docav8tor

DOT Approved The American Airlines-JetBlue Partnership (By Skipping Deadline To Object)

by Gary Leff on November 30, 2020

In July American Airlines and JetBlue announced a partnership involving codesharing and frequent flyer programs. It’s been expected that American would turn over some New York flying to JetBlue, and American would focus more internationally.

At the time American Airlines said it would mean the launch of New York JFK – Tel Aviv as well as seasonal New York JFK – Athens and seasonal New York JFK – Rio de Janeiro service in winter 2021.

The two airlines submitted copies of their agreement to the Department of Transportation for review on July 22, 2020. The agreement didn’t just include codeshares and frequent flyer program tie ups as announced but also “long-term wet leases involving a substantial number of aircraft” – a wet lease provides not just planes but also crew.

The DOT had 30 days to respond, but took its available option to extend that deadline, which on August 20 they did to November 19, 2020 (noting that they might terminate the waiting period early when they concluded their review).

November 19th passed without comment (HT: @IshrionA), and like the Latin phrase qui tacet consentire videtur or “he who is silent is taken to agree.” Since the waiting period passed without the DOT taking action, “the parties are free to implement their agreement unless the Department has taken action.”



This gives American Airlines strength in the Northeast, plugging an important hole in its network the way that Alaska Airlines does so for them in the Northwest. For JetBlue this gives them a way to expand in congested markets – expect to see them picking up slots at New York JFK. And for Delta this means new competition in New York and Boston.

I’ve reached out to American and JetBlue for comment and will update if they respond.

nuball5

Doesn’t mean it’s included in the specific agreement between American and Jetblue.

Roy Biggins

I guess I’m gonna ask a stupid question here. Why was the DOT reluctant to just sign the agreement? And why did they choose to extend and then do nothing at all? I mean, I realize it’s the government, but if this helped both parties, why not just sign on off on it...especially with the airlines treading water as it is.

Blue Dude

Because it costs regulators nothing at all to postpone a decision, during which time some reason might present itself that would allow them to say no. The clock runs out, no definitive action was taken, so nobody is accountable for anything. The most dangerous response for a bureaucrat is to say yes.

Bluedriver

I also suspect a competitor from Atlanta likely filed an objection and/or otherwise put some pressure to deny the application, which they ultimately didn't accomplish, but may have resulted in the delay.

docav8tor

https://airlineinfo.com/ost22/ost113020.html#ATI

American Airlines, Inc., British Airways, Plc, OpenSkies SAS, Iberia Lineas Aereas de Espana, S.A., Finnair Oyj and Aer Lingus Group DAC

OST-2008-0252 - Antitrust Immunity



November 30, 2020

Comments of Delta Air Lines

Delta takes no position on the merits of the motion or the Department’s decision to grant it (Order 2020-11-9), but strongly agrees with the Department’s tentative determination that the proposed ATI grant should be conditioned on the continuing enforcement of Heathrow slot commitments under the CMA’s oversight in order to maintain competitive discipline against the oneworld JV at Heathrow. As the Department observes, the record in this case “supports the ongoing importance of the Parties’ joint business slot access remedies in London for transatlantic services” and, further, that the Parties “must continue to make slots available as directed by CMA’s interim measures.”

In addition, Delta wishes to highlight the fact that the waiting period established by the Department to review the commercial agreements that undergird the proposed American/JetBlue alliance expired on November 19, 2020 without any Departmental action taken. Now that the Department has allowed the American/JetBlue alliance to proceed, there is no formal legal impediment preventing American and JetBlue from launching their commercial cooperation and de facto market allocation agreement.

These commercial agreements substantially “connect” American and JetBlue, creating extensive interdependence between the carriers. Rather than compete head-to-head at New York City and Boston, JetBlue and American will rationalize and “optimize” service in the two cities to coordinate their networks and feed American’s current and JetBlue’s prospective transatlantic services. The alliance involves extensive commercial cooperation between two domestic US carriers with substantially overlapping networks – rendering JetBlue an ineffective competitor to American on transatlantic routes. In particular, JetBlue cannot credibly claim to be an effective competitive check on the oneworld transatlantic JV’s flights to Boston and New York – the same gateways that JetBlue proposes to serve with Heathrow remedy slots – while at the same time it is participating in a de factodomestic market allocation agreement with American at those very airports.

The upshot of the JetBlue/American alliance, which has now been cleared by the Department to proceed, is that JetBlue is no longer an independent competitor to American – and is therefore ineligible to receive any Heathrow remedy slots under the CMA remedy process for the reasons Delta detailed in its Reply in this proceeding. Delta encourages the Department to take administrative notice of this fact when coordinating with the CMA on its investigation and implementation of the interim measures.

Counsel: Delta, Steven Seiden

Bluedriver

That is an inaccurate statement and inappropriate argument by Delta air lines.

First, it says it takes no position on the JB+AA agreement, but that statement is being made AFTER it's approval. It does not prove they hadn't filed an opposition to the agreement during the period of review.

Next, it says JB isn't an independent competitor of AA for the transatlantic (LHR) market because of the agreement, but JB's future transatlantic endeavors are specifically NOT part of this codeshare agreement, so they are indeed a direct competitor on transatlantic routes.

acecrackshot

There is also a I believe a continuing suit on slots at EWR by NK.

Time to bring back the CAB and equitably re-distribute slots.

todd1200

Obviously DL wants the remedy slots and wants to keep us out of LHR. I guess you can't blame them for trying to sway the regulators, but I hope they see through the faulty logic.

Bluedriver

True, but the argument lacks accuracy, honesty and integrity. Of course that doesn't stop them from trying.