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US District Court Judge Blocks JetBlue / American Airlines Alliance

US District Court Judge Blocks JetBlue / American Airlines Alliance

Old May 19, 2023, 2:26 pm
  #1  
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US District Court Judge Blocks JetBlue / American Airlines Alliance

Probably merits its own thread going forward

https://www.cnbc.com/2023/05/19/just...rtnership.html

I assume AA and JetBlue will ask for a stay, and appeal. That said the likelihood that the alliance persists in its current form through all of this seems pretty low (especially given JetBlue has its own issues with its Spirit merger). Has big implications for AA's NYC strategy, JetBlue's strategy, etc.
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Old May 19, 2023, 2:37 pm
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Yikes.
The only reason I flew B6 recently was because of my AA elite benefits and reciprocal mileage earning. If this ends, I have no reason to fly that dumpster fire of an airline.
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Old May 19, 2023, 2:38 pm
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The actual ruling, for those interested: https://storage.courtlistener.com/re...55.344.0_2.pdf
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Old May 19, 2023, 2:55 pm
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Originally Posted by S.R
Yikes.
The only reason I flew B6 recently was because of my AA elite benefits and reciprocal mileage earning. If this ends, I have no reason to fly that dumpster fire of an airline.
I have not read the decision. Is it clear that the reciprocal elite benefits will end If the "alliance" ends?
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Old May 19, 2023, 3:33 pm
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Originally Posted by Adelphos

I assume AA and JetBlue will ask for a stay, and appeal. That said the likelihood that the alliance persists in its current form through all of this seems pretty low (especially given JetBlue has its own issues with its Spirit merger). Has big implications for AA's NYC strategy, JetBlue's strategy, etc.
I am not a lawyer, but it seems Jetblue's best hope of getting the Spirit merger through is to take this loss.

Of course, they take the risk of losing both the alliance and the merger, so it's not as plain and simple of a decision.
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Old May 19, 2023, 4:21 pm
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Wonderful. Almost every route I fly that was previously served by B6 and AA is now served only by one - and fares doubled or tripled (even during the pandemic - not just post-pandemic boom).
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Old May 19, 2023, 4:31 pm
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I hope this doesnít have negative implications for the intl routes AA claimed to have launched as a consequence of this alliance, like JFK-DEL and even JFK-MEX. But this could really really throw a wrench into AAís already meager presence at JFK.
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Old May 19, 2023, 4:48 pm
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Though I worry this accelerates AA's decline in NYC, I won't miss the lack of upgrades, flying out of the lounge-less JFK T5, and having to monitor my flight 24-hours out to get a EMS seat that began after AA handed over many of their flights to B6.
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Old May 19, 2023, 5:56 pm
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Could AA get back some of the JFK slots it previously gave up, in order to restore some of the Caribbean routes given over to B6?
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Old May 19, 2023, 5:57 pm
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Saying "but there were great consumer benefits" did not negate the fact it was actually anticompetitive. I am not a lawyer, but my bet is that the ruling will stand on appeal.

Pre-COVID AA was a strong player in BOS -- even though they mostly flew to hubs, they flew to PHL more than hourly in the mornings and evenings -- I believe the number of AA flights out of BOS briefly eclipsed the number of AA flights out of JFK. COVID and the JetBlue partnership let them shrink tremendously there.

If AA/B6 are serious that it's all about frequent flyer benefits, let them continue to offer benefits after the anticompetitive parts of the partnership are dismantled, like how AS has existed for a long time.
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Old May 19, 2023, 7:04 pm
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Originally Posted by VFR
Saying "but there were great consumer benefits" did not negate the fact it was actually anticompetitive. I am not a lawyer, but my bet is that the ruling will stand on appeal.
.
Perhaps, but I wouldn't be so certain. Anti-trust law is extremely complicated and unpredictable. For example, Microsoft is not a actually a monopoly but in many situations it acts like one. But it is still allowed to carry on. It may be hard to prove that the AA-B6 alliance is anti-competitive. If one airline decides to reduce or discontinue service from one city, making the other the dominant player, then consumers will still pay a high price for those flights even if the alliance doesn't exist. Really this just comes down to how much more they want to fight it out in court versus just moving on and trying something else.
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Old May 19, 2023, 7:22 pm
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Originally Posted by ESpen36
Could AA get back some of the JFK slots it previously gave up, in order to restore some of the Caribbean routes given over to B6?
I would expect that AA would have the ability to take back all of its JFK/LGA slots that it leased to B6. It may leave them with B6 (potentially under renegotiated leases if the existing leases were at preferential terms due to the NEA) because otherwise they would have to fly them and the regional pilot shortage makes that very difficult to do.
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Old May 19, 2023, 8:17 pm
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I am not surprised by this ruling though I believe the NEA actually leveled the playing field in the UA/DL fortress hubs at EWR/JFK/LGA. I still find it quite astonishing that the DOJ can call anything anticompetitive these days when UA/DL are behemoths who own the markets in EWR/JFK/LGA. As another poster above mentioned, perhaps its best for B6 to concede the NEA as a bargaining chip to get their acquisition of NK approved. Ultimately, all of these decisions are governed by partisan politics and the deep pockets of the legacy carriers to prevent any other competitors from gaining ground.
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Old May 19, 2023, 10:58 pm
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Originally Posted by flyinmiamicane
I am not surprised by this ruling though I believe the NEA actually leveled the playing field in the UA/DL fortress hubs at EWR/JFK/LGA.
Thereís truth here, but DL certainly does not have a fortress hub at JFK or LGA. DL mainline has 28% of the market at JFK; itís hard to imagine anyone considering anything less than a majority a fortress hub, and I think of a fortress hub as more like 65-80% of the market (including regional affiliates). NYC is a highly competitive market, and DL is large enough there to have a bit more economy of scale than AA, but DL is certainly not without meaningful competition in JFK, LGA, or NYC overall in the way that the fortress hub airlines are at ATL, DTW, MSP, DFW, IAH, etc. In fact, B6 is bigger than DL at JFK, so hard to argue that B6 doesnít have the scale to compete with DL there. And AA isnít far behind with 24%. So, without reading the ruling, I think thereís a pretty reasonable case to be made that AA could compete more aggressively in NYC than they have even without the NEA.

All that said, the NEA means there are essentially three roughly-equal players who split up a lot of the NYC market and are fiercely competitive with each other, while there also remain robust options to pretty much everywhere international on foreign competitors and robust options to many domestic locations on the likes of WN, AS, and other smaller players. Itís not clear that making B6 and AA somewhat weaker than they are in combination to have 2-3 dominant players (UA, DL, and maybe B6) and 1-2 strong, secondary players (AA, maybe B6) before you get to the tertiary players makes the competitive landscape notably better.

I still find it quite astonishing that the DOJ can call anything anticompetitive these days when UA/DL are behemoths who own the markets in EWR/JFK/LGA.
But thatís not the option before them. If UA at EWR or DL at JFK/LGA (or even moreso ATL) tried to enter an alliance that further increased their dominance (ďdominanceĒ such as it is for DL especially), the DOJ would certainly sue to block it. But going in and breaking up an existing hub without a new transaction to block is a whole different level of legal fight.
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Old May 20, 2023, 3:24 am
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Originally Posted by Beltway2A
Wonderful. Almost every route I fly that was previously served by B6 and AA is now served only by one - and fares doubled or tripled (even during the pandemic - not just post-pandemic boom).
There are many factors that go into fare pricing. This may have had some impact on current prices, but probably not that much. I wouldn't expect much change from the status quo resulting from the dissolution of this alliance. Some of the airlines still seem to be having staffing issues. DL cut back a bunch of scheduled summer flying a couple weekends ago due to ongoing staffing issues (they were cancelling hundreds of flights at the last minute around several weekends in April). With fewer seats available, this is almost certainly not helping with pricing.
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Last edited by xliioper; May 20, 2023 at 3:32 am
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