The worst-kept secret in the industry finally became officialy last week when United and JetBlue announced the launch of their Blue Sky partnership. The headlines were about what I expected, but there were some interesting nuggest buried in the release. I spoke with JetBlue President Marty St George to get the story.
On the surface, again, it’s largely what I expected. The centerpiece of the announcement is the frequent flier partnership that allows earning and burning across the two networks, mostly. It’s not actually that simple. United has excluded some markets, but it is being coy about what those are. All the airline would tell me was this:
While a few routes will be excluded, most JetBlue flights, including transatlantic flights, will be eligible for accrual, redemption, and benefits. We’ll have more details as we get closer to the program rollout.
My thinking is that transcon overlap routes might be involved, but we will have to wait and see.
This isn’t just an earn-and-burn situation. The airlines took it even further by giving elite members in each other’s program benefits when flying the other. It’s the usual stuff like preferred seating, priority boarding, and a free checked bag.
There will be no codeshare — presumably because that involves tech work and getting labor involved, which isn’t going to happen — but there will be full interline with the ability to sell flights on the other airline coming to each carrier’s website and app.
And yes, United will return to JFK, but it won’t be until 2027. United will have the ability to use up to seven of JetBlue’s slots from a gate in Terminal 6. In exchange, JetBlue and United will also swap eight runway timings at Newark which Marty says will enable his airline to fly more of those Caribbean and Florida flights earlier in the day when leisure travelers want them.
Why 2027 for JFK? Marty said this was entirely United’s decision. United President Scott Kirby made it clear at the Bernstein Strategic Decisions Conference that this is because the airline won’t have good transcon airplanes available until then. This presumably relies on the 737-10 MAX actually being delivered.
Despite all of this, there were three other points that I found most interesting of all.
Not Joint Sales, But Let’s Call It a Mutual Benefit
United and JetBlue will have the ability to include each other’s flights in their corporate deals. This isn’t a new concept, and it’s something that JetBlue has done in the past with other carriers. Marty gave me two good examples of how this could in theory play out.
On the one hand, when United comes to JFK it will still have few flights from there. If a corporate deal needs access to, say, South Florida, then United could include JetBlue’s flights in the mix to win that business. On the other hand, JetBlue might be chasing a corporate deal in Boston that needs Chicago. It has limited frequency, but if it can include United’s flights, it can win the business.
This is not a joint sales agreement. It’s just an extra tool in the toolbox for each airline to win deals.
Paisly is Spelled Weird, But It’s About to Get a Huge Win
JetBlue’s Paisly product allows the airline to add hotels, car, packages, etc when someone books a flight. Today, United outsources all of that to ALG various third parties, and it will now switch over to using Paisly for hotels, cars, cruises, and travel insurance and presumably more.
Marty proudly explained, “we are extremely good at this.” Getting the added heft from United will, I assume, allow Paisly to get better and bigger deals which can only make for a more compelling offer for customers. I know there was a lot of wondering why JetBlue didn’t get rid of this business when it created the JetForward plan after Robin Hayes left as CEO, but now you’re seeing how this can start to be a real contributor.
Kinective Media Also Gets a Huge Win
If JetBlue wins with Paisly, United will get a win with Kinective. What the hell is Kinective and why does it also look like it’s spelled wrong? I can’t answer the latter, but to the former… the press release succintly describes it as a way to “connect airline customers to personalized, real-time advertising, content, experiences and offers from leading advertising brands.”
United has a lot of screens and people with apps — a lot of touchpoints — so it built this network last year as a way to monetize that screen space. I know, you hate it as a customer, but it is the way of the world. Now, JetBlue will use Kinective onboard because, guess what?, it too has a lot of screens.
The same way size helps Paisly, it will help Kinective as well. It creates a lot more view opportunity in the hugely important New York and Boston markets. It should be easier to sell bigger deals to advertisers.
You can see how a deal like this makes it easier for United and JetBlue to come to terms compared to what everyone expected to see, American and JetBlue. American confirmed to me that it still has its vacation product in-house, so it wouldn’t be in the market to have Paisly step in. And American doesn’t have an advertising network — even if it wanted to do it, it has far fewer screens anyway. There is a unique ability for United and JetBlue to give each other what they want that makes the value of the deal easier to justify.
The question on everyone’s mind is whether this will pass regulatory review. The truth is we don’t even know if there will be a regulatory review. Marty confirmed that they have or are in the process of briefing both the Department of Transportation (DOT) and Department of Justice (DOJ). While there is nothing here that would trigger a review automatically, the feds can decide to look into anything if they want. That being said, it’s hard to imagine this will be a problem.
In the judge’s ruling dissolving the American/JetBlue Northeast Alliance, he gave a pretty clear structure of what is and isn’t ok. JetBlue has made sure to craft something that wouldn’t be objectionable based on its past experience. There is no joint scheduling here. No antitrust immunity is required. All that being said, I’m very wary about predicting anything the federal government may or may not do these days.
Assuming all goes to plan, Blue Sky will start to be implemented in the fall. JetBlue loyalists should be happy to have a big, broad network to tap into at United. United loyalists in the Northeast, especially those in Queens/Brooklyn/Long Island, should be happy to have more flights at their disposal. Delta probably isn’t worried, but American, well, it’s just watching and trying to figure out a way to make a living in the region.
But for United and JetBlue? Yeah, I’m gonna say it. It’s nothing but… Blue Sky… with this deal. God, I hate myself for even typing that.
Edited 6/2 to reflect that ALG continues to manage parts of what United does on vacation packaging, but the direct-to-consumer offer goes to Paisly and that is managed by several different providers
