At LGA, a JetBlue Airbus A320 departs, a Delta A319 taxis and two American A319s are parked in … [+]
In May 2023 a federal judge ordered American Airlines and JetBlue to end their partnership in the Northeast, backing a Justice Department lawsuit which alleged that the arrangement was anti-competitive.
That doesn’t necessarily mean that every aspect of the partnership, known as the Northeast Alliance or NEA, is dead.
Unveiled in July 2020, the NEA allowed the two carriers to coordinate schedules, swap slots, share revenue, codeshare and jointly offer frequent flier benefits. As a pandemic raged, it seemed useful to both carriers. Today, in a different aviation landscape, the lost value of the dismantled partnership has gained importance as JetBlue realigns and American faces overwhelming competition from Delta and United in New York.
Seven months after the ruling, American – not joined by JetBlue — filed an appeal. Meanwhile, American’s weak position in New York has contributed to weakness in its relationship with its credit card issuers, even as credit card partnerships have soared in importance. The Delta/American Express deal is expected to produce about $8 billion in revenue for Delta this year, with the wealth of the New York area seen as a valued contributor.
Two events this week spoke underscored the viability of some form of a revived partnership between American and JetBlue.
On the JetBlue earnings call on Tuesday, an analyst asked President Marty St. George how quickly new partnerships could be implemented.
“It’s certainly something that we’re looking at,” St. George said. “It certainly could be with American. It could be another carrier. I do want to remind you; we do have 52 partners right now that we work with that are mostly at JFK and Boston.
“I think we learned a lot through the NEA as far as what worked for us, what might not work for us,” St. George said. “So I’m cautiously optimistic that we might have an opportunity at some point in the future.” He added that “It’s not a gigantic number.”
On Friday, the Allied Pilots Association, which represents American pilots, indicated it would be more open to a new NEA than it was previously. APA has no formal role in NEA implementation, but its new receptiveness underscores how critical it has become to enhance American in New York.
“By restricting partnerships, regulatory agencies have bolstered the Delta and United duopoly in NY,” said APA spokesman Dennis Tajer in an interview. “A broader New York partnership, underpinned by metal neutral service by American and JetBlue, would better serve passengers and employees while creating increased competition.
“Right now, Delta and United have a government provided shield of protection from loyalty competition, at a time when loyalty programs are wildly more valuable than they were a year or two ago, as reflected in the financial results for each of them,” Tajer said.
He said APA’s original coolness to the NEA was based on concerns that the partnership was not “metal neutral,” but rather provided more flying to JetBlue pilots than to American pilots. However, “we have an open door to understanding that better going forward,” he said. The construct had been that JetBlue would add domestic flights to feed American widebody flights from JFK. “If American gets feed traffic, we want to make sure that American pilots also get some of that feed flying,” he said.
In his ruling, U.S. District Court Judge Leo Sorkin wrote, “Whatever the benefits to American and JetBlue of becoming more powerful — in the northeast generally or in their shared rivalry with Delta — such benefits arise from a naked agreement not to compete with one another. Such a pact is just the sort of ‘unreasonable restraint on trade’ the Sherman Act was designed to prevent.”
Following the ruling AA said in a statement, “An erroneous judicial decision disregarding the NEA’s consumer benefits has led to an anticompetitive outcome. American will therefore move forward with an appeal.”
At an investor conference in July 2023, American CFO Devon May said that for American the NEA was a small factor, since “non-hub flying out of New York is something less than or around 5% of our total system capacity”.
Nevertheless, American is hampered in New York by a lack of destinations and traffic. The Port Authority’s airport stats show that in the year ending August 31, Delta carried 30% of JFK passengers, while JetBlue had 24% and American had 12%. At LaGuardia, Delta had 42% and American 21%, with Southwest third at 10%. At Newark, United had 65% and Spirit was second at 6%.