JetBlue Partners with American; No This Isn’t an April Fools’ Joke

If I didn’t know better, I would have thought yesterday was April Fools’ Day. Why? Because American and JetBlue announced that they had signed a limited partnership to feed traffic to each other in New York and Boston. Oh yeah, and they’re doing a little slot swap. What the f*&k?!? I had to ask JetBlue about this.

American Targets New York

American is the airline that dumped 757s into Long Beach when JetBlue started flying. This is also the airline that is known for doing everything it can to slay upstarts. Yet now, here they are skipping down 5th Avenue together. If the graphic above doesn’t make the entire thing clear for you, you can read about my take on this as part of American’s efforts to fight Delta in New York over on BNET today, but I want to focus on JetBlue here.

There are a couple of things happening. First, JetBlue and American signed an interline agreement, which means you’ll be able to book tickets via American or travel agents to travel on JetBlue from 18 domestic cities to either JFK or Boston where you’ll be able to transfer on American to one of 12 international destinations all on the same ticket. This isn’t a codeshare and it isn’t a frequent flier partnership, yet.

Second, JetBlue will give up 12 slot pairs at JFK in order to get 8 slot pairs at Washington/National and 1 at White Plains. Yeehaw. All this, combined with the fact that Lufthansa, part of American’s rival Star Alliance, owns a good chunk of JetBlue left my head spinning. So I turned to JetBlue and asked some question in a way that I wouldn’t ever dare trying with American.

Cranky: So this is just an interline agreement and it can only be booked via American right now? No bookings will occur via JetBlue? Isn’t that why you signed up for Sabre so you could do stuff like that?
JetBlue: Bookings can be made on AA.com, by calling American Airlines reservations, via Global Distribution Systems and Online Travel Agents or through a travel agent. JetBlue is currently unable to sell interline tickets seamlessly on our website. We intend to add interline functionality to our website later this year.

Cranky: Why have west coast cities been left out of the connections? In other words, why can’t I go from Long Beach? You know I love my home airport.
JetBlue: This is an agreement for non-overlapping markets served by JetBlue from JFK or Boston with well-timed schedules to connect to international destinations served by American. We will explore additional cities in the future, but these 18 domestic JetBlue and 12 international American cities are our launch cities.

Cranky: Is Lufthansa going to kill you? As a part owner, I assume this was discussed with them before the deal was implemented?
JetBlue: Lufthansa invested in JetBlue and we feel this agreement with AA will help us produce a valuable return on their investment.

Cranky: Does this have any impact on the 5 slots you’re trying to get at DCA from the US/DL deal or is this simply an additional part of your plan to make your move on DCA?
JetBlue: These slots are part of the agreement with American. They are separate from our plans to obtain slots through other means.

Cranky: If you’re giving up 12 slots at JFK, what flights will go away? Are those slots all during peak hours? Can you make sure the ones you give up are the ones that would otherwise have resulted in horrible 27 hour onboard aircraft delays?
JetBlue: The exact flights have not been determined. We are swapping valuable DCA slots for some of our extra JFK slots that were being underutilized. Even without these, we are still the #1 airline at JFK.

Cranky: When are you planning to start Washington/National service? Where are you flying from National? (I know you won’t answer this.)
JetBlue: We hope to begin flying to National in November. Precise start dates, routes and fares will be announced later this spring.

So there you have it. I think my questions were far more entertaining than the answers, but to be fair, the responses were typed on a BlackBerry. For what it’s worth, I also spoke with Lufthansa spokesperson Martin Riecken who said they did know about this before it was announced. I asked him if Lufthansa was unhappy about this. He said:

As a financial investor, anything that is good for JetBlue’s business is good for us. As a partner, this is just an interline agreement which is standard throughout the industry.

How very rational and, well, stereotypically German. That makes sense to me, but I imagine we’ll hear a different tune if this deal progresses any further.

For JetBlue, this seems to be a nice way to pick up a few extra international passengers, but it’s more about National than anything else. They’ll get 8 slots here and they still want those 5 if the US Airways/Delta slot swap goes through. They also said in their release today that they “petitioned the FAA for access to unused slot pairs in the early morning and late-evening hours.” Though they won’t tell me where they’re flying, my money is on Boston and Florida to start but possibly some JFK as well.

I think this is about as good of an example of strange bedfellows as I can remember. But it seems to make sense for both sides. If this does go any further, then it’s bound to cause some serious issues with Lufthansa. But maybe with its partner Continental in Newark, JetBlue isn’t as interesting to Lufthansa anymore. Hmmm.


27 Responses to JetBlue Partners with American; No This Isn’t an April Fools’ Joke

  1. Beatrice says:

    Now Jetblue prices will skyrocket, American is really at the bottom, and now is taking to the drain Jetblue. Bye bye low prices for Jetblue welcome the end of Jetblue.

    • A says:

      I’m not sure where you get that idea. Sounds to me like B6 will feed passengers to AA’s international flights across the atlantic and that’s about it. In exchange they are getting access to DCA and offering “better” serivice to their existing base in NYC and BOS.

      What is AA going to do with those slots at JFK? That’s what I’m wondering as someone in flyover country that finds himself on AA metal far more than B6. Assuming they will feed traffic into JFK from locations that aren’t Jet Blue strongholds like DFW, ORD & MIA.

  2. frank says:

    Isnt the logical choice, the shuttle market? BOS to DCA.

  3. frank says:

    Isnt the logical choice the shuttle market? BOS TO DCA Frequency.

  4. CF, interested in your further analysis on this. as a DCA based flyer, i gave this some thought. in summary, it looks like AA has simply outsourced its existing DCA-JFK and DCA-BOS flying to B6 in exchange for the slots at uber-competitive JFK which they can (possibly) use for lucrative new x-atl service. seems like a great move by both airlines (at least, once B6 gets interline capability onto its website).

    from the B6 perspective, the main benefit is guaranteed access to DCA (separate from the US/DL slot swap that has a looooong way to go IF it goes through at all). B6 obviously gains access to DCA passengers that were unwilling to use BWI or IAD and, probably more importantly to B6, offers its key constituents in BOS and JFK the ability to fly into uber-convenient DCA.

    as for AA, it seems they only lose O&D traffic from DCA to JFK/BOS. this might not even be a loss, i would surmise that their service to each of those airports was a standalone money-loser as it probably exists primarily to feed DCA pxs to intl flights). AA’s DCA pxs connecting to AA destinations can still do so using a B6 flight interlined to AA which will require changing terminals at JFK from 8 to 5 but that’s not really the end of the world. this might be a double win for AA, since they essentially outsource money-losing “connector” service from DCA while maintaining all of the connecting pxs AND they gain the slots at JFK which they will probably use to increase flying to high-yield destinations.

    while the B6/AA x-action might be a no brainer, if you want a head scratcher, look at AA’s other NY announcements yesterday and try to figure out some of their new LGA service, especially 7x to ATL on two class 170s?!?!?!?!?!?! really?

    • Alex Hill says:

      AA’s keeping their DCA-JFK and BOS-JFK (trading them up to CRJ-700s with first class), and this interline agreement only covers non-overlapping routes, so AA is not outsourcing those flights to B6. http://www.aa.com/i18n/urls/nyc.jsp

      (Cranky, your link to your BNet article is dead.)

    • tharanga says:

      I think it would be illegal collusion for AA and B6 to decide ahead of time, what routes either was going to add or cut.

      • Jason H says:

        I was actually thinking the same thing. At the same time I think it is silly for the government to say that talking about your routes when working together to build a network is illegal. If the DOT and DOJ would let airlines converse amongst themselves on routes then we might be able to alleviate some of the industry problems.

        • Jason H, makes you wonder if the government still set the routes and fares would we even have a problem like we see today.

          • wow, yeah, nothing could ever go wrong if the government set the routes and fares! (shudder)

          • tharanga says:

            I’m pretty sure collusion is a bad thing.

            Until AA makes the announcement, jetBlue should be left guessing on where AA will be cutting its DCA service. Maybe they can make an educated guess, but they shouldn’t know before the rest of us do.

    • CF says:

      Bill from DC – I don’t think you’ve got this one right . . . yet. While slots are changing hands, they are certainly not outsourcing their flights from DC to JFK and Boston. The interline agreement only covers cities that are not competitive, so you won’t be able to buy a ticket from DC on JetBlue to go through JFK or Boston on American. I’m not even convinced that JetBlue will start a JFK flight, though I fully expect to see Boston.

      American will have to slightly reduce operations at National, and they may very well choose to pull down Boston by a few departures, but there are plenty of other places to look. Maybe the 5x daily service to Nashville, the 4x daily service to St Louis, or the 8x daily service to Raleigh/Durham could get a trim.

      Now, this could evolve eventually, so that’s why I said “. . . yet” above.

      • thanks brett. looks like i skipped a few steps. of course, i still think my idea would make some sense, especially since the AA flights i’ve flown from DCA to BOS and JFK are frequently empty! i agree, AA has other candidates at DCA for the divested slots.

  5. Trent880 says:

    It’s a little odd that B6 is giving up slots at JFK, its home airport, but I suppose for the rigth price you can get anything. Separately, I highly doubt B6 will bother with DCAJFK given the tremendous competition on the market including Acela, less desirable location of JFK, and better opportunities out of DCA. I think B6 can basically have its pick of any US Airways mainline market out of DCA and do fine, much like any of AA’s Caribbean markets out of JFK but that’s another story.

  6. b757capt says:

    Wonder what the DOT will say about this deal.

    • CF says:

      I don’t think DOT will say anything here. The only reason US Airways and Delta went to the DOT for their swap is that LaGuardia slots are not allowed to be transferred right now. That isn’t an issue here. And the “partnership” is just an interline agreement.

  7. Is AA getting desperate with DL’s build up in the NY area so this is their answer to try and build up their presence?

  8. SEAN says:

    Who saw this one comeing.

    At one time many moons ago AA had a large hub at JFK do to the HQ being in Manhattan. Although smaller, the hub still exists. This plus some slot swaps allows for growth in the hub opperation, with some growth being organic & some via JetBlue.

    Without the AirTrain, jumping between AA & B6 would be far more challenging & may have prevented the interlining agreements effectiveness.

  9. Ed Casper says:

    Leveraging and repositioning assets in this way and as Delta and US Airways are trying to do with their slot swap transaction are viable alternatives to mergers. This kind of partnering allows each carrier to concentrate its efforts on what each does best. Done well, alliances and joint ventures can have most of the benefits and of a merger without many of the hassles – a “win-win” solution.

    I really don’t understand the mindset that an “us versus them” mentality always has to exist in business dealings. Even in sports where “winning is everything” the idea of a trade or other transaction is to benefit both teams. The entire real estate industry is built on the idea of being both competitive and cooperative when it serves the bottom line – completing a successful transaction. Why should it be any different with airlines?

  10. Eric says:

    I think your last sentence pretty well sums up where LH stands on all of this. The Euros they poured into B6 is simply a passive investment….while having CO in STAR is all about cash flow and market share.

    A few other sites are saying B6 may become the ‘Alaska of the East’….I wouldnt go that far, but I give 2 thumbs up to both parties for thinking outside the square. Interlining between competitors worked well decades ago (DL/PA, AA&WA/BN, CO/AS), so why not revive it 21c style?

  11. tharanga says:

    the LH investment is not wholly passive. In fact, it’s more active than the B6-AA arrangement. There’s actual codesharing involved.

  12. Pingback: The Big Deal – JetBlue and American – Our Take | Flight Wisdom

  13. PF says:

    The JetBlue comments are so cautiously structured one would think AA wrote them.

  14. Brett – Joe Brancatelli is reporting B6 will start DCA-JFK service in November. I don’t see this reported elsewhere and he doesn’t have a cite but is generally beyond reproach.

    http://tactical.biztravelife.com/

    • CF says:

      Well, I’m not a subscriber so I can’t read it, but I’m not sure how he can be so confident. We’ll see.

  15. CF says:

    Sorry for all the held comments, guys. My spam filters has, for some reason, kicked into overdrive and it’s really screwing things up. If you ever see your comment not going live, send me a note to make sure I go dig it out. I’ll try to be more vigilant.

  16. Pat says:

    Hopefully some of JetBlue’s good customer service will transfer over to American. Here’s a good article on JetBlue’s service in the skies report card. http://news.travel.aol.com/2010/04/23/aol-mystery-flyer-jetblue-report-card/

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