How Competitive are New York and Boston for Air Travel?

American, Government Regulation, JetBlue

With the DOJ lawsuit to stop the American/JetBlue Northeast Alliance (NEA) coming down last week, I started playing with all sorts of numbers. You’ve seen my basic thoughts, but there are plenty of areas I want to explore further. And today, I’m talking about competitiveness in New York and Boston.

The NEA focuses on New York and Boston, though of course there is an impact on flights that go to cities beyond those two places. But in terms of there being a concern about competition, it is mostly in one of those two places. Let’s start with New York.

New York, a Competitive Market

Even though the Department of Justice (DOJ) seems to think that Newark shouldn’t count as an alternative to JFK and LaGuardia for domestic travel, I think that’s absurd. So everything I look at here will take those three airports into account. (Islip, Stewart, and Westchester are rounding errors and not worth thinking about.)

Further, while DOJ uses revenue share since that would obviously give the legacy airlines a higher market share, it’s seat share that should really matter. How many seats get offered to the flying public is the right metric. And so…

2019 New York Departing Domestic Seat Share (JFK/LaGuardia/Newark)

What you see here is what we’ve talked about many times before. United and Delta are huge, only matched by putting American and JetBlue together. But Southwest and the ULCCs have really crept up, passing 8 percent. That may not seem like a lot, but when you start from basically nothing, that’s a real achievement.

Of course, this just gives us an overview and doesn’t tell us just how competitive the airlines are with each other. There are a lot of ways to dig deeper, and I’ll start with one of my favorite metrics, point-of-origin.

Domestic % Point of Origin New York By Airline By Year

Above, you can see by year the percent of onboard traffic that originated in New York by airline, including all predecessors. United and JetBlue remain highest, though they may have dropped a tiny bit over the years. Delta has, ahem, kept climbing. But nobody has fallen like American has. As American (and US Airways before the merger) reduced service and as others increased it, American became less relevant, so it started selling more tickets to loyalists outside of New York who had to visit the city as opposed to those in New York who wanted to fly out.

We can also see a version of this based on route maps.

United and Delta both have good coverage all over the country. But you can see that while JetBlue covers the west and Florida well, it has very little in the middle. American, meanwhile has a lot in the middle but lags everywhere else. Putting those two route maps together makes for something that looks a lot closer to what Delta and United have built. That doesn’t solve all problems and doesn’t consider schedules, connectivity, etc, but it does show the blueprint for how this would actually increase competition, not hurt it.

Boston is a different story entirely.

Boston, a Less Competitive Market

Up in Boston, there are fewer massive players, but the little guys have more share, as you can see just from looking at 2019 seat share.

2019 Boston Departing Domestic Seat Share

Here, JetBlue is the very clear top dog in the market with a third of all seats. Add American on and you control half the seats departing Boston. There is deeper penetration from Southwest and the ultra low cost carriers here, and that’s probably because there aren’t actually slots in Boston. It’s just a matter of finding enough gate space, which isn’t always the easiest task.

But when you look at point of origin, a funny thing happens here that is quite different than what we saw in New York.

Domestic % Point of Origin Boston By Airline By Year

You see that JetBlue continues to have a large point of sale in the home market, and that’s not a surprise at all since there are a whole lot more people flying from Boston to Florida and the Caribbean than the reverse. But I was more surprised to see both American and Delta both sinking quickly. And look at what happens in 2010 when Delta really lost out faster than American. This only starts changing in 2017 which is when Delta began building back its hub. I imagine that rebound will continue as Delta makes more inroads., and that’s really what JetBlue and American are targeting… the ability to compete with Delta better on the corporate side.

What caused the drop for all of them? I assume it’s a matter of low-cost carrier entry. Boston went from having scattered service from AirTran, America West, ATA, Independence, and the beginnings of JetBlue to having a ton of options on all the current low cost operators. The end result is that people were bound to walk away from the legacies because of the number of options they had at a lower price.

The difference here is that it wasn’t just American falling; it was Delta too. But now Delta is ramping back up. American has done a little of that, but not much.

I won’t even bother with the route maps, because it is clear JetBlue has more coverage. Put it this way, American serves 14 cities from Boston, Delta 43, and JetBlue 54. So a combined American and JetBlue certainly have much more dominance than they do in a place like New York.

Ultimately if there is a concern about competitiveness, it really shouldn’t be in New York at all. It should be in Boston. But how would you even rectify that issue, however, when there aren’t slots at the airport?

The DOJ could try to get American and JetBlue to surrender some gate space, but it’s unclear to me who would want it. I’m don’t think the low-cost carriers have been hampered in their ability to grow Boston. You don’t see Spirit clamoring for more Boston access. It’s all about LaGuardia for that airline. It might be a nice gesture to offer gates up as part of a settlement, but it may not have an impact.

61 comments on “How Competitive are New York and Boston for Air Travel?

  1. It would be really great if there could be some rule for the airlines that punish them if they fly routes that are less than 250 miles and along competitive rail corridors in the Northeast (basically Amtrak’s Northeast Corridor between Boston and Washington, plus the Keystone Corridor to Harrisburg, Empire Corridor to Albany, and the Hartford Line to Springfield). A blanket rule like this wouldn’t work in New York because geography like the ocean for flights to Nantucket and Martha’s Vineyard, or the extremely slow travel time by train to Syracuse make these less than 250 mile markets make sense by plane. I feel that this could help decongest New York’s airspace and encourage people to take the more environmentally friendly option of rail. Ideally these slots would be used to help funnel service to longer domestic markets underserved in New York. For example until 2018 United offered daily non-stop flights from Newark to small Indiana cities like South Bend and Fort Wayne, as a transplanted New Yorker living in South Bend, the loss of these flights has been huge meaning the long travel times make going to New York for a quick weekend much less viable. I moved to SBN in 2016 and one of the reasons I made the move was because I knew I had non-stop flight to have easy access back to New York. If airlines are already slot squatting they should be forced to use their slots on flights that would actually be useful at decreasing travel times, not flights to places Baltimore where rail travel is viable and generally faster.

    1. SubwayNut – The problem is connectivity. You need to be able to connect trains and planes, which you can pretty much only do in Newark. So good luck getting anyone at JFK/LGA to drop routes in favor of trains without that connectivity being addressed.

      1. It looks like there aren’t any routes out of Bradley to NYC these days and only United flies from Newark to Albany. I always assumed that those routes are for connecting passengers. No one would ever fly those routes just to go between those cities. Driving and taking trains are much more efficient anyway.

        1. The same goes for ORD-MKE and most of the intra-Michigan routes (LAN/GRR/TVC to DTW, for example), those are almost all connecting traffic where (door to door time) it would generally be more efficient to drive.

          Going back a few decades, people in Cincinnati used to purposely book flights from DAY (Dayton) connecting through CVG, as the lack of a nonstop meant lower fares compared to departing from the DL fortress hub, and as they could always get a cab or someone to pick them up if their CVG-DAY leg got delayed or cancelled.

          I’d argue that trains aren’t always more time efficient, especially for those not starting and stopping in the downtown of a major city (good luck getting a reliable Amtrak service from an airport to an outdoorsy area), but that’s another issue entirely.

      2. It’s difficult even in Newark – on weekends the NEC and North Jersey Coast lines run hourly, but with only seven minutes between them. There’s then 53 minutes until the next train. It is better on weekdays, but even then not all the trains stop at the airport.

        (Someday PATH will be extended to EWR, but at the current pace that’ll be just in time for First Contact on April 5th 2063, when the Vulcans arrive on my birthday and, if I’m still alive, figure out how to stop all my seasonal allergies, ’cause human medicine isn’t up to the task. Then I’ll actually be able to smell my First Contact Day salmon.)

        Trains also are limited in their ability to replace air travel by the lack of rental car infrastructure at train stations – if you’re going to Newark to do business with clients in central New Jersey, you need a rental car, and around Newark Penn there’s only an Enterprise office and a few Zipcars. Which is still better than most train stations, but not that good.

        1. TPA’s comments are understandable, but I will add that if you are transit aware as a large number of NYers are then taking transit to the airports is quite easy.

    2. As Brett points out, the main issue is making seamless connections among the various modes. It would take a massive investment in rail infrastructure to provide the kind of connections that would be competitive, especially in places like New York, Chicago, and Los Angeles. Based on my observations, the majority of those who use public transit to get to airports are those who work there (which is important). Here in Phoenix, there’s a line that runs near Sky Harbor Airport that could theoretically be used to connect passengers to Tucson, Casa Grande, Yuma, Palm Springs, Ontario, and Los Angeles, but the line west of Phoenix was mothballed after a vandal caused a derailment. That’s why there’s no passenger rail service to Phoenix at this time, as Amtrak stops at Maricopa. And the cost to bring the line through Phoenix up to serviceable levels is substantial. Brighline is building a new line to the Orlando, Florida Airport. It’ll be interesting to see how that works. The other issue is overall travel time. Trains have to stop to let passengers get on and off. That adds time to the trip. But if passengers have to drive 40 miles to the nearest train station while the nearest airport is 80 miles away, which is really more convenient?

  2. American’s struggles in NY date back to the post 9/11 industry landscape. Almost every major airline filed for bankruptcy, except for AA, which resisted, all the way to September 2011 when AMR finally did. Bankruptcy laws have been exploited by the airlines for decades as a way to shed expenses, screw their employees, and position themselves for the next upswing. Delta and Northwest filed at about the same time in 2005 which, in hindsight, was probably collusive. In any case, American struggled through the first decade and a half of the 2000s with older planes, poor products, and high costs, which were particularly problematic in New York. USAirways didn’t know what to do with NY either, clogging LGA with regional jets to places like Norfolk and Indianapolis, essentially squatting on slots (American did the same at JFK with pointless E145 flying to places like BWI, CLE, YYZ, etc..). The Delta and US swap at LGA and DCA was another form of collusion but it gave DL a further leg up at LGA. AA could not compete at JFK once B6 was an established player there and DL spent all its newfound money secured in Chapter 11 to spend a billion if not more building NYC, something AA could not or would not do in spite of its JFK terminal facility. The AA/B6 Alliance for JFK isn’t a problem and should not be perceived as one. JFK is a fractured market, always will be, and it is ludicrous to think F9 or NK can or should build a footprint there with many flights. That’s not the market for JFK and it should not be. Is Boston a problem? Maybe. Delta took advantage of AA’s weakness in Boston (and lack of interest in it post merger with US, which had a decent presence there) and built it out. Now AA wants back in and using B6 to make that happen. AA needs a larger presence at BOS yes, but where it needs to be relevant is NY and there it continues to struggle and can’t become more prominent without B6. Eventually, AA and B6 will merge. B6 has a lot goin for it, but operational reliability isn’t one of them. It remains an East Coast airline, heavy to Florida, and leisure oriented. AA has operational challenges but it has the heft to run a smoother operation. A merger of AA/B6 would likely be approved with BOS divestiture (and South Florida, of course) but it will happen eventually, thanks to a Private Equity firm that will have the money and the resources to ensure both AA and B6 turn themselves around operationally.

    1. > Almost every major airline filed for bankruptcy, except for AA, which resisted, all the way to September 2011 when AMR finally did

      I think your facts may be wrong. When did Southwest declare bankruptcy?

    2. “Delta and Northwest filed at about the same time in 2005 which, in hindsight, was probably collusive.”

      They filed on the same day. It was to beat the deadline before new BK regulations went into effect, but yeah…

  3. One more element to consider – the huge number of travelers within the NEC itself. Between DC & Boston there are a huge number of travelers that go between those points & others in between on a daily basis & therefore Amtrak with all it’s flaws needs to be considered a viable option to the airlines as well as driving for some.

  4. The problem the DOJ sees, not by my opinion but theirs, is not the total size of AA and B6 compared to DL and UA but the increased concentration of AA/B6 in a number of markets including LGA, JFK, and/or BOS to every AA/B6 hub/focus city such as BOS/NYC to DCA, PHL, MIA/FLL, CLT, PHX etc. and a few other non-hub markets.
    The DOJ’s stance is that all of the new routes that are added are not justification for further concentration in other markets – such as to/from a carrier’s hubs. By using schedule coordination, AA and B6 increased their concentration in a relatively small number of markets but ones which are large revenue markets. When you add in that LGA and JFK are slot-controlled, there is no real corrective means for competitors to enter the market, the DOJ’s concerns can be seen. Hubs are inherently heavily concentrated/less competitive markets so allowing a carrier to increase competition by cooperating with another carrier that already serves the same markets – such as B6’s addition of service to MIA on routes where AA was already dominant- only increases concentration.

    All the arguments about unfair and capricious the DOJ and the 6 states/DC are miss the point until the increased concentration in hub markets is addressed.

    The DL/US slot swap was subject to DOJ review, involved divestitures and DL still did not and does not have more than 50% of the slots at any slot-controlled airport. 50% is a problematic level which the DOJ has applied to other airline cases and AA/B6 exceed that level in a number of specific markets to/from NYC and BOS as well as from BOS as a whole.

    JVs also have gone through extensive DOJ approval and also frequently have carveouts and/or corrective actions to prevent concentration. the DOJ does not believe those corrective measures exist with the NEA.

    1. Quoting Tim: “All the arguments about unfair and capricious (sic) the DOJ and the 6 states/DC are miss (sic) the point until the increased concentration in hub markets is addressed.”

      My response: There’s nothing stopping the “Perfect Airline” or United from adding competition in these markets.

      Quoting Tim: “The DL/US slot swap was subject to DOJ review, involved divestitures and DL still did not and does not have more than 50% of the slots at any slot-controlled airport. 50% is a problematic level which the DOJ has applied to other airline cases and AA/B6 exceed that level in a number of specific markets to/from NYC and BOS as well as from BOS as a whole.”

      My response: The DL/US slot swap occurred 10 years ago. That was then. This is now. That analogy is like sports gamblers who place bets based on what teams did 10 years ago. It’s totally irrelevant to the current situation. To the 50% argument: Adding the percentages on the graph. American+JetBlue=43.1%. Based on what I know of math, 43.1 is less than 50. Adding Alaska into the mix, even though it’s not part of the NEA, brings the total AA/B6/AS share to 47%. Again, applying simple math, 47 is less than 50. I realize this is seat share, not slots, so I looked at the total number of slots at Washington Reagan. If my math and chart reading skills are accurate, there are about 800 slots there. American has about 500 of those slots. According to my phone’s calculator, that’s 62.5%. Last time I checked 62.5 is more than 50.

      Based on his constant and abundant defensiveness, it almost seems that Tim believes the “Perfect Airline” can’t compete in New York without some help from the federal government. I guess I have more faith in the “Perfect Airline” than he does. The real issue here is with Spirit, but that’s a different conversation.

      I continue to think there’ll eventually be some kind of settlement. The main reason is simple (and I’ve written it before), “You’re better off with the devil you know than the devil you don’t.”

    2. DOT/DOJ should continue to review all the approved JVs and slot swaps. This is a different administration. NEA was approved and now its up for review. So should any of the other situations which could be interpreted as anti-competitive.

      When looking at whether something is competitive, one must look at the whole picture. Not just the markets that favor a predisposed POV.

      In this case, you can make the market that a few BOS markets is become less competitive, mostly to AA fortress hubs. However, AA/B6 has already agreed to part with 6 DCA and 7 JFK slots to address competitive concerns to 2 of those markets. For the rest, the question must be whether or not the benefits of AA & B6 adding many new markets outstrip the downside of them possibly having more control over a few large markets like BOS-PHL/CLT/DFW.

      In the end, a fair solution may just come down to not allowing code shares from BOS to non-NYC AA hubs.

      there really isn’t prove that NEA is bad for competition out of NYC, since you are just combining two smaler carriers there.

    3. “DL still did not and does not have more than 50% of the slots at any slot-controlled airport. 50% is a problematic level which the DOJ has applied to other airline cases and AA/B6 exceed that level in a number of specific markets to/from NYC and BOS as well as from BOS as a whole.”

      BOS is not slot-controlled. The limitation is gate space, and even with those limitations Spirit and Frontier have been able to join Southwest at Logan.

      Could the DOJ look to AA/B6 to release a few gates, either outright or partially as CUTE gates if possible? Sure. But that’s a long way from outright shooting down the alliance.

  5. Thank you for the charts and discussion, Mr. Snyder. They do a great job of……proving why Southwest should buy JetBlue. As your graphs testify, Southwest is a bit player in NYC and BOS. And whatever traffic they have is inbound to those markets. JetBlue, conversely, controls the outbound market, so a merger makes sense in serving the market.

    As you noted, JetBlue’s midwest presence is minuscule. By plugging JetBlue’s existing customer base into Southwest’s robust network, this opens up many, many low-cost, destinations that New Yorkers and Bostonians currently do not have. In other words, it increases competition much more than allowing JetBlue to pick over American’s carcass, like a school of sharks that have happened upon a wounded whale.

    This move also gives Southwest immediate and necessary size to compete in NYC and BOS. It makes them the second largest carrier (by market share) in EWR and JFK and gives them an adequate competitive footprint in LGA. In Boston, they would be the largest carrier, but certainly Delta would be an adequate and fierce competitor there.

    This move also increases competition in the Carribean, South Florida and Latin/North South America, an American Airlines traditional stronghold. And, of course, it affords Southwest an initial foray into the U.K., via the JetBlue A-321XLR service. And it offers Southwest the opportunity to launch widebody services from JFK to Europe, thereby increasing TATL competition, should Southwest acquire the equipment in the future.

    1. In theory, this looks like a good idea. I just don’t think Southwest has the imagination and flexibility it would take to make it work. They couldn’t even cope with the idea of operating 717s, and Boeing doesn’t build a 737 counterpart to the A321XLR. (And if they did it would probably be rubbish, but I digress…)

      Southwest already ties both cities into their don’t-call-them-hubs at Baltimore, Midway, and St. Louis, offering connections to all those middle-america places. The main problem is that in NYC, Southwest only flies out of LaGuardia, but they tried Newark and we know how that ended.

      Given NYC and BOS’ operational challenges, I’m not sure Southwest is that terribly upset about not having a huge presence in either city. What they have, and their presence at MHT, PVD, and ISP gives them access to some of the outer catchment areas without all that hassle. I wouldn’t be surprised to see them try to gradually build on LGA (if slots become available) and/or BOS, but I’m not convinced it’s a high priority for them.

  6. > It should be in Boston. But how would you even rectify that issue, however, when there aren’t slots at the airport?

    I suppose a government entity could…. *sue* to stop the agreement?

    1. They could, but they’d have to prove that the AA/B6 alliance has sufficient market share to exert pricing power, and part of that is proving there are barriers to entry into the market high enough to prevent competitors from offering (in economics-speak) “substitute goods”. Southwest and LLCs have been able to grow at BOS, so while gate space appears somewhat difficult to come by it’s far from impossible, and there are no slots at BOS.

      Also, Bostonians have in the past shown that they are more than willing to use alternative airports. WN already serves MHT, and Spirit starts service on Oct 7. WN and F9 already serve PVD as well. Unlike HPN or ISP, both have expansion room, and unlike Stewart they are accessible to the greater Boston market. This further reduces barriers to entry to the point where a suit is likely to fail. And if BOS’ runways can handle more traffic and the only material capacity constraint is gate space, the court could also order construction of more gate space as a remedy, although this would likely lead to further lawsuits.

      1. The alternative airports at BOS really aren’t very convenient to the Boston urban area, especially with traffic, and are really **outside** the Boston metro area. MHT, PVD, and PSM (or even PWM or BDL, if you **really** want to go into airports that are 2 hours’ drive away on good days) are far enough away from BOS that they are more like Lansing/Toledo vs Detroit than LGA vs JFK vs EWR.

        Not long ago, MHT had much more service from WN and other airlines, but it fell away, especially as BOS began to offer more lower cost options.

        That said, IMHO (as someone who, frankly, would prefer NOT to fly out of BOS in favor of other airports, but who flies out of it the majority of the time) and from anecdotal evidence there seem to be enough competition and ULCC pressure in BOS to keep fares somewhat reasonable most of the time, especially on domestic and leisure flights. AA, DL, B6, Spirit, and others all compete to get Northeasterners down the Eastern seaboard, for example.

        1. True, MHT and PVD aren’t perfect, and may not get that much traffic from Boston itself, but if AA/B6 had excessive pricing power and tried to use it increased service to MHT/PVD could bleed off enough of the demand from the outer sections of BOS’ primary catchment area to relieve pressure on fares. DL and UA also have some opportunities to upgauge connecting service.

          1. Agreed. There are enough people outside the inner beltway (I-95/I-93) in the Boston area that if BOS fares get too high, especially for leisure routes, MHT and PVD flights will soak up some of the demand, but not sure how much or to what extent. One could make the same argument for Gary and MKE putting pressure on ORD fares, however.

        2. Yes, the service favors the urban core audience of Boston – as Logan Airport is located on a peninsula in East Boston. It’s quite close to downtown and thus you are told it’s “convenient”. True, if you live downtown. But most people do not. And if you live in the suburbs, BOS is a horrible place to get to. The traffic is awful and the number of ways to access the airport is quite limited (those not familiar with the area may not know that). MHT is waaaaay more convenient if you live north of say 128 (95) and PVD is better for anyone from Foxboro south or west. Far easier airports to deal with and it’s a shame that the various airlines fell like lemmings for Boston and abandoned the more user friendly airports when Logan opened more gates to them.

          Last note on this: unlike many metro areas, the population of the city of Boston is a very small percentage of the overall metro population. For example, a healthy percentage of those of fly through LAX would like in the city of Los Angeles because the city has a healthy percentage of the metro population. Far from all of it, but a large chunk. Cities like Kansas City or Nashville have a higher percentage even still. Boston itself has a population of roughly 684,000 in a metropolitan area of approximately 4,600,000. So, airlines acting as if the city is the entire market are making a mistake,

  7. While Boston competitive aspect Is interesting and relevant, putting it in context seems useful.

    The Boston metro area is the #8 GDP metro area in the US.
    Atlanta is #10.

    In Boston, you have MHT and PVD as relatively nearby reliever markets. In Atlanta, you have delta posing as a local citizen group and working with the city of Atlanta to actively prevent any new airports in the region.

    Both BOS and ATL are gate constrained, not slot constrained. Both airports struggle to provide new gates to carriers interested in adding service but delta dominates and actively prevents competition both from a gate and new airport perspective in ATL far more than any carrier is able to do the same in Boston.

    Seems like DOJ should be focused on Delta’s anti-competitive behavior in Atlanta before focusing on an airports where the share is far far below delta in Atlanta and where there are realistic reliever airports nearby. Even combined, B6 and AA hold nowhere near the percent of gates at BOS as Delta does in ATL.

    But that’s obviously not the point of the case.

    But context is always nice…

  8. Cranky,

    Under a different political party, could you imagine a JetBlue/American merger where FLL/MCO would be spun off to United to give United a Southeast hub?

    1. Bick – Oh yeah, I love that idea and have said it before in one of those fun “what if” kind of conversations with others. North to American, South to United.

  9. I’m sorry but I can’t see how any coupling of AA & B6 would be viable after forced divestitures & the inevitable structural cost inflation on the B6 side. Same can be said for B6 & UA or DL.
    The WN/B6 idea is fun.. in a fantasy football sort of way. Sure, the network synergies look great on a map but we’re not talking about a relatively small orphan fleet of 717s that can be easily unloaded and backfilled with 737s.
    Obviously the business models are completely opposite. Only way I could see it working would be to keep B6 as a wholly owned subsidiary targeting a different demographic. Unfortunately they tried that 35 years ago with Muse Air/TranStar and it was a huge flop.

    1. Eric…..I believe Mr. Kelleher bought Muse to punish Lamar Muse, a founder of Southwest. Southwest quickly dismantled Muse Air and I believe some of their DC-9-51s were acquired by Texas Air, and then put on the Eastern property in a 123-seat configuration in a transaction that was simultaneously advantageous for Texas Air and onerous for Eastern, line so many of Lorenzo’s “great deals.”

      You bring up a tantalizing point about the Airbus “problem.” During the farcical A-220 vs 737-7MAX “debate,” Mr. Van de Ven (now the President of Southwest Airlines) stated words to the effect that a second fleet type for SWA would require “several hundred” ships to qualify as the critical mass. Well, JetBlue fits that bill, even without the A-220-300 it has on order. But even if Southwest were to slowly phase out the Airbus (as it did the 717 with AirTran), there would be no shortage of takers, including Boeing Commercial Aircraft. Put in different terms, if SWA can readily find a taker for the out-of-production, spare-parts-challenged 717, then I think they can move a few hundred A-320s and E-190s.

      As a sidebar worth monitoring, Southwest has committed to AT LEAST 64 737-7MAX aircraft in 2022. Presumably, they are planning their flight schedules and troublesome manning issues around this rather large aircraft catchment. The only problem is that the 737-7MAX is not yet an FAA-approved Transport Category Aircraft. So Southwest may have to trim whatever 2022 growth plans they have if they cannot get the planes. Given the catastrophic outcome of the 737-8MAX certification, I frankly don’t think the FAA is in any rush, either.

  10. Even though it’s not mentioned much here, it seems to me that the issues ultimately revolve around Spirit, Southwest, et. al. The federal government is under the illusion that “low cost” and “ultra low cost” carriers are charities, and will automatically cut fares in half or provide consumers with free rides.

    News Flash: Low-cost and ultra-low-cost carriers aren’t charities. They’ll probably bring down fares initially, but in the end, they’ll charge what the market will bear.

    I continue to find the burning desire to serve New York somewhat ironic for most of these carriers (JetBlue being the obvious exception). The main reason to serve New York is obvious. It’s the most important business center in the country. Yet the carriers with the least exposure to New York also tend to be among the most profitable on a percentage basis. As Mr. Spock would say, “Fascinating!”

  11. CF, do you think both side would accept a change to NEA where AA & B6 are not allowed to codeshare on markets from BOS to non-NYC AA hubs? It seems like the majority of real competitive concerns are in those markets.

    I don’t really how they can make legitimately argue that the NYC partnership is bad for competition.

    1. FC – They’ve already done that. They agreed to remove Boston – Charlotte, Dallas/Fort Worth, Philly, Phoenix, Rochester, and Syracuse from the NEA.

      1. What are they complaining about then? BOS/JFK-LAX? I don’t see what other major market where competitive concerns have not been addressed.

        1. FC – I don’t think this is based on facts. I think it’s an ideology that the airlines are big enough. At least, that’s how it seems since the facts don’t really support the position.

  12. Brett — Your SoCal lack of NY knowledge is obvious. EWR is simply not an alternative for most people from Connecticut and Long Island. A two bridge/tunnel trip — especially when one is across the Hudson — is to be avoided if at all possible. Ask United if EWR is a reasonable alternative to JFK.

    1. Seth – Oh please. As I said in the last post about this. “Apparently DOJ didn’t think it looked bad enough with a normal review, so it opted to arbitrarily decide that Newark along with its United hub aren’t really competitive options for domestic travel. I’m pretty sure millions of people in Manhattan, Staten Island, and parts of Brooklyn would disagree.”

      You don’t have to serve every single population to be considered a viable alternative for a nearby airport. There are millions of residents who would consider all of these airports.

    2. EWR is definitely an alternative to vast majority of people/business in Manhattan. This deal has always been about the Manhattan and the major NYC corporate market. And yes, EWR is also an option for people in Brooklyn/CT, just as LGA is an option to people in Northern Jersey.

      1. EWR Sure is a viable option to NYC area suburbanites as I know White plains residents who fly from there EXCLUSIVLY.

    3. That is a pretty ignorant statement. JFK is not called Connecticut and Long Island International Airport. The epicenter of demand is Manhattan, the outerboroughs and northern NJ. One airport can’t serve everyone in the region, and obviously some airports are more or less convenient than others. I’ve flown to/from EWR many times and I’m in eastern Queens – not exactly the catchment for EWR since I’m 15 minutes from LGA and 20 from JFK.

      1. Yeah. Great ad hominem argument.

        Here are the facts (since you want to talk “ignorant”). Manhattan population: 1.3 million. Nassau/Suffolk: 2.7 million. That doesn’t even count SW Connecticut.

        And again, United thought that EWR was an alternative to JFK. Until the FACTS proved them wrong and they had to restart transcon flights.

    4. It is true that EWR is not a viable alternative for those in Long Island or CT. But JFK and LGA are not viable alternatives for those in NJ, which is equally part of the NY metro area. Both are viable for Manhattan and for the parts of the metro area they are closer to.

      1. Really depends where one resides. If you live in Orange or Rockland you’re closer to EWR. If you are along the sound shore near I-95 then JFK or LGA is your best bet, but that’s not a hard & fast rule. There are places such as Yonkers & Tarrytown where either airport may work out as road access isn’t difficult at all.

  13. As much as some might want to bring Delta or Southwest or Spirit into the discussion, the DOJ’s suit is against American and JetBlue.
    As much as some might want to discuss Atlanta or other airports, the only cities in the case are New York City and Boston airports. There are processes for determining whether there is adequate competitive access to airports and every major non-slot-controlled airport meets that requirement except for Dallas Love Field. There are plenty of single airport metro areas and there is also no assurance that a carrier can get whatever gates they want – but they are guaranteed to get some initial level of airport access if they do not already serve an airport. No airline is guaranteed to have unlimited growth potential at any airport.
    The DOJ has consistently applied 50% as the problematic level of market concentration in the airline industry and they have done it in other merger/asset combination related cases.
    It might make someone feel better to argue “look what they have been able to get by with” but it doesn’t get to the root objections that the DOJ has with the AA/B6 deal or how to restructure it to fit w/ DOJ guidelines which were actually fairly well known at the time AA/B6 did their deal and when the DOT but not the DOJ approved the NEA.

    1. Both of your posts today have been spot-on. The entire premise of the NEA is unprecedented in the history of the industry. It’s not a codeshare. It’s not a joint venture. It’s not a full-blown merger. Yet it contains elements of all 3. That alone warrants closer DOJ scrutiny. The entire aroma of the NEA reeks of a “It’s better to ask for forgiveness than to seek approval” odor.

      To his credit, Mr. Snyder (and other commenters here) has never hidden his favoritism for what today is known as American Airlines. But even by his cheerleader standards, today’s blog reads more like sponsored content than his typical nuanced analysis. But, given his previous affiliation with Mr. Parker (now the longest-tenured airline CEO in the country and the ONLY one who was a CEO on 09/11), that is understandable. Thank you, Mr. Snyder, for allowing us to play on your field, no matter how tilted it may be at times. And thank you for not censuring our replies.

      1. Saw – Thanks for that backhanded compliment. I generally ignore comments like these, but I felt compelled to respond for the benefit of those who read through them.

        > The entire premise of the NEA is unprecedented in the history of the industry. It’s not a codeshare. It’s not a joint venture.
        > It’s not a full-blown merger. Yet it contains elements of all 3. That alone warrants closer DOJ scrutiny.
        > The entire aroma of the NEA reeks of a “It’s better to ask for forgiveness than to seek approval” odor.

        Of course it deserves further scrutiny, and that’s what DOJ has been doing over the last year. But there’s a big difference between giving something scrutiny and filing a lawsuit. The idea that this is all about “better to ask forgiveness than approval” misses the entire fact that American and JetBlue both worked with DOT to create something that it would approve.
        DOT put safeguards in place that make sense before this went into effect.
        DOJ isn’t happy with that, and that’s fine, but it is basically saying that it would rather throw away the tangible benefits that exist today just in case something bad might happen in the future. I struggle with that argument, though I would have no problem at all, as I’ve said, with taking BOS gates away. Take more slots at NYC airports too if they want or negotiate other remedies. If that is the endgame, then it makes sense.
        But it’s hard to see the rationale for striking this down entirely.

        > To his credit, Mr. Snyder (and other commenters here) has never hidden his favoritism for what today is known as American Airlines.
        > But even by his cheerleader standards, today’s blog reads more like sponsored content than his typical nuanced analysis.
        > But, given his previous affiliation with Mr. Parker (now the longest-tenured airline CEO in the country and the ONLY one who was a CEO on 09/11), that is understandable.

        What an odd and incorrect thing to say. I have no favoritism for American. Learning under Doug’s leadership at America West certainly shaped my thinking about the industry and consolidation, but that doesn’t mean I favor one airline over the other at all. It certainly does mean that I was aligned with Doug’s thoughts in many ways when I started writing this blog and all the way up through the AA/US merger. I bought into the consolidation thesis and agreed with it wholeheartedly. Some did it better than others, and that was always good blog fodder. Since the merger, my view of American’s senior management has declined significantly. I’ve openly said there needs to be big change at the top ( https://crankyflier.com/2019/10/10/american-rearranges-the-deck-chairs/). I think Vasu has helped to shake up parts of the organization, and most of the things I like that American is doing come from him. That’s the same reason I criticize Delta. Vasu’s group seems to be trying hard to do new and creative things. Delta is busy doing, well, I don’t know what…
        hiring giant health teams and having the CEO put on a “Power of Purpose”
        webinar. (Seriously, that’s tomorrow for travel agents, and I’m dialing in.)

        It’s been 19 years since I worked at America West. The idea that this would somehow translate into some undying love for what’s left of that airline is rather silly. Scott Kirby was my VP at America West when I started, so does that mean I should instantly think that United is the best? No, of course not, and I was wary about him becoming CEO. I have friends and connections at all the airlines, and the only way that influences me is if they provide more in-depth information that helps me to shape my thinking.

        If you want to argue with the points in today’s post, then I’d suggest you stick to that instead of using ad hominem attacks.

        1. Sorry, but my post was not an attack, ad hominem or otherwise. I’m genuinely sorry if you interpreted it as such. Clearly, my sincere thanks for allowing me to post here was interpreted as a “backhanded compliment.” Yes, I wrote that your offering today seemed like sponsored content. It seemed to me that it was if you were given AA/B6 talking points and created a post around them. But I meant no disrespect then nor now. As others have noted here, you have a pro-AA/AW bias and, as I indicated, that is perfectly fine with me if that’s the cost of admission. And I mean that seriously, genuinely and without snark.

          As far as Mr. Parker is concerned, his legacy will be half-Lorenzo and half-Kelleher. And I mean both of those in a complimentary way. Like Lorenzo, he saw merger and consolidation as a means to industry power. But like Kelleher, he realized that carrots work better than sticks (unlike Lorenzo) in gaining, and maintaining, power. Perhaps, ultimately, too many carrots to too many people. But he has made the best of untenable positions, going all the way back to America West.

          1. Just as an FYI, this is a great example of why many posters dislike Mr Dunn and, at times, your posts.

            Others aren’t allowed to have opinions that differ from loving delta or hating American. If they do, they’re “clearly biased” because no rational person would possibly disagree with either of you, in this case even the DOT isn’t allowed to disagree with either of you or they’re biased.

            Brett’s post is largely based around what the DOT thought was reasonable accommodation, not AA and B6. I doubt the two airlines thought giving up DCA and JFK slots was reasonable for the NEA.

            You go off on Brett, who can defend himself, trying to discredit someone that is widely seen as an industry expert by multiple publications and TV programs insinuating a perceived bias because he worked for two current airline CEOs 20 years ago. Why? Because you disagree with his opinions on a lawsuit where even DOJ and DOT clearly disagree. Yet you call him biased because he thinks the DOT got it right?

            With all respect, go start your own blog and travel company if all you can do is criticize someone who’s gone from a lowly Revenue management analyst at America West to a very widely acknowledged industry expert.

            1. We all get to have opinions, CF included but if anyone is called biased, then it is fair to call everyone biased.
              Whether you agree w someone else, including one dept. of the government which is contrary to another, is immaterial.
              The only real test of the validity of anyone’s opinion is what happens in the end.
              I personally think the NEA in its current form will not survive. others are free to disagree.

              btw, California jumped in and decided to try to extract its pound of flesh.

              and those that are convinced that Delta is behind this might consider that Delta’s decision to add Boston to Charlotte and DFW probably helped reduce the concentration in a couple major markets that are the focus of concentration concerns. And yet AA/B6 are already apparently willing to start adding dialing back some of the scope of the NEA.

              Remember, the DOJ tried to reach a settlement before filing the suit and now AA/B6 realize it is in their best interest to have a smaller but intact agreement than to have it all tossed.

              If AA is convinced that AS will help them in the west including in providing feed for new int’l routes from SEA, then the same template will work in the NE. It is very precisely because AA signed a less problematic agreement with AS that states and the DOJ are seeking something similar with B6

      2. Its a shame, but when it comes to AA or Doug Parker I have to take CF’s comments with a grain of salt. Its obvious he is in the tank for AA and/or Parker. I really value Brett’s take on all non-AA related subjects. But when its AA-related….

  14. This lawsuit may be against American and JetBlue, but make no mistake, the politicians backing it are being pushed by Delta, Spirit, and Southwest. To believe otherwise is naive, or a lame attempt at some kind of justification that seems to benefit someone’s favorite airline. To repeat what I wrote above, nothing is stopping United or the “Perfect Airline” from adding competing service to American’s hubs from New York or Boston.

    The idea that 50% is a consistently applied metric is questionable at best. Let’s just say it’s often been applied arbitrarily and capriciously. It certainly hasn’t been applied across the board – or there would be no DFWs, Atlantas, Charlottes, etc. By the way, that doesn’t mean I’m suggesting that 50% should be applied rigidly. I’m merely pointing out that its application isn’t consistent. And how is the magic 50% measured, by the number of slots? By ASMs (which can change depending on the gauge of aircraft)? Just asking.

    IMHO, the “root” objections are specious at best. They’re both arbitrary and capricious – based on emotion, not real data. Mark Twain summed it up in his famous quote, “There are three kinds of lies; lies, damned lies, and statistics.” In this case, the statistics that have been arbitrarily put forward by the DOJ don’t tell the real story, but that’s the norm when politics and politicians are involved (maybe I’m being too cynical again). It’s also about a misguided view that LCCs and ULCCs are charities whose presence will guarantee lower fares. The market simply doesn’t work that way.

    1. Delta is not trying to combine/cooperate w/ any other carrier at Atlanta or limit the ability of any other carrier to compete and the same is true for United at San Francisco or AA at CLT or DFW. There are good reasons why N. Carolina and Texas are not part of the case but Mass. and Florida are.

      It really is not arbitrary.

      The question is figuring out how to extricate AA/B6 out of a situation that frankly they should not have been put in – DOT should not have approved something only for DOJ to come in 6 months later and shoot down.

      Life isn’t fair but the goal is to figure out how to allow AA and B6 to work together. I believe they can do it and satisfy industry objections rather than believing AA is the victim of an industry plot.

    2. NK has no political clout. WN just wants more LGA slots. This is definitely DL’s doing.

      The NEA is far less anti-competitive than some of the ongoing JVs we have. And as CF’s has demonstrated, the complaints are fairly weak. AA & B6 are going to be able to beat this back.

      It’s going to be hard for DOJ to make this case when NY AG has no interest in participating in it. You’d think that if anyone’s interest is damaged, it would be NY state.

      At this point, DOJ should look into settle with AA & B6 on something that is a little more restrictive and maybe request for more divestiture.

      The more time new NEA routes are operating, the more evidence they will have to show the positive effects of lower fares on various markets. B6 just started to code share on AA RJs after no being able to do this for months. There doesn’t appear to be any slow down in the implementation of NEA.

  15. Since slot squatting keeps coming up, here’s my proposal for a better solution than slot auctions for allocating limited airport capacity. Would love to hear everybody’s thoughts…

    Slot auctions (or grandfathering) raise fares for everyone. The true goal is to move the maximum number of passengers through an airport of limited capacity. Airlines can do this by flying big planes to popular destinations (or hubs) with low fares. To encourage this, every quarter find the 5% (?) of flights during each hour of the day carrying the fewest total passengers (this should be analyzed hour-by-hour so off-peak flights are not overly penalized). Competitors may propose replacements for those slots. Those with convincing proposals that they will carry more passengers should be given the slots (taking into account the reliability of each airline’s previous proposals and forecasts). Over time, competitive pressure will upgrade slots throughout the day with larger planes and lower fares to fill all the seats, thus maximizing the airport’s passenger throughput.

    As far as less popular or smaller destinations: they will either consolidate to fewer daily flights on larger planes, or, less optimally, slots can be reserved for them and their smaller planes. But carving exemptions for small planes/destinations defeats the purpose, so I think these destinations just have to accept that instead of having X flights a day on commuter jets, they will have X/3 flights/day on 737s. The only exceptions that should be carved out are if there is less than one (or maybe two) 737 load(s) per day of demand. Or maybe we just accept that you’ll have to connect through some other hub to get to those low-demand destinations?

  16. Hey Cranky. Thanks for another great article.

    One point of constructive criticism– for your line graphs if you right-click to format the axis you can set the minimum and maximum value of your graphs. It can help to avoid a lot of “dead space” below the range with no data (in this case below 40-50%). It can really help to make the subtle shifts “pop”.

    Enjoy the reporting and commentary regardless. Thanks!

    1. Thanks for the note. I don’t want to pervert the differences. The idea is to put it in context so that means showing it from 0 instead of just highlighting a smaller scale. I don’t want to exaggerate if I can avoid it.

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