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LAXintl
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JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:26 am

During event at the Wings Club in New York, JetBlue CEO Robin Hayes called for a greater scrutinization of large airline joint ventures (JVs), warning they can harm competition and innovation along with concern that major carriers now have a lock on gates and slots.


“Three alliances control close to 80% of the transatlantic market. Then within the alliances are the joint ventures which have been granted antitrust immunity to coordinate prices and schedules, things that would otherwise be considered unlawful collusion absent a government grant of immunity from these consumer protection laws.
The reality of antitrust immunity is that it reduces independent competition in the market. If you have three airlines teaming up in a JV, the truth is there’s really only one entity competing. The fewer competitors there are in a market, the larger and stronger the giants are, and the easier it is to thwart any competition who try to challenge their position.
These powerful JVs now have a grip on the market between the US and Europe and they are getting even more powerful.”



Hayes says a carrier like JetBlue struggle with access to airport facilities here at home.

“Today, four airlines control about 80% of the US market along with the vital facilities airlines need to operate in key markets. You look at some of the airport leases around the country and it’s almost as if the legacy carriers that dominate those markets had written the leases themselves. The fact is that in some of the most established and important markets in this country the infrastructure is tightly controlled by a few deep-pocketed airlines.”


Also says big boys are becoming ever more protectionist of their perceived turf.

"Industry consolidation has profoundly changed how the mega-airlines treat new competition", Hayes said. “Big airlines have always pressured the little guys, we’re used to that, but it’s becoming more blatant in recent years. They don’t want to cede any ground to new entrants that try to come on the scene. I believe that’s why we saw the big three [American Airlines, Delta and United] wage an aggressive lobbying and PR campaign in the Open Skies subsidy fight against the Gulf carriers, including those relentless attacks on fifth-freedom flights by foreign carriers – but of course not their own, or their partners’ flight,” Hayes said.


http://atwonline.com/aeropolitics/jvs-s ... -ceo-warns

=

Can't say I disagree.

JV's for all their fanfare don't always produce the great promised benefits for consumers. Additionally, at one time access to aircraft was a limiting factor for airlines, while today it's all about access to facilities to park those planes.
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Flighty
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:36 am

Absolutely right. The way DL-NW and AF-KL built a super joint venture was completely underhanded and a complete farce.

I mean you can't really make this stuff up... "Anti trust immunity.." a lot of other industries wish they thought of that pile of nonsense. But I guess they got away with it.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:47 am

I get the point of the thread, however...
It is interesting that jetBlue is now suddenly the defender of "independent competition in the market" given their recent attempt to takeover Virgin America.
Also, they don't even have the A321LR on order. Much ado about nothing until they put up or shut up via exercising their options for the plane.
What do they want? Heathrow slots for free? They could be flying to Europe today if they really wanted to. I'm sorry Gatwick isn't "mint" enough for them.
They want it all on a silver platter. Ain't happening.
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sonicruiser
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:47 am

Flighty wrote:
Absolutely right. The way DL-NW and AF-KL built a super joint venture was completely underhanded and a complete farce.

I mean you can't really make this stuff up... "Anti trust immunity.." a lot of other industries wish they thought of that pile of nonsense. But I guess they got away with it.


Yeah, for real. If we're going to start allowing immunity to anti-trust, then why do we need it all? Might as well get rid of it because it's is so stupid to begin with. Immunized JV's care as much about anti-trust as Taco Bell cares about Mexican cuisine.
 
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janders
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:50 am

Man is right.

JV's have created a market structure where airlines can employ monopolistic practices without worry. I am actually surprised the EU for all their alleged consumer focused ways has not looked to stop or break up these deals.

He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.
"We make war that we may live in peace." -- Aristotle
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:51 am

janders wrote:
He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.

Maybe they should have bid higher?
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777Mech
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 5:47 am

So are the 3 JVs not competing against each other and driving down prices? TATL pricing has been dirt cheap, and B6 doesn't even have a plane in their fleet that can do TATL, and probably couldn't afford 1 slot at LHR anyways.
 
Blerg
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 6:22 am

KICT wrote:
janders wrote:
He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.

Maybe they should have bid higher?


I suppose that's why he mentioned that these mega-airlines have deep pockets meaning they will always outbid them no matter what they do. Sure B6 could win a battle here, a battle there but they would eventually lose the war by bankrupting themselves.

If B6 was smart, it wouldn't invest in outbidding these airlines at local airports, it should use these millions to lobby on the EU level. That's where their focus should be as I don't think any US administration or any Democrat or Republican majority would go against the US3.
 
 
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LAX772LR
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 7:23 am

Wait, isn't this the same airline that won government contracts to the MidEast and beyond... when it doesn't have aircraft capable of crossing an ocean?

Not an immunized J/V, but hardly much practical difference for this specific application.

I guess it's only bad when others do it on a formalized scale, huh?
I myself, suspect a more prosaic motive... ~Thranduil
 
Bobloblaw
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 7:36 am

Are there other industries that receive anti trust immunity?
 
pdt2f
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 7:45 am

KICT wrote:
I get the point of the thread, however...
It is interesting that jetBlue is now suddenly the defender of "independent competition in the market" given their recent attempt to takeover Virgin America.
Also, they don't even have the A321LR on order. Much ado about nothing until they put up or shut up via exercising their options for the plane.
What do they want? Heathrow slots for free? They could be flying to Europe today if they really wanted to. I'm sorry Gatwick isn't "mint" enough for them.
They want it all on a silver platter. Ain't happening.


You can talk about how the industry is rigged while still trying to thrive within it, I see no contradiction.
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LAX772LR
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 8:07 am

Bobloblaw wrote:
Are there other industries that receive anti trust immunity?

Well, in the USA:
Newspaper ownership, cable news ownership, sports league ownership, insurance providers (though that's been significantly curtailed lately), telecom/water/sewer providers in small communities........ and of course the most glaringly obvious one of all: ISP + cable TV providers
I myself, suspect a more prosaic motive... ~Thranduil
 
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N717TW
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 8:44 am

Bobloblaw wrote:
Are there other industries that receive anti trust immunity?


Major League Baseball.
 
smartplane
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 8:55 am

Irony.

In the seventies, legacy cartels conspired against Laker Airways, and were fined and/or made out of court settlements.

Forty years on, joint ventures are mostly legalised cartels.

But the effects are the same. Restrict capacity, manage fares and neutralise competition.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 8:59 am

smartplane wrote:
Restrict capacity, manage fares and neutralise competition.

Please explain to me how existing TATL joint ventures prevent jetBlue (who, incidentally, does not operate TATL-capable aircraft) from serving Europe.
This entire discussion is asinine.
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Blerg
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:09 am

KICT wrote:
smartplane wrote:
Restrict capacity, manage fares and neutralise competition.

Please explain to me how existing TATL joint ventures prevent jetBlue (who, incidentally, does not operate TATL-capable aircraft) from serving Europe.
This entire discussion is asinine.


Just because they don't have an aircraft now doesn't mean they are not planning on getting it sometime in the future. They are probably annoyed that these cartels are making their entry into the TATL market more difficult. In the end, for consumers the more competition the better.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:11 am

So we should dissolve all TATL JVs because jetBlue *might* fly somewhere someday?
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Blerg
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:13 am

KICT wrote:
So we should dissolve all TATL JVs because jetBlue *might* fly somewhere someday?


JVs should be dissolved if they are restricting new players from entering and making it on the market. After all, didn't the EU fine Google for similar practices? https://www.theverge.com/2018/7/18/1758 ... -antitrust
 
smartplane
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:19 am

KICT wrote:
So we should dissolve all TATL JVs because jetBlue *might* fly somewhere someday?

JV's should be reviewed annually by each affected country.

Airlines caught (or owned up) in respect to illegal anti-competitive behaviour, should be banned from participating in existing and new JV's for say 5 years.

JV's are for the benefit of the JV participants, NOT passengers and freight customers.
 
StudiodeKadent
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:20 am

janders wrote:
I am actually surprised the EU for all their alleged consumer focused ways has not looked to stop or break up these deals.


Because they want to preserve employment. Particular when the employer happens to employ a lot of union labor, and the unions in question are reliable political donors.

A lot of European working conditions are only possible because of monopoly/oligopoly rents (i.e. higher consumer prices).
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:38 am

The EU has scrutinized all 3 major alliance TATL JVs, with legally binding commitments from all 3: http://europa.eu/rapid/press-release_IP-15-4966_en.htm

A discussion about competition - in particular, for major European markets - is not complete without mentioning slots and curfews which in my view restrict competition and market access much more than whether or not Delta and KLM coordinate schedules and/or share risk (profit AND loss).

And despite all of these "restrictions" on competition, carriers like Norwegian, WOW, and even Icelandair have expanded deep into markets in the US (some with multiple frequencies per day) with arguably some success. What is keeping JetBlue? Could it be that they have no vision?
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Blerg
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:46 am

KICT wrote:
The EU has scrutinized all 3 major alliance TATL JVs, with legally binding commitments from all 3: http://europa.eu/rapid/press-release_IP-15-4966_en.htm

A discussion about competition - in particular, for major European markets - is not complete without mentioning slots and curfews which in my view restrict competition and market access much more than whether or not Delta and KLM coordinate schedules and/or share risk (profit AND loss).

And despite all of these "restrictions" on competition, carriers like Norwegian, WOW, and even Icelandair have expanded deep into markets in the US (some with multiple frequencies per day) with arguably some success. What is keeping JetBlue? Could it be that they have no vision?


I don't think WOW really fits into the argument you are trying to make. ;)
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:52 am

Blerg wrote:
I don't think WOW really fits into the argument you are trying to make. ;)

Within the scope of "competition" and "market access", barriers of entry, etc. - their efforts most certainly do fit into what I'm getting at.
What (other than the fact they don't own an aircraft capable of flying it) is preventing B6 from launching BOS-EDI, JFK-ORK, BOS-GLA or similar - right now?
It is ridiculous to suggest that Delta's JV with an airline in France or Holland is preventing them from doing so.
Could it be because Delta beat them to it (in the case of BOS)? But I thought they wanted competition?
Last edited by KICT on Mon Nov 19, 2018 10:05 am, edited 1 time in total.
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Hornberger
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 9:58 am

I think it is important to remember that many JV's in the airline industry are only necessary because of archaic foreign ownership laws that prevent cross-border acquisition and mergers. This is a dynamic doesn't exist is pretty much every other industry.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 10:13 am

If they want into Europe so bad and it is such a priority for them, perhaps they should invest capable aircraft and slots at the desirable airports rather than questionable activities such as this ($20+ million an counting)?
https://www.jetblueventures.com/
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Blerg
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 10:43 am

KICT wrote:
Blerg wrote:
I don't think WOW really fits into the argument you are trying to make. ;)

Within the scope of "competition" and "market access", barriers of entry, etc. - their efforts most certainly do fit into what I'm getting at.
What (other than the fact they don't own an aircraft capable of flying it) is preventing B6 from launching BOS-EDI, JFK-ORK, BOS-GLA or similar - right now?
It is ridiculous to suggest that Delta's JV with an airline in France or Holland is preventing them from doing so.
Could it be because Delta beat them to it (in the case of BOS)? But I thought they wanted competition?


Well maybe WOW's concept would have succeeded if there were no JVs in the first place. One can also wonder if FI would have grown to such an extent if JVs existed back when they were growing their network and consolidating their brand awareness. Another thing to consider is what will become of Norwegian and how many billions they will have to burn in order to make it on the TATL market.

You are constantly referring to B6's lack of adequate aircraft as if it's a major hurdle which it isn't. If they wanted they could launch flights tomorrow on a leased B767 from Atlantic Airways.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 10:55 am

Blerg wrote:
You are constantly referring to B6's lack of adequate aircraft as if it's a major hurdle which it isn't.

Traditionally, one must have standing in a legal case in order for it to proceed...
As it stands right now, they have no skin in the game.

Can someone please tell me what exactly JetBlue wants?
Facilities access is mentioned in the OP. Where?
- They have one of the biggest terminals at JFK (with room to grow), with a large presence at EWR and LGA.
- Boston is it? They are the dominant carrier there. Not enough gates? Build more.
- SFO/LAX? Suck it up, buttercup - y'all got outbid by AS, that's life...not everyone gets a trophy.
- Seattle? Maybe you should have planned your west coast strategy better and beat Delta to it? Better yet, merge with Alaska and you'll get all of your west coast dreams realized and I'm sure the pilots would be on board.
- Access to European markets? Why don't they join an alliance, like all of the other major players? That would be a start.

I happen to enjoy B6 and their latest on-board products but they are a rudderless ship with no vision, no strategy, and their entire management team needs to be cut loose.
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tphuang
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 11:34 am

KICT wrote:
Blerg wrote:
You are constantly referring to B6's lack of adequate aircraft as if it's a major hurdle which it isn't.

Traditionally, one must have standing in a legal case in order for it to proceed...
As it stands right now, they have no skin in the game.

Can someone please tell me what exactly JetBlue wants?
Facilities access is mentioned in the OP. Where?
- They have one of the biggest terminals at JFK (with room to grow), with a large presence at EWR and LGA.
- Boston is it? They are the dominant carrier there. Not enough gates? Build more.
- SFO/LAX? Suck it up, buttercup - y'all got outbid by AS, that's life...not everyone gets a trophy.
- Seattle? Maybe you should have planned your west coast strategy better and beat Delta to it? Better yet, merge with Alaska and you'll get all of your west coast dreams realized and I'm sure the pilots would be on board.
- Access to European markets? Why don't they join an alliance, like all of the other major players? That would be a start.

I happen to enjoy B6 and their latest on-board products but they are a rudderless ship with no vision, no strategy, and their entire management team needs to be cut loose.


it's pretty clear what they are asking for here. Slots at LHR. According to another poster on this forum, they requested for a bunch of slots last year and got nothing. It's clear they want to get in, but would like to not operate out of LGW.

And why are people in favor of JVs around here? We need more competition, not less. Codeshares and alliance partnership is one thing. JVs are another.

Regardless of what B6 may or may not do. I'm in favor of JVs that need to be reviewed every 5 years everywhere. That includes TATL, TPAC, Latam and Canada. And they should ask for restrictions or further concessions if it's not good for the consumers.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 11:42 am

tphuang wrote:
According to another poster on this forum, they requested for a bunch of slots last year and got nothing.

"We would like to fly here. Someday. Can we have some slots?"
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RvA
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 11:57 am

I wonder why people assume JVs mean less competition? If anything, it could lead to more. If all US carriers and EU carriers competed head to head its likely we'd have less flights or at least less destinations on the map than we do today. Going head to head would just drive prices down until someone pulls out. Now even at low prices everyone at legacy cost structures is able to sustain themselves to some degree and you still have new entrants such as Norwegian, Westjet etc. popping up so obviously JVs are not stifling their ambitions.
 
KICT
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 12:06 pm

RvA wrote:
I wonder why people assume JVs mean less competition? If anything, it could lead to more. If all US carriers and EU carriers competed head to head its likely we'd have less flights or at least less destinations on the map than we do today. Going head to head would just drive prices down until someone pulls out. Now even at low prices everyone at legacy cost structures is able to sustain themselves to some degree and you still have new entrants such as Norwegian, Westjet etc. popping up so obviously JVs are not stifling their ambitions.

Indeed without the JV, Delta would *not* be flying to Amsterdam from MCO/TPA/SLC, Paris from RDU/PIT/IND to name a few. They allow year-round service to markets that would otherwise be seasonal via the right-sizing of aircraft to demand that Airline A may not have in their fleet, allowing Airline B to take up the route in the off season. Westjet is another example. Despite the Star JV and Air Canada's dominance, they actually launched service to Europe, which is proving to be quite successful and are investing for further growth.
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MIflyer12
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 12:25 pm

Not TATL, but another example of flights that probably wouldn't exist without the JV: Virgin Australia and Delta USA-Australia. The market shares of Qantas and UA were too high to take on independently.

Compass Lexecon set the annual JV consumer benefits at USD54 million

https://centreforaviation.com/analysis/ ... a-jv-53288
 
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enilria
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 12:47 pm

LAXintl wrote:
Can't say I disagree.

JV's for all their fanfare don't always produce the great promised benefits for consumers. Additionally, at one time access to aircraft was a limiting factor for airlines, while today it's all about access to facilities to park those planes.

The only purpose of a JV is to legalize collusion. Of course they reduce competition. Why is this even surprising? That’s their only purpose. I also fail to see any consumer benefit an alliance can’t offer.

Airlines promise new services, but after a quick flurry of justifying new flights, the goal turns to capacity “discipline” and higher fares. Where is the consumer benefit?
 
jayunited
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 1:29 pm

janders wrote:
Man is right.

JV's have created a market structure where airlines can employ monopolistic practices without worry. I am actually surprised the EU for all their alleged consumer focused ways has not looked to stop or break up these deals.

He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.


I get what his is saying and I agree JV's have allowed airlines across the globe to really dominate certain markets making it extremely difficult for a smaller airline to enter said market. But while it may be difficult for a smaller or non-JV airline to enter said market it is not impossible. The biggest case and point I can think of is DL-KL/AF's JV paying specially attention to DL/KL U.S.-AMS-U.S. route. Its no question DL/KL owns this route but UA while not a small carrier has been able to hold their own operating daily flights from ORD, IAH, IAD, and EWR while next spring SFO will join the list. While JV's make it difficult for a non aligned airline to enter and be successful in a market it is not impossible to find success.

As far as facilities it also seems like he wants other airlines to just cede marketshare and facilities to B6. He claims to understand that the big airline have always pressured the little guys however in the same sentence he claims it is more blatant now. I disagree with his analysis I think B6 had become accustom to the big guys struggling. then back in 2010-11 only airline of the US3 that was expanding and growing was DL, but now for the past year maybe two years both AA and especially UA are in the mist of a growth spurt. AS successfully merged with VX, then combine that with the US3 and WN and it become very clear B6 is in the fight of its life. DL is taking it to B6 at JFK, and BOS, while UA at EWR is not ceding any ground to B6. At FLL, they have to contend with WN, and to lesser extent DL and to an even lesser extent AA and UA have sizable operations at FLL. In the interior section of the country the legacies and WN are defending their hubs and focus cities, and out west all of these airlines are slugging it out from SEA to SAN and no one is giving anyone an inch on the West Coast. For now this growth we are seeing this is the new normal the legacies along with WN and AS are growing with each airline doing everything to defend its turf. In a way I feel bad for B6 but at the same time B6 need to learn to adapt and fight.
 
tphuang
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 1:54 pm

jayunited wrote:
janders wrote:
Man is right.

JV's have created a market structure where airlines can employ monopolistic practices without worry. I am actually surprised the EU for all their alleged consumer focused ways has not looked to stop or break up these deals.

He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.


I get what his is saying and I agree JV's have allowed airlines across the globe to really dominate certain markets making it extremely difficult for a smaller airline to enter said market. But while it may be difficult for a smaller or non-JV airline to enter said market it is not impossible. The biggest case and point I can think of is DL-KL/AF's JV paying specially attention to DL/KL U.S.-AMS-U.S. route. Its no question DL/KL owns this route but UA while not a small carrier has been able to hold their own operating daily flights from ORD, IAH, IAD, and EWR while next spring SFO will join the list. While JV's make it difficult for a non aligned airline to enter and be successful in a market it is not impossible to find success.

As far as facilities it also seems like he wants other airlines to just cede marketshare and facilities to B6. He claims to understand that the big airline have always pressured the little guys however in the same sentence he claims it is more blatant now. I disagree with his analysis I think B6 had become accustom to the big guys struggling. then back in 2010-11 only airline of the US3 that was expanding and growing was DL, but now for the past year maybe two years both AA and especially UA are in the mist of a growth spurt. AS successfully merged with VX, then combine that with the US3 and WN and it become very clear B6 is in the fight of its life. DL is taking it to B6 at JFK, and BOS, while UA at EWR is not ceding any ground to B6. At FLL, they have to contend with WN, and to lesser extent DL and to an even lesser extent AA and UA have sizable operations at FLL. In the interior section of the country the legacies and WN are defending their hubs and focus cities, and out west all of these airlines are slugging it out from SEA to SAN and no one is giving anyone an inch on the West Coast. For now this growth we are seeing this is the new normal the legacies along with WN and AS are growing with each airline doing everything to defend its turf. In a way I feel bad for B6 but at the same time B6 need to learn to adapt and fight.


The issue is more lack of gate space and slots for new entrants. B6 themselves actually is a huge beneficiary of this at JFK and BOS, but they are at a huge disadvantage in most other part of the country.

Of course UA is not ceding any ground at EWR, if WN, NK and B6 can't get more gates. That's the crux of the issue. Should our airports make more gates for new entrants or common use? Should slots be made available every year for new entrants?
 
CobaltScar
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 2:04 pm

Are these kinds of pushes by B6 dangerous for B6? What I mean is, they seem to have this history of activism against larger airlines. We know airlines kill other airlines to eliminate competition, but what about killing off a airline to silence their dangerous activism?

Too me this just adds another reason for one of the bigger airlines to buy B6. No other airline does the kind of lobbying B6 does to the determent of the big 3
 
RvA
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Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 2:35 pm

enilria wrote:
LAXintl wrote:
Can't say I disagree.

JV's for all their fanfare don't always produce the great promised benefits for consumers. Additionally, at one time access to aircraft was a limiting factor for airlines, while today it's all about access to facilities to park those planes.

The only purpose of a JV is to legalize collusion. Of course they reduce competition. Why is this even surprising? That’s their only purpose. I also fail to see any consumer benefit an alliance can’t offer.

Airlines promise new services, but after a quick flurry of justifying new flights, the goal turns to capacity “discipline” and higher fares. Where is the consumer benefit?


Are you suggesting that fares for example on US<>UK have gone up since the AA/BA, DL/VS/KL/AF and UA/LH JVs? I'm not sure that's correct. I also don't believe capacity has gone down either.
 
Blerg
Posts: 1782
Joined: Tue Jan 09, 2018 11:42 am

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 2:42 pm

RvA wrote:
enilria wrote:
LAXintl wrote:
Can't say I disagree.

JV's for all their fanfare don't always produce the great promised benefits for consumers. Additionally, at one time access to aircraft was a limiting factor for airlines, while today it's all about access to facilities to park those planes.

The only purpose of a JV is to legalize collusion. Of course they reduce competition. Why is this even surprising? That’s their only purpose. I also fail to see any consumer benefit an alliance can’t offer.

Airlines promise new services, but after a quick flurry of justifying new flights, the goal turns to capacity “discipline” and higher fares. Where is the consumer benefit?


Are you suggesting that fares for example on US<>UK have gone up since the AA/BA, DL/VS/KL/AF and UA/LH JVs? I'm not sure that's correct. I also don't believe capacity has gone down either.


Maybe not in those markets that remain highly competitive but what about the rest of Europe that is not as busy as the US-UK? There is more to Europe than the UK, France or Italy.
 
RvA
Posts: 71
Joined: Tue Sep 15, 2015 12:37 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 2:49 pm

Blerg wrote:
RvA wrote:
enilria wrote:
The only purpose of a JV is to legalize collusion. Of course they reduce competition. Why is this even surprising? That’s their only purpose. I also fail to see any consumer benefit an alliance can’t offer.

Airlines promise new services, but after a quick flurry of justifying new flights, the goal turns to capacity “discipline” and higher fares. Where is the consumer benefit?


Are you suggesting that fares for example on US<>UK have gone up since the AA/BA, DL/VS/KL/AF and UA/LH JVs? I'm not sure that's correct. I also don't believe capacity has gone down either.


Maybe not in those markets that remain highly competitive but what about the rest of Europe that is not as busy as the US-UK? There is more to Europe than the UK, France or Italy.


Agreed it was but an example. I'd say the same applies, fares are lower than they have been and there is far more opportunities in how to get somewhere. Pre the JVs flying Zagreb-US was far more expensive than now as you have far more competition because of the lift via the hubs and via the non JV-ed carriers making sure they are still competitive.
 
nine4nine
Posts: 464
Joined: Tue Mar 28, 2017 3:44 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 2:56 pm

tphuang wrote:
jayunited wrote:
janders wrote:
Man is right.

JV's have created a market structure where airlines can employ monopolistic practices without worry. I am actually surprised the EU for all their alleged consumer focused ways has not looked to stop or break up these deals.

He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.


I get what his is saying and I agree JV's have allowed airlines across the globe to really dominate certain markets making it extremely difficult for a smaller airline to enter said market. But while it may be difficult for a smaller or non-JV airline to enter said market it is not impossible. The biggest case and point I can think of is DL-KL/AF's JV paying specially attention to DL/KL U.S.-AMS-U.S. route. Its no question DL/KL owns this route but UA while not a small carrier has been able to hold their own operating daily flights from ORD, IAH, IAD, and EWR while next spring SFO will join the list. While JV's make it difficult for a non aligned airline to enter and be successful in a market it is not impossible to find success.

As far as facilities it also seems like he wants other airlines to just cede marketshare and facilities to B6. He claims to understand that the big airline have always pressured the little guys however in the same sentence he claims it is more blatant now. I disagree with his analysis I think B6 had become accustom to the big guys struggling. then back in 2010-11 only airline of the US3 that was expanding and growing was DL, but now for the past year maybe two years both AA and especially UA are in the mist of a growth spurt. AS successfully merged with VX, then combine that with the US3 and WN and it become very clear B6 is in the fight of its life. DL is taking it to B6 at JFK, and BOS, while UA at EWR is not ceding any ground to B6. At FLL, they have to contend with WN, and to lesser extent DL and to an even lesser extent AA and UA have sizable operations at FLL. In the interior section of the country the legacies and WN are defending their hubs and focus cities, and out west all of these airlines are slugging it out from SEA to SAN and no one is giving anyone an inch on the West Coast. For now this growth we are seeing this is the new normal the legacies along with WN and AS are growing with each airline doing everything to defend its turf. In a way I feel bad for B6 but at the same time B6 need to learn to adapt and fight.


The issue is more lack of gate space and slots for new entrants. B6 themselves actually is a huge beneficiary of this at JFK and BOS, but they are at a huge disadvantage in most other part of the country.

Of course UA is not ceding any ground at EWR, if WN, NK and B6 can't get more gates. That's the crux of the issue. Should our airports make more gates for new entrants or common use? Should slots be made available every year for new entrants?



You nailed it. The corrupt state and local governmanet agencies are pocketing the infrastructure funds or diverting it towards special interests and have not invested it in the crumbling transportation sector that rivals that if some 3rd world countries. Terminals should have been expanded long ago, more gates added, along with all the other improvements to the surrounding vicinity. Very little of it has been done over the past decades. Planes are parked on taxiways for hours in some cases waiting for a gate. And most of these are at major airports dominated by one or a combination of the Big3

This may be another reason we are seeing another renaissance in service adds to secondary markets like we did back in the 90’s.
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Flighty
Posts: 9963
Joined: Thu Apr 05, 2007 3:07 am

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 3:13 pm

RvA wrote:
I wonder why people assume JVs mean less competition? If anything, it could lead to more. If all US carriers and EU carriers competed head to head its likely we'd have less flights or at least less destinations on the map than we do today. Going head to head would just drive prices down until someone pulls out. Now even at low prices everyone at legacy cost structures is able to sustain themselves to some degree and you still have new entrants such as Norwegian, Westjet etc. popping up so obviously JVs are not stifling their ambitions.


:checkmark: One of the definitions of a competitive marketplace (a free market) is, can a new entrant feasibly raise capital and enter the market? In the case with JV competitors with slots at LHR, the answer is really no, a new entrant could not do that.

IMO, a 5 year review period (at most 10 year) is quite reasonable, not only for JV approvals, but for SLOTS at government-owned airports as well.
 
TWA85
Posts: 330
Joined: Tue Feb 14, 2012 10:06 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 3:40 pm

Question... How does more competition make it easier for new entrants to obtain slots at slot restricted airports? More competition means more competitors fighting over the same amount of slots. For example; If AA and BA didn't have their JV, they individually would be fighting for more slots to remain competitive with each other. As a result the slots would remain concentrated around denser markets. The JV has enabled them to pool their slot portfolios together and reallocate overlapping slots to new markets. That's how BA has been able to open up many new markets in the US since beginning the JV with AA.
 
cledaybuck
Posts: 1368
Joined: Thu Aug 18, 2016 6:07 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 3:54 pm

tphuang wrote:
jayunited wrote:
janders wrote:
Man is right.

JV's have created a market structure where airlines can employ monopolistic practices without worry. I am actually surprised the EU for all their alleged consumer focused ways has not looked to stop or break up these deals.

He's also right on about the ME3 nonsense displayed by the US majors, and fact that facility access has become ever harder as huge chunks of US airports are locked up under multi-decade grandfather leases.


I get what his is saying and I agree JV's have allowed airlines across the globe to really dominate certain markets making it extremely difficult for a smaller airline to enter said market. But while it may be difficult for a smaller or non-JV airline to enter said market it is not impossible. The biggest case and point I can think of is DL-KL/AF's JV paying specially attention to DL/KL U.S.-AMS-U.S. route. Its no question DL/KL owns this route but UA while not a small carrier has been able to hold their own operating daily flights from ORD, IAH, IAD, and EWR while next spring SFO will join the list. While JV's make it difficult for a non aligned airline to enter and be successful in a market it is not impossible to find success.

As far as facilities it also seems like he wants other airlines to just cede marketshare and facilities to B6. He claims to understand that the big airline have always pressured the little guys however in the same sentence he claims it is more blatant now. I disagree with his analysis I think B6 had become accustom to the big guys struggling. then back in 2010-11 only airline of the US3 that was expanding and growing was DL, but now for the past year maybe two years both AA and especially UA are in the mist of a growth spurt. AS successfully merged with VX, then combine that with the US3 and WN and it become very clear B6 is in the fight of its life. DL is taking it to B6 at JFK, and BOS, while UA at EWR is not ceding any ground to B6. At FLL, they have to contend with WN, and to lesser extent DL and to an even lesser extent AA and UA have sizable operations at FLL. In the interior section of the country the legacies and WN are defending their hubs and focus cities, and out west all of these airlines are slugging it out from SEA to SAN and no one is giving anyone an inch on the West Coast. For now this growth we are seeing this is the new normal the legacies along with WN and AS are growing with each airline doing everything to defend its turf. In a way I feel bad for B6 but at the same time B6 need to learn to adapt and fight.


The issue is more lack of gate space and slots for new entrants. B6 themselves actually is a huge beneficiary of this at JFK and BOS, but they are at a huge disadvantage in most other part of the country.

Of course UA is not ceding any ground at EWR, if WN, NK and B6 can't get more gates. That's the crux of the issue. Should our airports make more gates for new entrants or common use? Should slots be made available every year for new entrants?
While I agree with most of what he has to say, I am having trouble finding much sympathy for B6 when it comes to infrastructure considering the facilities they have at JFK and BOS and the fact they have been squatting on slots at LGB for years.
 
User avatar
spinotter
Posts: 453
Joined: Wed May 27, 2015 1:37 am

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:06 pm

Flighty wrote:
Absolutely right. The way DL-NW and AF-KL built a super joint venture was completely underhanded and a complete farce.

I mean you can't really make this stuff up... "Anti trust immunity.." a lot of other industries wish they thought of that pile of nonsense. But I guess they got away with it.


However, if you remember the ups and downs of NW, DL, UA, AA and not just American airlines up until 2010 and beyond, no business can afford to lose so much money for such a long time. The big airlines IMHO are now about the right number to have some level of, but not insane, competition, and they are holding down their YOY growth to sustainable levels. And so they are making money and able to invest. And compete on a level playing field with international airlines. We will see what happens in the next business cycle turndown, but I don't see how you could have as healthy profits (still only 10% remember, not like many industries) with six major airlines plus WN as there were before the mergers.
 
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thekorean
Posts: 1739
Joined: Mon Dec 05, 2011 9:05 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:14 pm

To play devils advocate, what is stopping JetBlue from forming a JV if they find a suitable partner?
 
incitatus
Posts: 3272
Joined: Wed Feb 09, 2005 1:49 am

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:19 pm

B6 is against JV's until they set up their own. Then they will be singing the competitive benefits of partnerships.

Let EK come and set up a JV with them and they will replace the tape immediately.
I do not consume Murdoch products including the Wall Street Journal
 
klm617
Posts: 4339
Joined: Sat Jul 04, 2015 8:57 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:30 pm

LAXintl wrote:
During event at the Wings Club in New York, JetBlue CEO Robin Hayes called for a greater scrutinization of large airline joint ventures (JVs), warning they can harm competition and innovation along with concern that major carriers now have a lock on gates and slots.


“Three alliances control close to 80% of the transatlantic market. Then within the alliances are the joint ventures which have been granted antitrust immunity to coordinate prices and schedules, things that would otherwise be considered unlawful collusion absent a government grant of immunity from these consumer protection laws.
The reality of antitrust immunity is that it reduces independent competition in the market. If you have three airlines teaming up in a JV, the truth is there’s really only one entity competing. The fewer competitors there are in a market, the larger and stronger the giants are, and the easier it is to thwart any competition who try to challenge their position.
These powerful JVs now have a grip on the market between the US and Europe and they are getting even more powerful.”



Hayes says a carrier like JetBlue struggle with access to airport facilities here at home.

“Today, four airlines control about 80% of the US market along with the vital facilities airlines need to operate in key markets. You look at some of the airport leases around the country and it’s almost as if the legacy carriers that dominate those markets had written the leases themselves. The fact is that in some of the most established and important markets in this country the infrastructure is tightly controlled by a few deep-pocketed airlines.”


Also says big boys are becoming ever more protectionist of their perceived turf.

"Industry consolidation has profoundly changed how the mega-airlines treat new competition", Hayes said. “Big airlines have always pressured the little guys, we’re used to that, but it’s becoming more blatant in recent years. They don’t want to cede any ground to new entrants that try to come on the scene. I believe that’s why we saw the big three [American Airlines, Delta and United] wage an aggressive lobbying and PR campaign in the Open Skies subsidy fight against the Gulf carriers, including those relentless attacks on fifth-freedom flights by foreign carriers – but of course not their own, or their partners’ flight,” Hayes said.


http://atwonline.com/aeropolitics/jvs-s ... -ceo-warns

=

Can't say I disagree.

JV's for all their fanfare don't always produce the great promised benefits for consumers. Additionally, at one time access to aircraft was a limiting factor for airlines, while today it's all about access to facilities to park those planes.


Look who's calling the kettle black how many interline agreements does JetBlue have feeding their flights at Boston and Ft Lauderdale eliminating potential flights at other airports because international airline only need to fly where JetBlue can feed them.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
Posts: 4339
Joined: Sat Jul 04, 2015 8:57 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:32 pm

incitatus wrote:
B6 is against JV's until they set up their own. Then they will be singing the competitive benefits of partnerships.

Let EK come and set up a JV with them and they will replace the tape immediately.


I get so tired of this corporate propaganda and people share this crap as it it's truth. It's exactly what it is words that feed whatever their agenda might be.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
Posts: 4339
Joined: Sat Jul 04, 2015 8:57 pm

Re: JetBlue CEO: JVs stifle competition

Mon Nov 19, 2018 4:35 pm

RvA wrote:
enilria wrote:
LAXintl wrote:
Can't say I disagree.

JV's for all their fanfare don't always produce the great promised benefits for consumers. Additionally, at one time access to aircraft was a limiting factor for airlines, while today it's all about access to facilities to park those planes.

The only purpose of a JV is to legalize collusion. Of course they reduce competition. Why is this even surprising? That’s their only purpose. I also fail to see any consumer benefit an alliance can’t offer.

Airlines promise new services, but after a quick flurry of justifying new flights, the goal turns to capacity “discipline” and higher fares. Where is the consumer benefit?


Are you suggesting that fares for example on US<>UK have gone up since the AA/BA, DL/VS/KL/AF and UA/LH JVs? I'm not sure that's correct. I also don't believe capacity has gone down either.


Unless you live in a big market with a lot of competition yes fares have doubled in other markets where there is little or no competition in the TATL market.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...

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