JetBlue has not been quiet about its desire to have a domestic partner to help it fill some of the gaps it faces as a regionally-focused airline. It had one in American back when it tried to push through the ambitious Northeast Alliance (NEA). The courts didn’t take too kindly to that one, but JetBlue had a fallback plan… a Spirit merger which the courts also shot down. That left JetBlue with new management trying to figure out the right way forward. At this point, despite some of the speculation out there, it’s down to only one good option.
You’ve probably seen wild speculation ranging from a partnership with Southwest or Alaska to a merger with United. Everyone calm down. The only real option at this point is a more limited partnership with United. Reuters is reporting this is a done deal, but I won’t believe it until I see it actually announced. If that happens, however, it would be a good outcome for JetBlue.
What is it exactly that JetBlue wants? JetBlue President Marty St George reminded everyone on the airline’s recent earnings call.
… as far as the benefits that we expect to offer to our customers, the most important thing is, number one, a significantly higher network opportunity for earn and burn of TrueBlue points, which we think greatly improves the utility of TrueBlue. And that means, for example, today, if you are a customer in the Northeast and you love JetBlue for leisure, but twice a year you have to go to Omaha or Boise…. and the second thing is I’m really excited for just the overall broadening of the network opportunities, not just connectivity, but also just a sort of better opportunity to our customers to fly more places with more frequency.
Ok, so JetBlue wants a partner that will enable broad earning and burning of miles in TrueBlue. After all, that makes TrueBlue more valuable and it gets more people to sign up for that lucrative credit card. And it just wants a broader network for customers to access which would include higher frequency in relevant markets. This greatly narrows down the options.
Southwest is not one of them. There is no world where Rapid Rewards would be considered a meaningful broadening of JetBlue’s earn and burn access. I assume people are just getting hung up on hearing “Omaha or Boise,” but that’s just silly. The same goes for Alaska. JetBlue already has its international partnerships and it keeps adding earn and burn on them as of late. Alaska itself doesn’t add that much value in a partnership. And ULCCs? No value there.
So who does that leave?
Delta, well, that would probably be good for JetBlue. It’s also going to happen when hell freezes over. There is no love lost between these airlines, but specifically, why would Delta do this? It wouldn’t. It’s trying to kill JetBlue in Boston and New York. This would only help JetBlue in places where Delta doesn’t need much help. Even that’s questionable. There’s a reason that Delta has never been a part of this conversation.
The only two logical options are American and United. And American has now quite publicly announced it is out of the running. It sent a letter to the team and published it in its newsroom which I’ll talk about more next week.
With American out of the running, that leaves United as the only sensible option for the Blue Crew. That’s the only other possible partner that can give JetBlue what it wants.
JetBlue wants a global mileage earn and burn partner, and United is certainly that. It also makes JetBlue more attractive as an option for the large MileagePlus cohort. That’s obvious. Regarding more frequency to places around the network, United does provide that in New York, if people are willing to cross the Hudson and go to Newark. Elsewhere, it does provide added opportunity to connect via United’s hubs, but how big this opportunity is elsewhere isn’t completely clear.
What may make this more appealing to JetBlue is that United is likely pretty hungry for this deal as well, which could mean a better financial outcome for JetBlue.
Think about it this way. There are three markets that matter to JetBlue the most: New York, Boston, and Fort Lauderdale. United is strong only in one, New York.
In Boston, United is a fourth place airline, similar to American in New York, actually. Here’s a look at July departing seats:
July Departing Seats from Boston
Data via Cirium
United only serves its hubs, so it treats Boston like a proper spoke with ample service to the hubs but nothing else. This partnership would make United somewhat more relevant in Boston.
The same goes for Fort Lauderdale. United has been wanting some kind of toehold in South Florida for ages, and now it could get a small one. Here’s how that breaks down:
July Departing Seats From Fort Lauderdale
Data via Cirium
Fort Lauderdale is particularly interesting since JetBlue’s big competitor there is Spirit. The addition of a partner like United — even though it only serves its hubs plus Cleveland — means that JetBlue could further differentiate its ability to provide value through TrueBlue. It should make a difference in that fight.
Assuming this United/JetBlue tie-up is the eventual outcome, the real question is… what form will this partnership take? Unquestionably it will include a frequent flier partnership that allows for earning and burning on both airlines. But it gets more complex from there. A codeshare would certainly make a great deal of sense, but there are contractual issues with pilots on both sides that would need to be cleared. That might have to be a future development at best. The only other thing I could imagine in the initial agreement would be a slot-leasing agreement.
Somehow, the Italian news site Corriere Della Sera has the scoop that United will pick up 20 slot pairs at JFK from JetBlue. This is an awfully strange place for that leak to come to life. It also seems like more slot pairs than United would actually want. But we do know that United wants to get back into JFK with a full complement of slots so it can fly to the West Coast with enough frequency, unlike its last attempt. JetBlue might find it a benefit to part with a handful of slots are JFK that could make more money on lease.
I can’t imagine anything beyond that would be in an initial agreement. But really, I have to think that JetBlue envisions its ultimate future as a part of something larger. United CEO Scott Kirby is certainly laying the groundwork for something bigger in the future; I don’t imagine he’s busy praising President Trump’s tariff plan just for fun. He wants to know if he comes with a merger proposal, it doesn’t get stopped.
A partnership, of course, doesn’t mean that the partner would end up being the successful acquirer in the end anyway, so it’s very premature. But for JetBlue, just locking down a significant domestic partner is important, and the friendly skies seem to be the only option that gets JetBlue what it wants.
9 comments on “JetBlue’s Domestic Partner Options are Now Down to One”
If JetBlue and United are really moving toward a deeper partnership, then yes, I’d imagine JetBlue will need to add frequency to some of United’s key hubs. Right now, JetBlue doesn’t serve most of those cities with any real depth. If they want the partnership to actually function beyond loyalty reciprocity, there has to be some level of feeder flying. United could easily say, “Hey JetBlue, you take this thinner route into DEN or IAH and carry the connection flow,” while they focus on long-hauls and bank structures.
Also, with LAX Terminal 5 set to close for construction, that raises another logistical piece. I assume JetBlue would push for space in T6, 7, or 8. If they’re going to cooperate more with United, especially for connections, they’ll need proximity. Even just a few gates with coordinated scheduling would make a big difference.
Could a codeshare realistically help JetBlue restart routes that struggled before? SJC is a good example — with United’s code on it, there’s more visibility and potentially more feed from their side of the network (especially in the Bay Area, where United is strong). JetBlue doesn’t need to compete with United; they can complement each other. But that only works if JetBlue steps up presence in places like ORD, IAH, SFO, and maybe even DEN.
If an agreement with United takes place, whatever form it is in, is there any sort of guarantee that it will stick around for a meaningful length of time?
Last time around with AA, two of the big things were the slot swapping plus FF benefits. All of which had to be undone pretty quickly when it fell apart. Even though it wasn’t directly the airlines’ fault, those rapid shifts are not great for operations or passenger loyalty.
Who knows what the DOJ will have to say this time around, but they’d better come up with a really compelling proposal and very good reasons for us to believe that this partnership will last.
There’s never a guarantee about anything. However, any airline entering into a partnership obviously want it to last.
AA/B6 didn’t ‘fall apart,’ it was (from the start) a risky and legally untested joint venture that was predictably challenged in court, and lost. You can absolutely blame the airlines for pursuing such an aggressive quasi-merger – one of the risks is exactly what happened. It wasn’t just slot swapping and FF benefits – they were sharing revenue and coordinating schedules.
The reporting from Reuters indicated that this would be a much simpler partnership compared to the NEA, and one that would therefore be on much stronger legal footing. All of which would suggest it would last.
I’m not sure B6 is going to let go of their flagship (and possibly most profitable) transcons. Blue has made ALLOT of mistakes….Mint is NOT one of them. If anything it’s a template of what happens when market research, inflight, accounting/finance and advance schedule planning successfully work together. I can’t help but to think there will be a JFK-LAX/SFO carve out to keep the brand, product and revenue skewed towards B6.
It will be good to see Blue tails in flyover country outside of token 2 a days to JFK. I can see B6 metal filling in in high demand/low yield stuff out of FLL, MCO, LAS , SJU and the Caribbean. Twenty years after TED they will finally have a lower cost partner that dosent bastardize the brand but knocks CASM down a few cents to fun N sun markets.
There’s a lot of buzz on FB saying or suggesting that WN is preparing to make a move against JetBlue. What value B6 would bring, beats me. Unless it’s just to eliminate a competitor. I always thought that a AA/B6 matchup would’ve made more sense. Not that I’m a big fan of mergers and acquisitions in general. I figured this “alliance” was intended to be a precursor to that effect. No wonder B6 is trying so hard.
But rumors and speculation have been going on since the earliest days of chat boards. So I rarely give them much credence. Anyone remember the endlessly asked question of “What will Northwest replace their DC-9’s with?”
Is there more likely this partnership would pass when the AA didn’t? What is the current DOJ/DOT views on something like this?
I always figured B6 would go for a smaller airline to prevent any anti-trust denials
I still believe an Alaska JetBlue tie up is very much possible even if United may have the breath of service in most of the country that JetBlue may desire.
When it comes to NYC flyers, most of them will not willingly travel across the Hudson to fly as most flights at EWR have a similar one at JFK or LGA. The only reason to do that now a days is tied to “what’s in their wallet.”
Thank you for the rational and reasoned approach to what is known about a B6 partnership. There are several realities that some people continue to miss.
First is that there continues to be too much capacity in the US domestic market in part because most of the industry capacity is not sustainably profitable at post covid labor costs which DL has led higher and continues to push up. DL and UA are the only sustainably profitable carriers right now and UA has amendable contracts with its FAs and mechanics and the list of labor groups will grow to all 6 non-pilot unionized groups by summer.
The only thing that is saving the US domestic market is that oil prices are down to pandemic era low levels. Even the AF/KL and LH both noted that the relatively low levels of international booking decline they are seeing is being offset by low fuel prices.
Second is that AA should have done a deal with B6 paralleling the AA-AS relationship. Kirby has been gunning for AA in Chicago (which is adding another round of flights) and they’d love to take out AA in NYC as well.
Third is that UA is motivated first and foremost to a return to JFK because JFK is the primary airport for outside the LGA perimeter traffic in the NYC area. AA, B6 and DL all serve all 3 NYC airports; UA is the notable exception.
Fourth is sheer size of the carriers in the NYC market. NYC is essentially a slugfest between DL and UA with AA and B6 along for the ride. DL has 15% more flights but UA has a revenue advantage because the majority of DL’s slots are from LGA which are perimeter limited.
Fifth is that there is ZERO appetite in the country for any of the big 4 to become larger and to further concentrate their power. It is one thing to add a codeshare and even alliance partnership between B6 and UA but quite a different matter for B6 to give up slots to allow UA to further grow in NYC – even before all of the talk about a potential future merger or acquisition.
Sixth, B6 and UA cannot negotiate what markets UA will serve if B6 leases slots to UA. That is collusion. If B6 leases slots, it runs the high risk that UA could grab the slots and then cancel the rest of the agreement, leaving B6 with competition in some of its most valuable routes – the CA transcons.
And finally, whatever takes place with B6 is the opening salvo in fixing the overcapacity problems in the industry. AA and WN right now both financially underperform as does most of the LCC and ULCC sector. Other deals will come esp. if B6/UA progresses to the point of altering the current competitive balance in the industry.
Love the Dating Game pick BTW.