An appeals court ruled last week that the American and JetBlue Northeast Alliance (NEA) was indeed anti-competitive, shooting down American’s attempt to overturn the original decision. But with the pending change in administration at the federal level and some comments that have been made about future partnering decisions in a different way, this seemed like a good time to go and take a look in Cirium data to see just what has transpired.
I’ve written exhaustively here about what was added when the NEA was being put together. In broad strokes, American bulked up on international from JFK along with a handful of domestic markets from LaGuardia, primarily in the Midwest and the Great Plains (Des Moines and Omaha, for example). It also eliminated 50-seat regional jets so it could have First Class and extra legroom available on all flights to/from NYC airports.
JetBlue, meanwhile, picked up the slack at LaGuardia where it launched flights to a dozen new destinations. It stretched into markets like Charleston (SC), Nashville, Portland (ME), etc. It went into new markets from JFK like Detroit, Kansas City, and San Antonio. This was about complementing each other.
But then, it all fell apart. Once the NEA was shot down by the feds, the airlines slowly unwound what they had done. JetBlue went back to serving the same four cities from LaGuardia it had served previously. American started flying more leisure routes again in order to try to keep those slots utilized both at JFK and LaGuardia. (It did also start leasing out slots to low-cost operators and doing some slot-squatting with Philly flights.)
To some, this was a victory because it meant that American and JetBlue could once again be considered competitors. To others, this made things feel less competitive because American and JetBlue were no longer able to compete on the whole with the behemoths Delta and United. But what really happened in detail? Let’s dig in.
I took a look at Q2 2024 vs Q2 2023 flying for both American and JetBlue. That captures the end of the spring break season as well as beginning of summer. It also shows the peak of the NEA which wasn’t shut down until May 2023. Schedules didn’t begin to change until after Q2. I also did something you might not love; I combined all three big New York airports. The way I figure it, I wanted to look at how many airlines serve the metro area this year versus last year before the NEA was ended. Looking at individual airports would create a lot of noise.
I tried to break this down into a cool map or some easy categories, but I struggled to do it. So, here’s a map that’s not all that helpful:
American/JetBlue Change NYC Routes map generated by the Great Circle Mapper – copyright © Karl L. Swartz.
Now, let’s talk about what each of these means.
The Atlanta Problem
Atlanta is a strange outlier, so it deserves a headline of its own. JetBlue served Atlanta from JFK, but it was in May 2023 that it went into LaGuardia as well. At the same time, American ended its LaGuardia service. JetBlue ended that service this October, but American has no plans to go back. This means that technically the number of competitors has remained flat in the broad metro since JetBlue still flies from JFK, but for that business traveler, there is really one less airline option now that neither is at LaGuardia.
American Exits, But Would They Have Stayed?
There were three markets that American has exited since the end of the NEA:
- Jackson Hole
- Montrose (CO)
- Nassau
These were weekly routes for American that were primarily flown in winter. Now, American has left them all. JetBlue is in Nassau but not the others. Might American have stayed if the NEA still existed? Maybe, but probably not. These are heavy leisure markets that probably just didn’t pan out. My thought is that the NEA didn’t have much of an impact, and these would have disappeared anyway.
There’s one more market not mentioned here, and that’s Birmingham (AL). That was started at the end of the NEA, but it’s already gone. So, nothing to see there.
The End of the NEA and the Pandemic Brings American Back
There are three markets that American exited specifically due to the creation of the NEA, handing over the flying to JetBlue before coming back recently:
- Orlando
- Nantucket
- Portland (ME)
There are another four that ended after the pandemic began and have only recently returned:
- Bangor
- Halifax
- Martha’s Vineyard
- Philadelphia
Did these come back because the NEA was gone? On all but one, I would say yes. Orlando, Martha’s Vineyard, Nantucket, and Portland all now have JetBlue and American competing with each other. Those aren’t big markets, but it is an increase in competition post-NEA.
Bangor and Halifax aren’t served by JetBlue, so presumably American thought it had a better use for the slots elsewhere during the NEA. Now that the NEA is gone, it’s back in those markets.
Philly, well, that is just slot-squatting. During the pandemic, slot utilization rules were suspended so it didn’t need to fly. But now it needs to fly it once again.
I’ll also add two more to this group. They’re markets American didn’t serve in the NEA or before, but it has recently started flying:
- Hyannis
- Sarasota
Hyannis is unrelated to the NEA. American was waiting for the runway extension to be finished before it went in there. But there may not have been slots available if the NEA was still in place, I suppose. In Sarasota, American can’t rely on JetBlue anymore, so it went into the growing market itself.
The American NEA Markets That Went Away
There were six markets that American started due to the NEA and then exited as soon as it was done:
- Doha (not on the map since it would have skewed the scale too much)
- Hilton Head
- Houston/IAH
- Kansas City
- Los Cabos
- Monterrey
These markets did not pan out, and as soon as the NEA was over, they were gone. Some may very well have been gone anyway, but without the NEA they don’t exist. As for Doha, that one moved down the road to Philly when it became clear that JFK would not be a big enough connecting hub without JetBlue.
Note, I’m not including Tel Aviv here at all, because it may very well come back when there is less of a threat from war. Call that one TBD.
JetBlue’s Exits
The problem with JetBlue is that it is shifting its strategy under new management, so there has been a LOT of cleaning house. In this case, I have to look more recent than Q2 2024 to see the full extent of what is gone. Here’s what I’ve got, but there could be a couple missing:
- Burbank
- Burlington (VT)
- Detroit
- Havana
- Kansas City
- Palm Springs
- Pointe-à-Pitre
- Portland (OR)
- Puerto Vallarta
- San Antonio
- San Jose (CA)
- Worcester (MA)
Note that this doesn’t include the seasonal exits. Effectively what we have here is JetBlue walking away from some markets it held on to for reasons other than profit, like Burlington and Worcester which were not good performers but must have felt important to keep for one reason or another. The rest of these probably should have gone long ago and weren’t likely tied to the NEA but rather to the shift in strategy at the airline.
New Blue Crew Routes
With all this, some new routes have emerged:
- Belize
- Bonaire
- St Kitts
- St Vincent & the Grenadines
- Tulum
These are deep leisure destinations that help to grow the airline’s footprint, but are they routes JetBlue would have flown otherwise? Tulum, probably, since JetBlue was only not at the airport because it had yet to open. But the rest are part of the broadened leisure strategy that might not have been possible if slots were dedicated to supporting the NEA’s business routes.
Partners to Rivals
The last grouping involves routes flown by both airlines before, during, and after the NEA. But since under the NEA they worked together and now they are once again rivals… some may consider this to be an increase in competition.
- Antigua
- Aruba
- Austin
- Bermuda
- Boston
- Buffalo
- Cancún
- Chicago/O’Hare
- Detroit
- Los Angeles
- Miami
- Montego Bay
- Nashville
- Phoenix
- Punta Cana
- Raleigh/Durham
- San Francisco
Should we really count this as gaining a competitor? For the casual leisure traveler yes. But for the business traveler who cares about loyalty, it might just make both options less appealing.
It’s hard to say definitively that the NEA was or was not anti-competitive. It would certainly depend upon your point of view. If I’m a leisure traveler going to Orlando then great, it’s nice to have a 945th airline on the route again. But if I’m a business traveler to Atlanta, I’ve actually lost out.
I still find the argument to end the NEA to be a very strange one, but I am not a lawyer. The question now is whether or not the two airlines try to reunite in some form. Cirumstances are very different in almost every way now, so it’s far from a guarantee that this would be a good fit.
41 comments on “Thinking About New York Competition Post-NEA”
The short-lived JFK-DOH route had absolutely nothing to do with the NEA. It was a temporary solution to backfill for QR, which had a shortage of wide body aircraft and so AA simply operated the third QR frequency on JFK-DOH.
The NEA was flawed and American’s lesson here is that if it wants to compete in the NYC market, it needs to optimize what it has slot wise and use them more efficiently and to markets where the O&D demand (that’s what AA largely caters to in NYC) wants to go, not what makes more sense for it to fly vs. B6 or vice versa. If AA is leasing slots to low cost carriers, that shows it still does not know how to run NY and the issue is far beyond slot availability.
The incoming Trump Administration will no doubt take a different view on business and mergers in the industry and another wave of consolidation is very likely on the horizon. JetBlue, Southwest, and Alaska will all likely be in play for different reasons. JetBlue has a great product and business plan on paper, but it has never been able to execute it properly. JetBlue will end up being swallowed almost whole by American Airlines in some complicated financing deal, given AA’s challenged financials, but it will happen, with some divestitures in FLL to account for AA’s massive MIA hub. Southwest will end up with United, finally fixing UA’s improved but still lagging domestic US capacity issue. Alaska will merge into Delta. Only a matter of time. It may take a long time, but it will happen. Lastly, look for F9 and NK to tie the not.
There is 0 chance that even a Trump DoJ approves a merger between Southwest and United. They are far too big, with too much overlap, especially in Denver, Chicago, and Houston. They would be crazy to even try.
Delta buying Alaska would be an extremely challenging approval process as well – I think very unlikely that they would roll the dice on approval.
American buying JetBlue would also have substantial antitrust risk (even more concerns than NEA), but could maybe happen if management at both airlines were willing to take a major gamble on it. The main risk is that JetBlue would be required to divest so many slots at JFK and DCA that they would not longer be worth buying.
Frontier will probably buy Spirit, if Spirit can stay out of bankruptcy long enough to make a deal happen.
The second most-plausible large-scale merger from an antitrust perspective remains Alaska & JetBlue, with Alaska the surviving entity. They have relatively minimal overlap in route maps, and a plausible story of consumer benefit from offering a larger network.
On the low end, Avelo and Breeze are also both small enough that they could plausibly be bought by almost anyone.
This the correct prediction. Even in a Trump administration, there will be too much backlash against the Big 4 becoming bigger. Frontier buying Spirit is the obvious one and then maybe Alaska and Jetblue is the second one later.
Welp – it looks like Frontier has dropped the Spirit bid, so that won’t be happening for right now.
the impact on the market or the consumer simply does not matter if the only way to achieve a benefit for the consumer is to break laws. The US does not allow two domestic airlines to coordinate by jointly planning capacity or moving assets around (the slot swapping feature of the NEA) or sharing revenue.
The features of the NEA which were rejected by the DOJ and upheld by the courts are features that are only allowed under a single company. If AA and B6 need that level of cooperation to succeed in the market, they need to come up with a merger proposal and allow the DOJ to review the merger proposal on that basis.
Given that the DOJ asserted that B6 has provided a downward pressure on fares for the big 3, it is likely they would object on a system basis – just as was true for B6/NK. The US airline industry has almost if not completely been based on mergers of similar types of carriers – legacy with legacy, low cost with low cost, and, where it has existed, ULCC with ULCC. Having a larger company of a “higher fare type” merge with or acquire a smaller company of a “lower fare type” airline eliminates competition.
Further, AA’s CASM is so much higher than B6′ (as is also true w/ DL and UA), that much of B6′ network would not work at AA’s costs; the merged entity – if it were allowed – would gravitate to the larger carrier’s costs.
AA and B6 both failed to use the advantages they had at one time and the competition grew larger.
There is no requirement in US antitrust law that there must be a third similar sized competitor or that the government or the people should ignore antitrust laws in order to create a third competitor.
The only viable combination left for B6 is AS – which has similar costs and complementary networks – IF AS is willing to take on B6. and that is far from a given.
Too bad that AS is busy digesting Hawaiian. It’s hard to imagine that ALK would have the bandwidth to merge with B6 at the present time. Though it is the natural way for AS to grow. It would still not solve one problem for both AS & B6: the need to have a mid-continent hub somewhere so that they can increase their relevance for coastal travelers. Sending them to connect to AA isn’t a long-term solution both because AA is an inferior experience and lack of consistent elite benefits, the Oneworld partnership notwithstanding. AS will eventually need a mid-continent hub.
I agree with everything you wrote Carl especially the mid-continent hub to attract not only connecting traffic, but also local travelers who want to avoid the traditional network carriers.
There is no viable mid-continent hub that isn’t already “claimed”. A hub needs a very large base of O&D traffic, and all of the metro areas with a large enough passenger base are already legacy hubs or Southwest focus cities. It’s not going to be possible to get to critical mass without pushing someone else out via an extremely expensive fare war. And none of the candidate metro areas are growing fast enough for the benefit of winning the fare war to be worth the cost.
With AS’s lower cost structure, they may be able to make a smaller hub work. I suppose that could be a former hub like Memphis or Kansas City or St. Louis or even Cleveland or Cincinnati. Or Indianapolis? None of them is obvious but none of them is claimed. Too bad Southwest has so much presence in Nashville. It would be a long haul for Alaska to create a hub, but I don’t think they are going to go after Delta at MSP or DTW nor UA/WN at DEN or Chicago.
Carl – You had the same thought as me RE: MCI.
Alex – Do you think that market is not large enough?
Most airlines no longer publish explicit lists of “focus cities”, but I would argue that almost all of the airports you mentioned are “claimed” by at least one incumbent. By “claimed” I don’t mean that they necessarily have a dominant position competitively at the airport, but that they offer a wide variety of routes, including routes to stations that aren’t hubs or pilot bases. In this situation, it seems unlikely that there is enough unserved demand to build a hub – the incumbent carrier is already flying most of the routes with substantial demand, so you either need to knock them off, or just end up with routes that the incumbent hasn’t prioritized due to perceived low demand.
Going through the list in descending order of population.
– St. Louis (pop. ~2.8m): Incumbent: Southwest, with up to 136 departures/day to 61 cities, with a ~65% carrier share.
– Cincinnati (pop. ~2.3m): Incumbent: Delta, with a substantial operation, including non-hub flying to AUS, CDG, CUN, DCA, EWR, FLL, LAS, MCO, RDU, RSW, TPA and a 24% carrier share.
– Kansas City (pop. ~2.2m): Incumbent: Southwest, with up to 80 departures/day to 42 cities, with a ~50% carrier share.
– Indianapolis (pop. ~2.1m): Incumbent: Southwest, with up to 39 departures/day to 18 cities, with a 28% carrier share.
– Cleveland (pop. 2.1m): Incumbent: United, with a pilot base, and service to a handful of non-hub stations (CUN, FLL, RSW, MCO, TPA), with a 23% carrier share.
In each of these cases, there is already a an airline with demonstrated willingness to fly non-hub routes. If there were enough unserved demand to build out a hub operation, you would expect the incumbent to already be serving it.
I’ve deliberately ignored ULCC presence (often substantial) in this analysis because they are less direct competitors, but they still siphon off enough leisure and VFR demand that it may be hard to fill planes.
The only exception is Memphis (pop. 1.3m), which is just too small to provide the O&D demand necessary to support a hub.
If you think one of these airports actually does have substantial untapped demand, I’d be sincerely interested in hearing the “bull case”.
Sources:
– Southwest Airlines city fact sheets: https://www.swamedia.com/media-resources/city-fact-sheets
– BTS Airport Stats (for carrier share): https://www.transtats.bts.gov/airports.asp
Alex – What about Kansas City?
There are two issues with Kansas City… 1. Southwest & 2. several hubs have been tried, but all have failed i,e Eastern as well as TWA who ended up relocating to St. Louis. With St. Louis on the other hand, there are whole concourses that have been abandoned once American pulled out. However you still need to contend with Southwest, but it’s still a metro of over 2.8 million witch isn’t small by any means.
Just to compare…
metro population area in millions as of 2020 sensis
KC 2.19
Cincinatti2.25
Cleveland 2.08
Pitsburgh 2.37
Columbus OH 2.13
Austin 2.28
Cue Vanguard from the 90s. Didn’t Braniff have an MCI hub as well?
Since much of the much of the concern will be on American Airlines, here’s my proposal for fixing the AA/NYC problem:
1) Partner with Jetblue again.
No ifs, no buts, this has to happen. Judge said a WCA/WCIA type partnership was allowed, so get on it ASAP. The customer base and feed would be much appreciated.
2) Fill in the big holes.
You cannot expect to be relevant without flying where pax actually want to go. Atlanta, Denver, Houston, are all massive markets that need to be flown 5x daily minimum.
Do Frankfurt and a 2nd daily Paris with the A321XLR while we’re at it. Oh and speaking of that.
3) Create an international gateway.
I’m not saying to add everything, but look out for any opportunistic adds.
– Think Bangalore, a city which has tons of foreign investment from the US and hence matters to the NYC corporate market.
– Think Lagos, big market but no one flying it year round.
– Think Seoul, has good fares and with the upcoming KE/OZ merger, no competition.
– Switch the Tokyo flight from HND to NRT to maximise connectivity to/from Asia. Etc, etc.
4) Lease out leftover slots to B6.
Why? The quickest way to stop losing money, is to stop flying unprofitable flights, and AA has plenty of money-losing flights that burn cash.
5) Fix sales and distribution.
Rebuild the sales team, and fix the terrible website and app.
6) Marketing, marketing, marketing.
Many New Yorkers don’t even think about American Airlines as an option, and that’s concerning.
Or just continue to let NYC wither. AA doesn’t have good options for NYC. The yields aren’t there for AA to be profitable with its cost structure. FRA, CDG and ICN, AA has no connections and won’t get sufficient yields. AA really is the odd man out in NYC and there is no profitable strategy for them AA to fix it. Is it important enough for AA to lose money here?
Ironic that NY was once AA’s HQ. But AA is checkmated in NYC, between UA & DL strengths and AA’s high costs.
Bangalore is challenging because avoiding overflight of Russian, Ukraine, Iran, and Afghanistan requires a huge detour vs. the great circle route. Compare the recent tracks of AI102 (great circle route over Russia) vs. AA292 (detour over Europe, the Caucasus, and the Caspian Sea) for the JFK-DEL route. If you’re detouring that much, total duration isn’t much shorter than a one-stop itinerary on the ME3, which all provide competitive fares and high levels of service. I think AA is reasonably choosing to serve most NYC-India traffic by connecting to QR in Doha.
I’m skeptical that Lagos is actually a big market. VFR traffic is likely price-sensitive and willing to cross-shop across different connecting options. Connecting in LHR as part of the TATL JV seems like it provides passengers a reasonable option and doesn’t leave that much money on the table.
AA sells a reasonably well-timed one-stop JFK-GMP itinerary with a transfer to JAL in HND. If you search JFK-ICN it won’t come up, but GMP is actually the more convenient airport in Seoul.
I actually think at this point HND offers more connecting opportunities than NRT would. JAL flies to many more destinations from HND than NRT. Looking at the list, there don’t seem to be any destinations served exclusively by NRT in East Asia. There are a handful of destinations in Southeast Asia that JAL flies from NRT but not HND (Hanoi, Jakarta, Kuala Lumpur). But somewhat counterintuitively, those destinations are well-served by Qatar Airways via a stop in Doha. HND provides much better connecting opportunities within Japan.
Russia can be overflown eventually. I should also add that AA needs a JV with QR to properly make India work.
Airbus not too long ago posted the top 10 unserved African routes, and New York to Lagos was one of them. Nigeria is actually very high yielding due to the lack of competition. With B6 feed you can do higher yielding one stop connections over JFK that would otherwise be forced to double connect.
JALs NRT operation is perfectly banked for Asian connections. A flight arriving there at 4pm aligns perfectly for connections to SGN, MNL, TPE, BKK, etc etc. Offering pax the ability to mix and match schedules is a bigger benefit than one may think.
My general point is that they need to offer something they can sell to the New Yorkers that won’t burn cash and/or offers no edge over competitors like JFK-MXP-JFK
Playing a game of fill in the map is a bad strategy. AA could never make 5X on ATL or IAH profitable. They have flown these routes in the past and there is a reason why the do not fly them today.
Yeah, AA’s flight to DOH had nothing to do with the NEA. it was simply a stopgap for QR’s lack of airplanes and their desire to have a 3rd flight in the market. QR paid AA to operate it, and resumed as soon as they had the aircraft. QR now pays AA to operate from Philadelphia to Doha. Same thing. And if you look at what was on AA’s jfk-Doha flight, the vast majority was o/d nyc, and most of the connections came from AA’s own flights into JFK, not B6 metal.
I may be dead wrong, but I think there will ultimately be a merger between JetBlue and American – with a whole bunch of divestitures. Both of these airlines probably have a pretty good handle on the right size of their potential combined New York operation and will be willing to sell some slots at JFK. Among others, I’m thinking that United may be willing to acquire some slots there to regain its former presence. I tend to doubt there will be a big sale at LaGuardia, but there will probably be a few slots sold to appease regulators, even under a Trump administration that should, at least in theory, be more open to mergers than the current one.
To me, and again, I could be wrong, the main point of the NEA and a potential merger between American and JetBlue is New York.
Most of the rest of JetBlue’s network is probably expendable, with the possible exception of Boston. Again, I’m guessing that American and JetBlue are probably aware of their limitations regarding Boston.
Since the combined carrier’s costs will rise to American’s levels, the entirety of JetBlue’s network probably won’t work for the combined carrier. I’d be surprised if JetBlue’s Fort Lauderdale’s presence was retained. There are probably more than a few carriers who would like to grow there. And I’ll only mention the redundancy of American’s large Miami operation in passing.
All of the above is relatively obvious, I think. What isn’t clear to me is how American and JetBlue would deal with San Juan. I’m guessing the combined carrier would want to keep JetBlue’s existing slot to serve San Juan from Reagan, but I’m wondering if that will have to be sacrificed to get the merger through. All of this is speculation, of course.
AA really screwed the pooch in NYC (and LAX for that matter) when they abandoned the cornerstone strategy and went all in on the sunbelt. Its the reverse of what we said at NWA where our network was “cold, dark and OURS”. The sunbelt would work if there wasn’t so much pesky competition from DL in Dixie , UA/WN in TX & every LCC in PHX.
No matter what format the B6/AA entanglement resurfaces its a bandaid solution like AS is covering what AA walked away from….thrice…in the west.
And I’m afraid there’s no way AA can merge itself out of this one. A deep, nasty recession is coming. Its time to preserve cash not gamble on boosting market share at garbage yields.
IDK – the strategy built extremely dominant hubs in DFW and MIA, and grew the US Airways hub in CLT into a huge profit engine. I think the Sun Belt strategy is the only thing that *has* worked well for AA.
The Sun Belt is also where all the growth is, both in terms of population growth and airport infrastructure. AA has the freedom to grow their operations at DFW and CLT in ways that just aren’t physically possible at JFK and LGA.
Yup. People forget of the environment both LA and NYC were in when AA went to the sunbelt strategy. They needed to deploy assets to areas of the country that were “in business” rather than LA and NYC whose leaders decided to impose heavy lockdowns for political reasons.
If you recall, their strategy was highly successful for that time period outperforming UA and DL during that time. If there was a mistake, its probably that they did not come back to LA soon enough with enough mass. NYC is a different matter because slots provide a barrier from competition.
Calling that last bucket an increase in competition is a big reach considering the NEA was not approved. All your other buckets look at reality, but the last what is viewed under a what/if scenario?
Eric – Well, this is the argument that comes from the other side. These are markets that the airlines had begun to act as one carrier in terms of network, but not officially in terms of pricing. Now that the NEA is gone, they’re back to being competitors again.
I always wonder how (or if) American’s and/or JetBlue’s strategy in the NYC metro area market would differ if there was no perimeter rule at LaGuardia.
Would American just withdraw from JFK completely, perhaps, with all European service at PHL? And build a domestic “focus city” at LaGuardia?
Would JetBlue really do anything differently?
Just a thinking-out-loud thought exercise. Either way, I wish the perimeter rule at LaGuardia were abolished. It is silly.
Even if there were no perimeter rule, widebody flights would still be at JFK. The 7,000 ft runways at LGA are not long enough for fully loaded widebody aircraft. So AA would have a substantial JFK operation regardless, both for their own TATL operation and to provide feed for their JV partner flights.
Alex – Fair enough. I just think it’s a silly rule.
And as to widebodies: “fully loaded” being the key phrase, of course. Widebodies can serve LGA (and did quite regularly up until Delta quit 767 service there), and several types of current narrowbodies have more than enough legs for the west coast, I believe.
Thanks.
I know that widebodies served LGA as I remember flying on them to Floriduh as a child.
I’ve been on a full AA DC10 out of LGA.
Not to mention no Customs. Hard to build an international hub limited to service to Canda, Ireland, AUH, and the Carribbean.
As an Austin-based flier, being condemned to JFK and IAD (excluding 1x daily WN) because of the perimeter always gets my nerves. It may or may not be true that noise was a factor 50 years ago, but it very much shouldn’t be (and if it is, it should be measured in decibels, not miles).
People assume market and airport share is permanent – look back 10 years, and it becomes obvious that is not the case.
United has the best position in NYC b/c EWR allows them to consolidate domestic & intl to be a big O&D and transit hub for the price of giving up some of the most-premium routes at JFK.
Delta leads at JFK and LGA, benefiting from AA and B6’s missteps, but when AA and B6 were better run, Delta hemorrhaged $$ in NYC like AA today. The problem with JFK / LGA is most domestic and intl operations are separated limiting feed so everyone relies on O&D. Today, Delta wins it.
B6 will always lack AA or Delta’s Intl reach – it can offer more Caribbean destinations b/c lower cost structure, but given it delaying the A321LR orders, Europe will not change. Add the lack of LGA slots, I think they’re stuck as the domestic / Carribean JFK powerhouse.
AA has a tough path at LGA – they can add more routes to better destinations that will likely lose money but gain share but idk if they can afford it. JFK though is different – IMO there are a few things that can be done:
– Marketing: AA has cut back on its premium product and rep allowing Delta to catching up on premium Transcons & JFK-LHR route (& premium Euro). Delta invested in its “premium” moniker and sure the Delta One lounge is nice. But, much of the difference is small, cheap things: incrementally better catering, fancier amenity kits, slightly better on-time and delay %, etc, and not a better hard product. AA needs to spend on marketing to convince NYCers to fly AA
– JVs: AA does not maximize its JVs – AA should be the clear market leader between JFK (and the US) to Ireland, greater UK, & Spain. It has POS and advantage on business travel from the Euro side due to JVs with the national flag carriers – why are they letting Delta and UA take those direct and secondary routes w/o competing? JFK-Edinburgh or Malaga?
– Point to point: Business travel will take time to rebuild, but w/ the A321XLR, AA can leverage its slots more efficiently to offer more P2P to secondary Europe that only United can match from EWR. If I’m flying to Malaga or Dubrovnik, do I connect on Delta or fly direct via AA? AA also needs to return to some core European business markets (e.g., Switzerland) but esp. seasonally they can optimize their JFK network
– Strategy: Delta cried for HND slots b/c of no JV partner when the DOT allocated slots. Korean & Asiana are merging despite valid anti-trust concerns – UA is not at JFK and ICN has strict capacity restrictions with ideal times tough to get. If I’m AA, I lobby, kick, and scream to the DOT to get ideal times at ICN and limit what Korean & Delta can fly (do this at LAX too). The market is big enough for multiple carriers, and it hurts Delta.
Jeremy
a couple of factual corrections.
According to Port Authority data, DL is the largest carrier at all NYC airports and has grown while UA is down. DL is the largest domestic airline – 13% larger than UA while UA is 17% larger than DL in int’l – but int’l is only 34% of UA’s NYC operations so DL’s larger domestic operations.
Having a split hub allows DL to operate a larger operation in total; EWR Is at capacity while LGA and JFK are both operating under reduced flight caps due to ATC issues.
As for ICN, the US has had Open Skies for S. Korea for decades and there is no evidence that any US carrier has ever been unable to get the slots it wants. ICN is at capacity at certain times of day but the whole justification for the KE-OZ merger is to better use the combined slots because OZ mirrors KE’s operation in many markets w/ similar flight times.
The KE-OZ merger may or may not be anticompetitive but the EU agreed to divestitures. The US is likely to do the same.
AA’s DFW flight is consistently used for some of the cheapest fares from ICN to the eastern US. It is doubtful there is any justification for them adding more service to ICN.
DL seems content for now with its 6 flights/day to HND. NRT is a shrinking local market for every carrier from the US because there is more than enough HND flights on all US and Japanese airlines to satisfy the local market at fares that are comparable to what existed at NRT pre-covid. Now, average fares to Japan are much lower and to NRT even lower still.
As for average fare on int’l, DL and UA have consistently received fairly comparable international fares to most destinations worldwide with AA being the laggard except to London; AA’s fare advantage to Tokyo and GRU doesn’t even exist any more.
And DL and UA are larger than AA. DL and Latam have matched AA’s network to S. America and news of a potential AR investment by DL could further cut AA’s advantage in the one region where they have reported consistent profits.
AA has been focused on being a lower-quality domestic airline than DL and UA and has not chased the international growth that DL and UA have gone after. that is true in NYC and across the US
@Tim None of your corrections are not factual – they are differences in opinion.
I never said UA was the biggest carrier in NYC – I said UA has the best position which financially would be very clear. UA can absolutely (and has recently) still grow at EWR – Delta (like AA) has limitations b/c of slots at JFK and LGA. They aren’t maximizing their slots, but there is strong reason to think given the financials Enilria and others on airliners have shared that at LGA there’s a reason for that. Most of the profitable routes are already being flown so more capacity is to prevent others from scaling rather than to make $$.
Divestitures and ideal time slots in Korea is the whole ball game – it’s basic logic if ICN is at capacity at certain time periods (which it is), then there are limitations for any airline flying there. US demand to Korea is less than that to Japan so there has been limited US3 flying to Korea so it’s not been a problem. I am sure AA can extract concessions to prevent only 1 alliance flying JFK-ICN. UA is allegedly about to try the same at LAX – we shall see.
Delta is satisfied with its 6 routes to HND, but as of early this year the data showed they were losing $$ on MSP-HND (worst performing mainland US-HND route for any US3) and HNL-HND. They are happy to eat losses to prevent AA and UA from realizing more of their JV – it’s the same logic as in Korea.
The LATAM comment is so pie in the sky it’s surprising you’d even make that comment. Delta just withdrew some JFK-LATAM routes just in the past few months and still lags AA in JFK-GRU and JFK-EZE. It has made almost no dent in Miami. UA itself is still on-par w/ Delta in LATAM, and that hasn’t been changing at all. Adding Aerolineas Argentina which has already shrunk considerably as a gamechanger is laughable.
Regardless, AA can absolutely regain its position. Like I said above, it’s all marketing and leadership strategy – if they chase that growth, AA has advantages it can leverage vs Delta and UA to regain some of that share just like the others do.
Jeremy,
US airlines report profitability by global region to the DOT and that gets reported publicly but no one outside of each airline has access to hub profitability.
International revenue is not even generally available to the public and Eniliria doesn’t have access to it.
UA does generate the most revenue from NYC but that doesn’t mean it is the best positioned – whatever that means. EWR is operating at maximum capacity right now. LGA and JFK are limited by FAA slots but PANYNJ stats show that DL is growing so they are clearly picking up slots that other carriers are not using. and the FAA limits on LGA and JFK due to controller shortages will be lifted; EWR might or might not see more capacity but DL is operating about 15% more flights from all 3 NYC airports than UA.
AA hasn’t asked for limitations on the DL-KE JV – it would be public if they did – and they don’t likely have any reason to want more flights to ICN. Their DFW-ICN flight has some of the lowest fares flowing over it so is not likely a strong performer. We saw the same thing on AA’s flights from LAX to PEK and PVG. AA might strategically stay at ICN but they still lose money flying the Pacific according to DOT data. UA makes the most flying the Pacific but DL makes about 80% of what UA makes on the Pacific flying about half the capacity – so DL’s profits per ASM over the Pacific are the highest. That is public information.
for all of the US to the DL-LA JV markets, DL and LA combined have about the same amount of capacity as AA does.
Argentina is not part of the JV. The day that DL announced it was buying equity in LA and intended to develop a JV, everyone that was really following knew the market to Latin America had changed.
If DL does anything with AR – and they might not – there could be as much change to the market as there was when DL got a JV with LA approved.
and specific to the NYC-Latin America market, the DL-LA JV plus DL’s own service to Argentina is larger than AA or UA.
that is simply the power of JVs. AA benefits from it with BA to LHR; DL benefits from it to S. America minus Argentina.
Cranky, would like your additional thoughts on the question of Doha. Some commenters have said Doha has no bearing on the New York competitive situation because Qatar and AA had an agreement that AA would run the flight for Qatar.
My understanding is that Qatar and AA do not have an immunized JV the way that AA does with BA, for example — and, thus, that there’s not “metal neutrality” on the routes. Is that wrong?
The other thing that could have happened is that Qatar wet leased an AA plane/crews to fly the route. But it seems in those cases the flight is typically marketed as by the operating carrier and has the operating carriers service standards on board (for example, in Australia, Finnair is flying for Qantas, but they are sold as Qantas flights and the onboard service follows the Qantas standards, delivered by Finnair crew). And from my recollection the JFK-Doha flight was operated as AA, with AA on-board service.
Just curious for your clarification on these matters and additional opinions. Thanks.
BRMM – There is no joint venture, and this was not a wet lease, you are correct. American made the decision to fly the route as part of its efforts to get closer to Qatar and create more feed. But once it became clear that New York was not going to be what they hoped it would be when the NEA was shot down, American decided to shift its flight to Philly instead, and Qatar moved its Philly flight to add another frequency at JFK. They aren’t allowed to coordinate, but these were very clearly related closely.
Greetings from Jackson Hole-JAC
from the article above:
There were three markets that American has exited since the end of the NEA:
Jackson Hole
Now, American has left them all.
American Airlines is still serving Jackson Hole on a daily basis from DFW. They are offering 2 daily flight ” in season’. i.e ski season and peak summer travel dates.
I recently flew AA from DFW in October and the flight was probably 80% full.
I believe AA is doing quite well on these flights as fares are high and flights are pretty full, even in low season. I recently flew in October JAC-DFW-JAC and each flights was more than 75-80% full.
This used to be seasonal service, but with Jackson booming, I believe AA committed to the market for full time service and is doing quite well.
Brett, Not sure why you thought they had pulled out?
This was an article about New York specifically.