United Airlines wants to increase service to Mexico City. The carrier intends to add a third daily flight from its San Francisco hub. But it cannot. Gaining runway slots at Benito Juarez International Airport (MEX) is notoriously difficult and the slot coordinator there – AICM – has, in the carrier’s words, “summarily denied United’s slot requests.”
But JetBlue has slots to spare in Mexico City. It received “remedy” slots as part of a deal between Delta Air Lines, Aeromexico and regulators related to the joint business venture the two carriers established. At that time the US Department of Transportation required that Delta and Aeromexico cede slots to new entrants, “providing access to MEX to carriers that do not have it, and have demonstrated that they cannot achieve it otherwise, in order for them to provide competitive service, disciplining the [Joint Venture].” JetBlue, along with Alaska Airlines and Southwest Airlines, received slots during that process.
JetBlue is leaving the market in early January and United wants those slots. The problem is that the DoT’s prior policy says the slots can only be given to new entrant carriers, not legacy operators. United appealed to the Department to adjust that ruling and JetBlue is now on record supporting that option. And JetBlue’s reasoning is intriguing.
JetBlue acknowledges that it (and Alaska & Southwest) had ample opportunity to compete and could not. The company notes in a filing that its “advocacy for increased U.S. carrier access at MEX and other airports is not, and was never, meant to negatively impact U.S. airlines attempting to serve constrained international airports.” And gaining access to those constrained airports, that opportunity to compete, is a massive problem for JetBlue right now. Just not in Mexico.
It turns out the yields JetBlue could drive in Mexico City were insufficient to justify continuing those operations. But as the carrier plans to launch its London service in 2021 access to constrained airports is critical. JetBlue has appealed to regulators multiple times to gain access to Heathrow through similar “remedy” slots, tied to the granting of anti-trust immunity to other carriers. It has repeatedly come up short on those requests.
But as it walks away from Mexico City the carrier is making one more effort to point out that Delta and its partners are growing their slot portfolios at constrained airports (its revised JV with Virgin Atlantic, Air France and KLM was conditionally approved in August and finalized last month), and that’s making it hard for new entrants.
In the context of MEX, United’s statement regarding the problems it is encountering obtaining slots completely debunks Delta/Aeromexico’s argument in support of their pending motion to eliminate the five-year-term limit on the erroneous basis that MEX slot restrictions no longer remain a concern. The record is clear that Delta and its worldwide partners continue to accumulate slots at MEX and other key international airports such as London Heathrow, where slots constitute a barrier to new entrant competition from carriers such as JetBlue.
Making sure that someone – anyone – is competing against Delta at Mexico City is marginally good for JetBlue. In this case the enemy of their enemy is a friend. But in London United is still an enemy, “shaking the trees” and securing an slot from Lufthansa Group to launch an additional Newark-London flight in Summer 2020.
JetBlue still does not have a viable (read affordable) solution for getting access to Heathrow and it is unlikely that this move in Mexico City will change the London situation. But it certainly doesn’t hurt to remind the DoT that the anti-trust immune joint ventures do reduce competition. Requiring that they be reviewed on a shorter timeline (every 5 years instead of 10) and otherwise keeping them in the spotlight could eventually pay off for JetBlue.
Besides, the carrier is giving up the Mexico City slots anyways.
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