Vasu today appeared in the AA team member podcast to talk about the B6 deal.
The bottom line is that AA has financially underperformed on the coast and did not see means to organically grow so both AS and B6 deals help make AA more relevant in these key markets and provide a foundation from AA to build from.
also saw this from an AA pilot
Listen to Vasu, jfk long haul never made money. They are going to see if this works before pulling it down completely.
JFK was really terrible for AA. Aside from JV with BA and LAX, basically everything didn't do that well. The within perimeter stuff on Eagle had terrible yield numbers (just looking at fare number and load factor) and they connected to LH flights that "never made money". This was their last attempt to stay relevant in NY. It was either this or just pull out completely with no replacement. Apparently, the talks started pre-COVID and picked up at COVID.
That means, AA realized:
1) They didn't have money to burn at NYC anymore
2) They were going to lose slot for nothing once slot waiver ends, so might as well let a partner do those flights.
3) building up JetBlue will make DL and UA's lives hard in Northeast.
Just look at what they were willing to give to JetBlue assuming code share and ff benefits are established. The first 2 are huge by the way.
- A domestic network that JetBlue customers can use to get to places that JetBlue doesn't fly to and still earn TrueBlue miles
- Interline/re-protection relationship that JetBlue needed so it can place its customer can get where they need to go in IRROP.
- An international network that JetBlue customers can fly to and earn TrueBlue miles
- More slots at JFK
- More slots and gates at LGA
- Help at EWR, probably entailing gate access if JetBlue ever becomes constrained there
- Access to AA network and ff in all these markets + BOS
The biggest complaints about JetBlue has always been that they don't fly to all the places where people need to go and you can't trust them if you have to got somewhere. There are so many people that don't fly with JetBlue for these 2 reasons. That's what partnership with AA solves.
Now, they will have that and also the slot/gate space to become as large or larger than UA/DL in NY/NJ. Again, if this works out, that would be good for AA. But at the same time, they just created a whole new competitor that also flies internationally and has much better product. What would be the reason for AA ff to stay with AA in NY and Boston once JetBlue has the network and solves the IRROPS issues? What happens when the large finance and law firms in Northeast decide to put JetBlue on the same level as the big 3 in corporate trravel on these premium transcon and TATL flights?
I'm sure AA isn't blind to these things. So it still went ahead with it anyways. This isn't about having a second TATL hub. It's about keeping its corporate contract that require certain level of service out of NYC. While also help it retain its ff in Northeast. Remember, a big complaint about AA in NYC is that it doesn't fly to leisure destinations. With this partnership, it's ff can go anywhere on JetBlue and earn miles. There is a reason Vasu explicitly mentioned Florida in the press release.
So unless the routes was at least system average pre-COVID, there is no reason keeping them in an environment where yields are sure to be low for a few years. There is a reason why they have only brought back LAX/SFO/PHX/MIA/CLT/LHR/CUN so far. Those are the routes that did at least system average well.