Delta, JetBlue, and Spirit Knock American While It’s Down (But It’s an Indirect Hit)

American, Delta, Gol, JetBlue, Spirit

It’s been a tough few weeks for American without question. After filing for bankruptcy, it’s probably not a surprise that we see airlines trying to take advantage of the situation by moving in on American’s turf. There were three moves last week in particular that seemed to single out American. I say “seemed” to, because in reality I don’t imagine that any of these were made specifically because American filed for bankruptcy. In fact, I’d argue that one isn’t even targeted at American at all, though it will have an impact. Let’s look at each one.

Spirit Grows Dallas/Ft Worth
Spirit has has now refocused on domestic flying, and DFW is getting a big new spot on the map. This expansion will see one flight Spirit Rides the American Bankruptcy Waveper day to Atlanta, Boston, New York/La Guardia, and Orlando. It also announced a day later that it was going to add a daily flight to Mesa (outside of Phoenix) as well.

Let’s be clear on this one: this doesn’t hurt American much. Sure, it has the potential to siphon off some seriously price sensitive travelers on to Spirit, but American shouldn’t be targeting those people anyway. The flight times here aren’t very good with a redeye on the DFW-Boston and Mesa-DFW flights and some mid-day runs on the others. This isn’t going to pull off business travelers in any way, and I can’t imagine Spirit wants to do that. Just as it has tried to do in Chicago and in Vegas, Spirit sees an opportunity to go with super low fares and skim traffic off the bottom.

For Spirit, the timing was perfect. Spirit thrives on using outrageous slogans or promos to get free press. So when Spirit saw American file for Chapter 11 bankruptcy protection, it was too good to ignore. The press release makes that clear with references to a “new chapter in Dallas/Fort Worth’s history” along with $11 fares. You have to love an opportunistic airline. Spirit is like a parasite that lives off the misfortune of others – it’s brilliant.

This really shouldn’t be viewed as much of an assault on American, but many will draw the parallel. And American, like most legacy airlines, has nothing against irrational response so we’ll see where this goes. But American isn’t the only one that’s thinking about these moves. . . .

JetBlue Starts Boston to DFW
Another move that would seem to be more alarming to American is JetBlue’s decision to fly Boston to DFW three times daily. JetBlue has avoided DFW so JetBlue Fights Spirit in Bostonfar, and it has a strong relationship with American, so this might seem curious. Why is JetBlue doing this? I think it’s more about Spirit than American.

Is JetBlue trying to make a move on American’s turf? Well, it is doing that, but I don’t think it’s particularly targeting American. JetBlue stands to benefit through greater cooperation with American after the bankruptcy process wraps up, and it wants to be a strong partner. That makes this seem like an odd move.

And that’s why I think this is more about Spirit. JetBlue has previously been VERY aggressive at tackling ultra low cost carriers. When Allegiant announced it would begin flying from Long Beach to Las Vegas, JetBlue ramped up to offer 5 daily flights in the market and launched the additional flights with a $19 each way sale. Overkill? Yeah, probably. But then again, Allegiant pulled out.

JetBlue has tried a similar move with Spirit. Less than a week after Spirit announced it would do a daily flight from Chicago to Boston, JetBlue added a fourth flight on that route. While JetBlue doesn’t care about competing on Boston to Myrtle Beach and it probably accepts Spirit flying to its home base in Ft Lauderdale, it’s not going to be willing to sit there while Spirit moves in on other destinations. That’s why I think we’re seeing this move.

Delta Steals Gol from American
In a completely unrelated blow to American, Delta signed an “exclusive” deal with Brazil’s Gol to be the only US partner with the Delta Plays the Brazil Dating Game with Golairline. That means that American’s current partnership with the airline is going to disappear. Delta paid a pretty hefty price to get in on this – it had to invest $100 million in Gol and now has a seat on the Board of Directors.

While I can’t imagine this has anything to do with American’s bankruptcy (this kind of agreement had to be be in the works long before), I do think it was more about Delta feeling a little desperate about Latin America. Avianca/TACA and COPA will all be in Star Alliance. Though I don’t think it’s been announced, the combined LAN and TAM have to pick an alliance, and the scuttlebutt is that they’re leaning toward oneworld (as they should). That leaves Delta with a messy Aerolineas Argentinas and absolutely no presence in the increasingly important Brazilian market. This was an effort to buy a place in that market, and it’s a place that American likely won’t need assuming LAN brings TAM into oneworld.

So, lots of moves that impact American recently, but it’s not a direct hit, as the title of this post says.

[Original surfer photo via Flickr user The Pug Father/CC 2.0]

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18 comments on “Delta, JetBlue, and Spirit Knock American While It’s Down (But It’s an Indirect Hit)

  1. I live in the DFW area and while I hope American survives and keeps a HUB operation here, they really could use some competition here! The employees and management seem to have the attitude that we have to fly them because they are the 800lb gorilla here. I have purposely moved a portion of my flying to other carriers even if it means a connection. I would hate to see them disappear, but they really have to up their game!

  2. As someone who has spent a lot of time at DFW as a O/D traveler I don’t think any airline can hurt American there. Now if the Wright Amendment was dropped and WN could fly anywhere out of LUV, that would hurt AA in their hometown. JetBlue or Spirit, ha!

    1. Well the Wright Amendment was dropped in 2006, but there’s just a VERY long break-in period until it’s truly gone. In 2014, Southwest will be able to fly anywhere domestically that it wants from Love. It just won’t be able to grow much because there’s a cap on gates.

  3. I don’t think any LCC will kill or hurt AA. AA will go through tough times in the wave of bankruptcy (as all the others did). Then they’ll come out bigger and stronger (as all the others are doing).

  4. It will be hard to hurt AA in DFW since these few other flights can not compete with AA overall nonstop route system out of DFW. Locals are to tied up in AAdvantage miles to use another carrier. So it’s only the once a year traveler, those really on a budget and other alliance mileage holders that would use anyone other then AA.

    Now the question is is Virgin stupid enough to try and grow in DFW also?

      1. Let’s see if Virgin America is pulling a full year profit yet. Correct me if I’m wrong but I believe VX’s 3q financials for this year will be made public tomorrow.

      2. As DFW has traditionally been AA superhub, I think a carrier like VX or B6 could potentially sustain DFW service if it beefed up international partnership feed.

  5. It’s gonna take more than 4 daily flights (combined) to BOS and a handful of others (Mesa? Really?) to really put a dent on AA in DFW. The timing of these moves is indeed curious, but besides Spirit I don’t think they’re directed at AA. In any case AA could still squash Spirit in a fare war even in it’s weakened state.

  6. The JetBlue decision is interesting to say the least. Many people seem to think its a logical add for JetBlue’s FF base in BOS.

    Since LATAM has to choose an alliance that’s not the one Avianca/TACA is in, I think 99% of the world is now sure that TAM is going to Oneworld.

    I think if Delta really focuses on Aerolineas Argentinas, maybe helps em with maintenance and maybe some planes as well, they could be a winner. Just see how many ailing airlines Skyteam has brought back to decency. While Buenos Aires is too far south for useful connections, I think it’s relatively uncongested compared to Rio or Sao Paulo. There is significant O&D to be had here.

    However, this doesn’t solve SkyTeam’s problem in Central America. ATL is not sufficient.

  7. TAM is currently in Star Alliance. If (When) they leave to join OneWorld, that will leave Star Alliance without a real presence in Brazil. I wonder what will happen around that? Will they go back to the new in-name-only Varig? Or will they bring in TRIP (which currently code-shares with TAM) or Azul? Interesting.

    1. TAP – Portugal (Managed by former VARIG Execs) dominates the Europe-Brazil Trans-Atlantic market via Lisbon. Providing non-stop service from secondary Brazilan destinations such as Recife, Fortaleza, Brasilia. Overall Star still has a good foothold in Bazil.

      Having Aerolineas Argentinas joining Star would not be a bad idea. As it would compliment Air New Zealand connections at Auckland. Aerolineas Argentina can provide an alternative route to Europe. Air New Zealand can provide an connection to Asia. It also compliments South African Airways network with its flight to Buenos Aires.

  8. This move for B6 adding BOS-DFW is more for business travel than invading AA’s turf. DFW was only of the only major business markets out of BOS that JetBlue was not offering until now. ATL and PHL still remain so I bet we will see BOS-ATL in 2012.

  9. well, JetBlue just also announced Newark and West Palm to San Juan … good opportunity to continue building up SJU which will eventually push even more flying by AA out of SJU (even though these two markets are NOT served by AA). Critical mass will push them out of SJU except to their CORNERSTONE hubs

  10. Having GOL and Aeromexico are good Latin American anchor partners for Skyteam. Unfortunately GOL is a domestic carrier, but owns the VARIG brand. With Delta’s help, they may have the potential of resurrecting the VARIG brand to more international destinations.

    Ever since the demise of Mexicana, Star and Oneworld has a big gap in Mexico. Volaris has the potential, but it’s codeshared with Southwest.

  11. You know I’m kinda curious if Spirit skimming off the bottom is a bit of undoing of AA’s innovation of using yield management to put “charter” passengers on the same plane as business passengers?

    CF, do you think AA will retaliate against NK, and if US’s management was at the helm do you think they’d do the same thing?

    1. It wouldn’t surprise me if AA retaliated against Spirit, but that doesn’t mean it would be a good idea. The US Airways guys would probably come to a similar conclusion as American, but I don’t know for sure.

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