS. AS (and maybe UA) would be the most likely to harmonize the product into their own. AA would simply put in more coach seats and call it a day.
nah, they would also wind down BOS and JFK in favor of PHL and CLT
JetBlue's prospects as an independent airline are very limited. It will be acquired. Only a matter of time. Most likely, it will be American.
American doesn't have the finances to pull it off, but would be the most logical merger partner from a network perspective and resolve its NY problem. United, unlikely, without huge divestiture in NY, given its massive EWR hub. AS and B6 have complementary route maps but AS just merged with HA and likely is done for the time being.
In the long run, depending on finances and DoJ posture, an AA/B6 merger is more than...
American doesn't have the finances to pull it off, but would be the most logical merger partner from a network perspective and resolve its NY problem. United, unlikely, without huge divestiture in NY, given its massive EWR hub. AS and B6 have complementary route maps but AS just merged with HA and likely is done for the time being.
In the long run, depending on finances and DoJ posture, an AA/B6 merger is more than likely, with further consolidation in the US industry such as AS/DL, UA/WN.
Well said
With only two Jet Blue Mint flight experiences to compare to the rest of the US market, I would not welcome a takeover.
From my limited experience, Jet Blue are far more customer friendly and offered me a better experience of any of the other US airline I have flown.
A takeover might be advantageous to others but in my opinion it would be a retrograde step for Jet Blue.
Agree Mogman. If AA take over (most likely according to many commentators), then all the B6 benefits get dumbed-down to AA levels of shiteness. No benefit to passengers.
Unlikely any of these would ever be approved.