In one Antitrust test of Northeastern Alliance’s partnership with JetBlueAmerican Airlines has argued that the only way it can compete in New York is by partnering with a smaller airline. The problem, American says, is not being able to access the new “empty seats” that allow it to schedule multiple departures and arrivals from capacity-controlled New York airports.
While that’s true of all airlines, American is in the unique position of giving away seats it previously held in the early 2010s as part of a merger with US Airways.
But it turns out Americans still have more room to use, and could have had a moderate presence in New York – if only they hadn’t forgotten about them.
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In 2019, the Federal Aviation Administration revoked seven positions from American Airlines, chief commercial officer Vasu Raja confirmed at the United States District Court in Boston on Fridayafter an audit found that Americans were overusing coveted use points.
Raja said the reason for the underutilization was that as a result of the merger with US Airways, the vacancies were simply forgotten.
“The accounting and matching of positions after the merger is a manual process,” said Raja, who used to mainly manage the airline’s network. “There’s no good reason, and I’m a bit worried that it happened.”
“It’s for the worst reasons,” he admits. “It made us sound completely ridiculous.”
Discuss the positions taken in the discussion of plans to expand and reshape pre-pandemic America – and before the Northeast Alliance – at Boston Logan International Airport and John International Airport F. Kennedy, two of the Northeast Alliance airports (the others are LaGuardia Airport and Newark Liberty International Airport).
On February 5, 2019, in an emailed reply to Brent Alex, director of legal affairs at American Airlines, Raja confirmed that they had agreed to hand over slots to the FAA because they were not being fully utilized.
“Don’t ignore this as we have ‘lost’ positions,” Raja wrote. “We haven’t used all of our positions in so many years that no one knows our true baseline.”
In an email to the court, Raja wrote that the airline thought it had 216 seats after losing seven, while the FAA said it had 200. In the end, both agreed to allow the Americans to hold 210 seats.
System “slots” regulate take-offs and landings at the world’s busiest airports as a mechanism to regulate traffic and avoid both dangerous and anti-competitive overcrowding – so-called “hoarding” – of several airlines. In the United States, three airports – JFK, LaGuardia and Ronald Reagan Washington National Airport in Washington, DC, are controlled by location, while a fourth airport – Newark – is considered “schedule controlled” , is a similar system with some differences.
Unless an airport builds a new runway or finds other ways to increase capacity – e.g. further optimizes air traffic control models – the number of positions is finite and all positions are equal. administered by the FAA. Each location represents a takeoff or landing – a “slot pair” would represent one of each location or a return flight.
American has said it needs an alliance with JetBlue to compete in the New York market, which is dominated by Delta and United. JetBlue was the largest airline in JFK for the 12-month period ending July 2022, according to the Port Authority of New York and New Jersey, but growth is limited due to its significantly smaller route network with legacy airlines.
By combining JetBlue’s positions at JFK (and American’s at LaGuardia) with American’s broader network, the two airlines have argued that they could be formidable competitors against its involvement. Delta-United.
While the alliance deleted During the waning days of the Trump administration, the Justice Department sued in 2021, alleging that due to share code and collaborate to run additional route networks through New York and Boston, the alliance between the two parties will “eliminate significant competition between American and JetBlue that has resulted in lower fares and higher quality service for consumers to and from airports.” there.”
However, airlines say that in the 18 months since the union was approved, fares have not increased and consumers have access to better options.
The alliance creates a single, stronger and related competitor out of two weak ones,” argued Richard Schwed, an attorney from Shearman & Sterling representing JetBlue, in his opening statement, cites 50 new non-stop routes that have been added to or from New York or Boston since the alliance was formed, 90 non-stop routes increased in capacity, 17 new international routes covered by the alliance, and a total capacity on alliance routes increased by more than 17%.
The trial began in US District Court in Boston on Tuesday and is expected to last up to three weeks. JetBlue CEO Robin Hayes testified earlier this week, and testimony is expected from American Airlines CEO Robert Isom and former CEO Doug Parker. Other stakeholders, including network planners for the airlines and former chief executive Scott Laurence, who organized the coalition on JetBlue’s side, are also expected to testify. A decision from U.S. District Judge Leo Sorokin could take weeks or months.
TPG is reporting from the US District Court in Boston, so stay tuned for the latest on the trial.