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American Airlines

U.S. Green Lights American, JetBlue Pact Despite Competitive Concerns

Edward Russell
January 12th, 2021 at 4:18 PM EST

American Airlines and JetBlue Airways are free to begin setting up their new northeast alliance after U.S. officials approved the pact despite objections from competitors.

Under the partnership, the carriers will offer customers what they claim is the “largest network” in Boston and New York beginning in the first quarter. American and JetBlue plan to coordinate schedules under a new codeshare and grow their respective operations in the two cities as part of the deal. Other aspects include joint ticketing and reciprocal loyalty benefits.

“With this alliance, American and JetBlue will operate the biggest network for our customers in the northeast,” said Vasu Raja, chief revenue officer at American, in a statement Tuesday. He hinted at new routes to come in addition the previously announced additions of Athens and Tel Aviv.

Similarly, JetBlue will “significantly expand” at New York LaGuardia using what are understood to be slots from American. Growth is also planned in Boston and at New York JFK.

While representatives for the carriers declined to provide additional details, executives at American previously spoke of shifting slots at New York JFK and LaGuardia currently flown with small regional jets to JetBlue. The larger carrier could then focus on expanding mainline and long-haul flying from the airports.

The tie-up is not without competitive concerns. American and JetBlue combined carried 44% of passengers at Boston Logan in 2019, according to Bureau of Transportation Statistics data via Cirium. And at JFK and LaGuardia, they had a 32% share of passengers during the year.

Southwest Airlines and Spirit Airlines both raised objections to the alliance that they see as more akin to a joint venture than a codeshare. Both note the pact allows for what amounts to a duopoly in Boston and at New York JFK and LaGuardia airports between the combined American and JetBlue, and Delta Air Lines which has its own hubs at the three airports.

“You’ve got the world’s largest airline and they need a codeshare partner in Boston and New York?” a senior executive at Spirit told Airline Weekly. “It feels like a pseudo-merger.”

While the Department of Transportation signed off without addressing Southwest or Spirit’s concerns, it is requiring American and JetBlue to divest a yet-to-be-disclosed number of slots at New York JFK and Washington Reagan National airports. The partners also cannot coordinate in certain markets where they both fly and there is little other competition.

But asked if this was enough, the Spirit executive said they are unlikely to come “anywhere near overcoming the competitive disadvantage.”

Approval of the American-JetBlue partnership comes during the industry’s most challenging crisis. The coronavirus pandemic has decimated air travel, with U.S. passenger numbers down 52% year-over-year during the week ending January 5, data from trade group Airlines for America (A4A) shows. Traveler numbers are expected to fall further following the holiday travel season.

This slump has resulted in billions of dollars in losses since the pandemic began last March. Hundreds of aircraft have been retired and, if not for federal aid, one in five airline employees would be out of a job.

Both American and JetBlue see the pact as a way to restart some of their suspended flying earlier rather than later. The latter just took delivery of its first Airbus A220, a jet it will base in Boston to expand its presence there.

And it appears political leaders may have backed the partnership as a way to save jobs despite the objections. In the airlines’ joint statement, incoming Senate Majority Leader Chuck Schumer (D-N.Y.) called the partnership an “innovative” solution that could “save thousands more jobs.”

American inked a similar partnership with Alaska Airlines last year. The codeshare will cover the airlines’ flights along the West Coast and see Alaska join the Oneworld alliance on March 31.

Edward Russell
January 12th, 2021 at 4:18 PM EST

Tags: American Airlines, JetBlue, Southwest, Spirit

Photo credit: American and JetBlue can begin implementing their proposed northeast alliance following regulatory sign off. Wikimedia / Eric Salard

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