With their landmark Northeast Alliance (NEA) approved, JetBlue and American Airlines are pushing quickly towards implementation of coordinated operations in the New York City and Boston markets. In earnings calls last week both companies spoke to the potential opportunities the relationship brings.
While the pandemic has been extremely challenging, it has also created once-in-a-generation opportunities. This alliance is one of them. As always, we will be smart about where and when we grow, and we won’t grow just to grow – we’ll add routes that earn their way into our network and help us return to profitability.
– JetBlue Head of Revenue & Planning Scott Laurence
Shifting to larger planes
For American one key development is removing its 50-seat jets from the New York market. AA president Robert Isom noted in his company’s earnings call that “every time we move one of those 50-seaters out, we’re bringing in a two-class product, with a first-class section that has Wi-Fi and in-seat power.”
It should be a more comfortable and compelling offering for passengers, but the promise of two-class service may not be the full story.
A major slot shift in play
At LaGuardia, for example, JetBlue expects to potentially triple its operations from 18 peak daily flights in 2019 into 50-60 range over “the next few years” with the NEA online. That only happens as it borrows slots from American. So while the replacement aircraft will be larger, and include free wifi on board, there might not be power or the first class cabin on offer.
JetBlue Head of Revenue & Planning Scott Laurence suggested, for example, that the coastal Southeast might be ripe for disruption, with a number of markets “right now that are served by a monopolist.” Reviewing filed schedules suggests a handful of destinations in the region where Delta Air Lines is the sole or dominant carrier.
Map generated by the Great Circle Mapper - copyright © Karl L. Swartz.
Laurence also suggested that the NEA would allow the pair to “work together to have additional relevance in some of the more business-oriented markets in the Midwest, for example, that we have not been able to break into historically.” While he did not name specific cities in the earnings call an internal memo to crewmembers suggests that San Antonio, Kansas City, St. Louis, and Milwaukee are among the markets on the shortlist for the next few years.
Map generated by the Great Circle Mapper - copyright © Karl L. Swartz.
Newark is expected to grow towards the 70-80 daily flights range as JetBlue adds frequencies and destinations, taking advantage of American’s corporate contracts and customer base. JFK and Boston expect similar growth.
More transcons at JFK, building out the Mint offering, could be sold to more corporate customers. And if the loyalty program reciprocity truly is reciprocal some travelers might start to book away from AA’s product towards Mint, especially as the new Mint aircraft enter service in June.
Leaving the United States (and with the growing fleet of A321neo aircraft) there are many more markets that become appealing and profitable to serve. Whether it is finally launching service to Canada with flights from Vancouver or expanding further into Central and South America with destinations like Cali, Colombia and Panama City, Panama, JetBlue is looking to fill out its route network with help from American’s sales team.
In total the carrier expects a dozen or more new cities could be added to the route map as a direct result of the new partnership.
American already announced its new JFK routes to Tel Aviv and Athens, building on the feed expected from the new JetBlue flights at JFK. But given the zero-sum game of slots it is clear that AA will have to trim services in these markets to make the numbers work.
Timing of the implementation
Much of this could still be years away. Laurence references 2023 as a target for business travel recovery. But other bits will begin much sooner.
Both sides agree that the first step towards implementation is a quick and aggressive move on code-sharing where permitted. That should start to show up in the next month or two as both Raja and Laurence anticipate having that live in Q1.
From there the frequent flier reciprocity comes into play. Given the very different program benefits, particularly around day-of-travel experience, this one will be interesting to watch unfold.
And from there the other route planning starts to take off.
Objections raised, but will they be heard?
Not everyone is happy with the NEA moving forward. Competitors objected to the paltry divestiture of slots and are demanding an open public review of the agreement.
Passenger advocacy group Travelers United went even further, suggesting that roughly 16 slots at each of the airports was a more reasonable level to divest rather than the 13 total required.
It is unclear how the Department of Transportation will react to these appeals. Thus far the agency has remained quiet. And the airlines keep noting that the review was completed in line with the requirements at the time. No doubt that, just like Boeing, the pair are happy the paperwork was signed prior to January 20th.
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Not quite sure how “seamless” the “seamless experience” touted in the PowerPoint slide for B6 (jetBlue) – AA connections at JFK Airport will be with each airline operating at separate terminals (5 & 8 respectively) they sub-lease & manage from the Port Authority of New York & New Jersey (PANYNJ; the operator that leases JFK & LaGuardia airports from NYC), which will require either the addition of an airside bus similar to Delta’s “JFK Jitney” to transfer passengers between Terminals 2 & 4 (Note: Delta’s T2 is currently closed due to its reduced schedule at JFK; T2 is also going to be demolished if/when JFK Airport’s $13 billion terminal redevelopment plans are funded & Terminal One Group Association’s T1 massive expansion gets underway) – or even worse, passengers are left to fend for themselves & have to rely on exiting jetBlue’s T5, schlepping through the VERY LONG connector from the T5 head house to the JFK AirTrain, and then having to clear security once again (or vice versa from AA’s T8 to B6’s T5)?
That, plus the vast disparity in terminal amenities, which on JetBlue’s side is an over abundance of much better curated restaurants & shops, but a distinct lack of clubs, lounges or AA’s well regarded “Flagship Dining”, with the opposite situation at Terminal 8 (to date; perhaps this will change when the current T8 $344 million expansion [33,000sf is being added to the existing structure, with 70,000sf being “added” from reconfiguring/repurposing existing facilities] & renovation is completed in 2022…), where except for its lounges & Flagship Dining, amenities for most passengers are not nearly as robust as they are at T5.
Meanwhile, over at LGA, jetBlue will have to relocate from the intimate Marine Air Terminal to the new terminal & gates nearing completion at what used to be referred to as the Central Terminal Building, now Terminal B to make a “seamless experience” possible there.
Although not officially announced yet, a move to LGA Terminal B by jetBlue has been speculated by many industry observers – so this marketing/code-share agreement, along with a (likely) leasing out of slot pairs (& presumably gates, other terminal faculties, too) by AA to B6 increases the likelihood of jetBlue relocating to LGA Terminal B once the westernmost gates are completed there.
[Sidebar re LGA 1,500 miles Perimeter Rule: Once upon a time, Delta Air Lines wanted to have this government imposed, but of course, long ago obsolete, market distorting/anti-competitive “regulation” eliminated.
Delta’s desire to have LGA’s Perimeter Rule eliminated was so great that it took its case all the way up to the US Supreme Court in 1987 (after it merged with Western Airlines, which had a hub at Salt Lake City), but lost.
Numerous published reports dating as far back as 2015, plus a column by noted industry expert, Brett Snyder (aka “Cranky Flier”) the same year, said that elimination of LGA’s outdated Perimeter Rule was being “studied” by PANYNJ, with Delta still eager to see it eliminated (or I might add, perhaps modified/amended along the lines of Washington National [DCA] where a carve-out for a subset of “beyond perimeter” slot pairs is created instead of outright elimination…).
Of course, with Delta contributing $3 billion to redevelop Terminals C & D (which made NY’s King…er Governor…Cuomo “vision” [& legacy] to create a “world class airport” possible), most industry experts (myself included) believe (fully winking & nodding, of course!) the “quid pro quo” for Delta’s $3 billion that was required for King Cuomo to include rebuilding LGA as among his greatest, most recognized & admired achievements is ultimately allowing Delta (& others, of course) to finally fulfill its decades’ long ambition to fly beyond 1,500 miles from/to LGA].
Finally, over at Newark Liberty International Airport, as both airlines (AA & B6, that is) operate at the current Terminal A, completion early next year (2022) of the 1st phase (21 of its planned 33 total gates) for the brand new, $2.7 billion, 1 million sf Terminal One makes a “seamless experience” for connections between AA & B6 possible from the get go without fussing about connecting between distant passenger terminals or devising & executing a move from one terminal to another before the PaxEx experience becomes “seamless”.
But, regardless of the obstacles yet to overcome at either JFK or LGA Airports, with AA & B6 being able to dramatically increase flight options to/from NYC, the potential benefits to both airlines, and perhaps flyers who in theory will gain a “3rd viable competitor” capable of taking on Delta & United, something that neither AA nor jetBlue could do as efficiently on their own (albeit for different reasons, with AA’s to some degree being of its own making), “seamless experience”, or more likely at least at JFK for quite some time anyway, “not exactly ‘seamless’”, the potential is there for this to be a “win-win” for the two airlines AND flyers, too.
Which would be a refreshing change from the anti-competitive oligopolistic models that emerged not long after Doug Parker’s US Airways took over American in 2013/14.
Even better would be a more robust slot divestiture than the preposterously paltry number of slots awarded at the last minute by the DOT without a public commenting period, which rightfully should be revisited & revised after Pete Buttigieg is confirmed by Senate as DOT Secretary – because that way too small slot divestiture is truly ridiculous & most assuredly requires a more transparent process, not to mention a more robust & equitable divestiture of slots at otherwise impenetrable airports
Addendum: Pete Buttigieg was confirmed by the US Senate as the new DOT Secretary while the reader comment above was being written!
A bus between terminals isn’t the end of the world. Not ideal and adds to the minimum connect time, but relatively cheap to implement. And don’t forget that JetBlue’s terminal at JFK is supposed to expand as part of the same effort that will kill off T2.
Seamless FFer experiences will be very interesting given how different the programs are. Earning rates should be relatively easy as both are revenue-based programs now. And priority boarding/bags/security lines are easy. Would AA offer upgrades to Mosaic passengers? Is the potential for EMS at the gate for AA elites enough to reciprocate? What other day-of-travel benefits need to be mapped between the two?
Booking across both carriers on a single ticket and being able to manage everything (seats, changes, etc.) and to check-in for that itinerary via any channel (i.e. counter, web, app) and have all the BPs is a tech challenge. Not impossible, but neither carrier has shown itself to be stellar at interline IT work (though AA got better recently). That’s the sort of seamless stuff that will really piss customers off if it doesn’t go right.
Once cash becomes available, we will merge.
Will AA employ the same strategy out West with Alaska?
To an extent the company already indicated its intentions to do just that, though it didn’t phrase it the same. In shifting some long-haul markets to Seattle from LAX there is an admission that AS will be handling more of the domestic feed.
Some additional details on those changes:
Late yesterday (Weds. Feb 3rd) longtime airline industry reporter, Ted Reed, now with The Points Guy (TPG), posted additional info re American Airlines & jetBlue (aka “B6”, its 2-letter airline code) NYC slot swaps (including some schedule coordination, but NOT pricing…[interesting!]) & the two airlines’ upcoming code-share & Northeast USA marketing alliance.
The slot swaps in NYC are interchangeable between JFK & LGA Airports, with Reed, based on his interview of American’s Chief Revenue Officer, Vasu Raja, noting that a possible option to introduce a more seamless experience at JFK, where the airlines operate not just at separate, but quite far apart terminals, is for American to swap some of its LGA slots currently operated with 50-seat RJs for some of jetBlue’s mid-afternoon JFK slots that will allow AA to **REINTRODUCE** nonstop MAINLINE (that’s what AA’s pilots are being told) domestic, feeder service at JFK to select cities, along with launching nonstops to Athens (seasonal), Tel Aviv (year round) & reinstating nonstops to Rio de Janeiro (seasonal).
Of course, the word “reintroduce” seen in the paragraph above regarding AA DOMESTIC MAINLINE nonstops to/from JFK was deliberately chosen because once upon a time, AA operated a modest afternoon in/out bank of nonstop, mainline domestic flights when it had a more robust international operation at JFK waaaay back in the day (plus, of course, AA inherited TWA’s fairly robust portfolio of slots & routes when it acquired that airline in early 2001 during its bankruptcy).
But, quite frankly, after the airline industry was deregulated, airlines such as Pan Am, TWA or even American, that relied on a limited schedule of domestic flights at JFK struggled to make things work at that airport even if they could operate under a single roof or at closer by/adjacent terminals that in Pan Am’s case didn’t even require going outside (as TWA did), much less the hassle of waiting for a pokey bus, to change terminals!
And while the JFK of now is not the unwanted stepchild among NYC’s 3 airports as it was during Pan Am’s & TWA’s era, thanks to JetBlue’s launch 21 years ago, Delta’s bulking up of its operations at JFK & to some extent introduction of the (half-baked but better than nothing…& barely when compared to many cities around the world…) “AirTrain” connection with Long Island Railroad & NYC Subway trains that makes JFK more accessible without the typical 90 mins to 2 hours schlep by car than it used to be, one still cannot help but wonder if the ghosts of Pan Am, TWA or even AA’s past will loom large – or not – for AA reintroducing the type of nonstop domestic service pattern at JFK that Reed describes as an option being considered to bring connections under one – as in ITS – T8 roof at JFK to make some, but obviously NOT all connections between AA & JetBlue at JFK a “seamless experience”.
We shall see – in about 2 months’ time, too, according to Reed.
Oh, and don’t forget, when completed, LGA’s brand new terminals & its much closer to midtown Manhattan location will make that airport **VERY DESIRABLE** once again – especially if/when JFK becomes a gigantic construction zone anytime soon per King Cuomo’s $13 billion redevelopment plans already announced.
[NOTE: LGA is slot controlled 6am – 9:59pm Monday thru Friday; 12noon – 9:59pm Sunday. Slot controls nor LGA’s 1,500 miles Perimeter Rule are in effect on Saturday. Meanwhile, at JFK, slot controls are daily, 6am – 10:59pm. Both airports’ slot controls (technically, they’re called “High Density Rules”) are effective thru October 29, 2022, with the 80% “use ‘em or lose ‘em” requirement currently suspended due to Covid19. All slot data per USA Federal Register].
For example, unlike Delta’s “JFK Jitney” shuttling connecting passengers between its NEIGHBORING terminals 2 & 4 (pre-pandemic when both terminals were in use; T2 is currently closed), jetBlue’s T5 & American’s T8 are not just quite a ways away from each other vs. Delta’s direct route, & much shorter distance, for its two terminals, airside (as in a bus similar to Delta’s inter-terminal connections that eliminates the need for an additional, mid-journey security clearance) AA’s T8 to B6’s T5 requires passing British Airways’ T7 *AND* an overpass above the JFK Expressway…so that makes for a much longer & time consuming transit time that must also include allowances for aircraft departing & arriving at BA’s T7, along with vehicular traffic also using service lanes on the JFK Expressway overpass, with the corresponding trade-offs between increased costs for additional equipment & bus drivers for more frequent inter-terminal service vs. longer wait times to better control costs for however many buses & drivers are required to optimize frequencies, etc.
Simply put, obviously, shuttle buses between the two airlines’ terminals is eminently doable, just as Delta does for its separate terminals at JFK. However, there is a critical difference that AA & jetBlue face: the distance between their terminals is considerably longer AND the route requires passing an active passenger terminal along the way [T7] & an overpass.
Anyhow, Reed’s update re AA + B6 is at the link below:
https://thepointsguy.com/news/frenemies-american-jetblue-new-york-jfk-south-florida/