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dca1
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 4:06 pm

trueblew wrote:
Runway765 wrote:
dca1 wrote:
Could they just now pivot to a full-fledged merger and divest whatever is necessary in the markets of concern?


This is what I was thinking. It would be in AA's interest to do so. They finally fix their NYC presence, gain a nice presence in BOS and they can dump PHL. They would probably have to divest some DCA slots though.


That could be the worst idea possible. JetBlue's NYC/BOS operation is successful because of its cost structure. That is the whole reason AA has linked up with them, and the advantage would be lost if they were to be folded into AA. Not to mention all the South Florida overlap that would be a major issue and cede significant ground to Spirit while giving up JetBlue's cost competitiveness.


The reality is both B6 and AA are limited in NYC… without each other, neither is competitive with UA or DL. As far as B6’s lower cost… that is quickly slipping away; and there is something to be said for scale, which could offset costs with a larger network and dominant force in BOS, NYC, DCA.
 
jplatts
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 4:08 pm

RL757PVD wrote:
Midwestindy wrote:

I'm still confused on how this is bad for competition.

What about this agreement has decreased competition?


The way I could see it is that if you live in Boston or NYC, AA+ B6 makes it an absolute no brainer in terms of options making otherwise notable competitors of UA or DL for NYC or DL for BOS far less competitive in the long run. I don't see what NK's gripe is however, as higher ticket prices would only benefit them.


There are some more adds that could be made by both DL and WN out of BOS in order to improve competition at BOS such as the addition of DL BOS-MDT/ROC/PHX/SYR/ILM nonstop service and the return of WN BOS-DAL/PHX nonstop service.

Most of the AA, B6, and AS nonstop routes out of NYC already have nonstop competition from airlines other than AA/AS/B6 partners such as DL or UA. I had also mentioned that there are some additional adds that could be made by DL out of LGA/JFK and by UA out of EWR to improve competition on the NYC market.
 
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Polot
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 4:11 pm

All this talk about adds is acting like NYC airports have all this available capacity for other airlines to start all these new proposed competitive flights. I mean NK had to go to federal court to get 16 former WN EWR slots reinstated.
 
tphuang
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 4:15 pm

Polot wrote:
Midwestindy wrote:
tphuang wrote:

Well, looks like DOJ is going to challenge this, so we will see what happens. I don't see how this gets rolled back at this point. Maybe they will have to part with more slots.


I'm still confused on how this is bad for competition.

What about this agreement has decreased competition?

Well before AA and B6 where competitors in the Northeast. Now they are not- thus competition has decreased.

Now whether that is meaningful in the overall picture (eg looking at AA’s competitive presence in the region prior to the agreement, and likely future in region without it) is an entirely different question.


in terms of individual routes, there is no question this has added competition across a lot of routes. Even if you count AA & B6 as one airline, the number of routes seeing new presence from either AA or B6 greatly exceeds the number of routes that had both AA & B6 pre-COVID. That would have to be AA & b6's argument to DOJ.

Now, you could argue that NEA makes DL uncompetitive in BOS vs AA or B6 ff program. But you could also make the argument that NYC area now have 3 or 4 competitive ff program vs 2 before this.

If they want more competition, the only thing I see them doing is require further divestiture at JFK/LGA/DCA to LCCs.
 
FSDan
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 4:56 pm

I'm on the side of this partnership adding competition rather than reducing it. Before the agreement, B6 and AA didn't overlap that much anyway. B6 had massive capacity in the Northeast-to-Florida market while AA had very little outside of MIA (which B6 didn't serve). B6 had lots of capacity in the Northeast-to-Caribbean market which AA had largely abandoned years ago. The biggest overlapping markets were those like JFK-SFO, JFK-LAX, and BOS-LAX where there were usually at least 3 other airlines besides B6 and AA offering competition as well.

By allowing AA and B6 to offer a broader network, it really does make them more competitive with UA and DL than either airline was individually. At the same time, I don't believe it results in so much consolidation that either UA or DL become uncompetitive (certainly not in NYC - BOS is a bit more concentrated but also doesn't have slots like NYC does).
 
trueblew
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 5:26 pm

FSDan wrote:
I'm on the side of this partnership adding competition rather than reducing it. Before the agreement, B6 and AA didn't overlap that much anyway. B6 had massive capacity in the Northeast-to-Florida market while AA had very little outside of MIA (which B6 didn't serve). B6 had lots of capacity in the Northeast-to-Caribbean market which AA had largely abandoned years ago. The biggest overlapping markets were those like JFK-SFO, JFK-LAX, and BOS-LAX where there were usually at least 3 other airlines besides B6 and AA offering competition as well.

By allowing AA and B6 to offer a broader network, it really does make them more competitive with UA and DL than either airline was individually. At the same time, I don't believe it results in so much consolidation that either UA or DL become uncompetitive (certainly not in NYC - BOS is a bit more concentrated but also doesn't have slots like NYC does).


This basically sums it up. The only reason this is being challenged is due to the temper tantrum being thrown on Virginia Avenue.
 
ScottB
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 5:41 pm

tphuang wrote:
But you could also make the argument that NYC area now have 3 or 4 competitive ff program vs 2 before this.

If they want more competition, the only thing I see them doing is require further divestiture at JFK/LGA/DCA to LCCs.


Frequent flyer programs are not "competition." If anything, they are anti-competitive -- that's part of why airlines bother with them. Pricing is competition, and arguably the relative weakness of both AA and B6 at LGA forced both to be more aggressive in pricing at that airport. Nothing about a substantial increase in market concentration at JFK is pro-competitive. Combining the #2 and #3 carriers at JFK into a virtual largest (by 2019 numbers) makes a slot-restricted market even more concentrated. Combining the #1 and #2 carrier at BOS into a virtually merged carrier with over 50% market share is not pro-competitive.

tphuang wrote:
They also share traveler data. That's what happens when you have reciprocal mileage earning.


The fact that they are sharing fare data is quite concerning; it allows much greater indirect coordination on pricing than if they had to rely on aggregate fare data shared publicly several months after the fact via T-100 filings. Reciprocal mileage earning does not require the sharing of fare data.
 
Abeam79
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 5:49 pm

ScottB wrote:
tphuang wrote:
But you could also make the argument that NYC area now have 3 or 4 competitive ff program vs 2 before this.

If they want more competition, the only thing I see them doing is require further divestiture at JFK/LGA/DCA to LCCs.


Frequent flyer programs are not "competition." If anything, they are anti-competitive -- that's part of why airlines bother with them. Pricing is competition, and arguably the relative weakness of both AA and B6 at LGA forced both to be more aggressive in pricing at that airport. Nothing about a substantial increase in market concentration at JFK is pro-competitive. Combining the #2 and #3 carriers at JFK into a virtual largest (by 2019 numbers) makes a slot-restricted market even more concentrated. Combining the #1 and #2 carrier at BOS into a virtually merged carrier with over 50% market share is not pro-competitive.

tphuang wrote:
They also share traveler data. That's what happens when you have reciprocal mileage earning.


The fact that they are sharing fare data is quite concerning; it allows much greater indirect coordination on pricing than if they had to rely on aggregate fare data shared publicly several months after the fact via T-100 filings. Reciprocal mileage earning does not require the sharing of fare data.


Still the data shows that prices have come down on many markets and new routes brought upon way more competition both domestically and internationally. Again, the data doesn't support this as being anti-competitive.
if anything B6 can quickly argue on why they have to divest their market share when delta has over 88% market share in ATL/DTW/MSP and UA has about the same in CLE /IAH and EWR for that part of the NYC market west of of the Hudson. AA gets to also enjoy massive market share in CLT/MIA/PHL/PHX
I i were jetblue I would bring up if the DOJ really cares about competition, lets look at the whole picture and really see whats going on,
 
ScottB
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 6:12 pm

Abeam79 wrote:
Still the data shows that prices have come down on many markets and new routes brought upon way more competition both domestically and internationally. Again, the data doesn't support this as being anti-competitive.
if anything B6 can quickly argue on why they have to divest their market share when delta has over 88% market share in ATL/DTW/MSP and UA has about the same in CLE /IAH and EWR for that part of the NYC market west of of the Hudson. AA gets to also enjoy massive market share in CLT/MIA/PHL/PHX
I i were jetblue I would bring up if the DOJ really cares about competition, lets look at the whole picture and really see whats going on,


I don't think we can make any reasonable comparisons between current pricing data and anything from before March 2020. The economic conditions resulting from the pandemic response and government financial support to the airlines don't form the basis for a meaningful comparison.

No one is arguing that B6 or AA should be divesting assets absent a virtual combination of their businesses that is anti-competitive. DL and UA aren't trying to combine their businesses with large competitors at their hubs.
 
tphuang
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 6:12 pm

ScottB wrote:
tphuang wrote:
But you could also make the argument that NYC area now have 3 or 4 competitive ff program vs 2 before this.

If they want more competition, the only thing I see them doing is require further divestiture at JFK/LGA/DCA to LCCs.


Frequent flyer programs are not "competition." If anything, they are anti-competitive -- that's part of why airlines bother with them. Pricing is competition, and arguably the relative weakness of both AA and B6 at LGA forced both to be more aggressive in pricing at that airport. Nothing about a substantial increase in market concentration at JFK is pro-competitive. Combining the #2 and #3 carriers at JFK into a virtual largest (by 2019 numbers) makes a slot-restricted market even more concentrated. Combining the #1 and #2 carrier at BOS into a virtually merged carrier with over 50% market share is not pro-competitive.


So let's say we dismiss the ff program and just look at competition on various routes. There have been far more routes that have seen new B6/AA presence then routes that had both B6/AA presence pre-COVID. Would you not agree that more competition on routes is better for competition.

You can also make the argument have a "merged carrier" with size comparable to DL in NYC is good for competition. Having 1 carrier (DL) with that many more slots than #2 and #3 out out of JFK/LGA is not good for competition.

tphuang wrote:
They also share traveler data. That's what happens when you have reciprocal mileage earning.


The fact that they are sharing fare data is quite concerning; it allows much greater indirect coordination on pricing than if they had to rely on aggregate fare data shared publicly several months after the fact via T-100 filings. Reciprocal mileage earning does not require the sharing of fare data.


If that's concerning, then force them to drop that part of it. just have the same mileage earning as AA & AS. I don't see abandoning that part really changing the calculus of this partnership.
 
Aliqiout
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 6:12 pm

jayunited wrote:
janders wrote:
Nothing stops DOT/DOJ from reviewing the deal.

As is DOJ did express concern that the alliance could cause coordination that leads to increased ticket prices. The outgoing Transportation Secretary literally on her final day in office signed off on the joint venture which certainly raised eyebrows.


Then why not object to American's partnership with Alaska Airlines? Why single out American partnership with JetBlue while saying nothing about their West Coast partnership with Alaska?

There is something about Blumenthal's sudden objection (after 9 months of silence) to the NEA that bothers me and I think the DOT should reject his request unless he can provide concrete proof that the NEA will kill competition within the aviation industry and this isn't some childish tit for tat or a power trip he suddenly decided to go on against these two carriers.

There are significant differences between AA-AS and AA-B6, the AS agreement is substantially the same as their previous argement, and the previous agreements AS had with DL, NW, CO, DE, FI, SQ....The AS agreement does not allow shedule coordination, or sharing fare data, and it does not have a significant impact on slot controlled airports.
 
tphuang
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 6:18 pm

Aliqiout wrote:
jayunited wrote:
janders wrote:
Nothing stops DOT/DOJ from reviewing the deal.

As is DOJ did express concern that the alliance could cause coordination that leads to increased ticket prices. The outgoing Transportation Secretary literally on her final day in office signed off on the joint venture which certainly raised eyebrows.


Then why not object to American's partnership with Alaska Airlines? Why single out American partnership with JetBlue while saying nothing about their West Coast partnership with Alaska?

There is something about Blumenthal's sudden objection (after 9 months of silence) to the NEA that bothers me and I think the DOT should reject his request unless he can provide concrete proof that the NEA will kill competition within the aviation industry and this isn't some childish tit for tat or a power trip he suddenly decided to go on against these two carriers.

There are significant differences between AA-AS and AA-B6, the AS agreement is substantially the same as their previous argement, and the previous agreements AS had with DL, NW, CO, DE, FI, SQ....The AS agreement does not allow shedule coordination, or sharing fare data, and it does not have a significant impact on slot controlled airports.


Belated fare data sharing is a small part of this deal. I'm sure it's something they are willing to drop if that's one of the conditions. Slot trading at airports by themselves is not anti-competitive. Generally speaking, it's not anti-competitive for a large carrier to sell/lease slots to a smaller carrier as in the case of LGA. On top of that, the carriers made commitment to add growth in the 4 airports which should increase competition.
 
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Midwestindy
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 6:52 pm

RL757PVD wrote:
Midwestindy wrote:

I'm still confused on how this is bad for competition.

What about this agreement has decreased competition?


The way I could see it is that if you live in Boston or NYC, AA+ B6 makes it an absolute no brainer in terms of options making otherwise notable competitors of UA or DL for NYC or DL for BOS far less competitive in the long run. I don't see what NK's gripe is however, as higher ticket prices would only benefit them.


Well in NYC, even with B6+AS, its hardly a no brainer. This just puts AA+B6 on more equal footing with DL and UA.

I think NK's end game is trying to get more slots out of LGA and access to DCA. Framing this AA+B6 agreement as anti-competition could possibly help get them there.

ScottB wrote:
The fact that they are sharing fare data is quite concerning; it allows much greater indirect coordination on pricing than if they had to rely on aggregate fare data shared publicly several months after the fact via T-100 filings. Reciprocal mileage earning does not require the sharing of fare data.


No T-100 data is load factor data, you are thinking about DB1B data.... but airlines know much, much, much, much more about what fares and bookings are like than that data, thanks to the GDS.

AA can tell you how many bookings are coming in for different carriers, on different routes, which companies are buying those tickets, and much more.

They aren't relying on fare data published 3-6 months after the fact to make most if any decisions.

Polot wrote:
Midwestindy wrote:
tphuang wrote:

Well, looks like DOJ is going to challenge this, so we will see what happens. I don't see how this gets rolled back at this point. Maybe they will have to part with more slots.


I'm still confused on how this is bad for competition.

What about this agreement has decreased competition?

Well before AA and B6 where competitors in the Northeast. Now they are not- thus competition has decreased.

Now whether that is meaningful in the overall picture (eg looking at AA’s competitive presence in the region prior to the agreement, and likely future in region without it) is an entirely different question.


I'd argue the meaningfulness of their presence pre-agreement is not an entirely different question. In fact, I'd argue it's an essential element of how it isn't decreasing competition.

Just take a look at some examples of routes like STL/MKE/CVG/CMH-BOS or OKC/OMA-NYC, routes that were monopolies that now have competition.

Sure on a minuscule level, since B6 + AA are coordinating schedules they will have less overlapping flight times on routes like JFK-LAX. Which in theory could lead to slightly higher fares on those routes. But you'll need a lot more than that for the costs to outweigh the benefits of the agreement.
 
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LAXintl
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 8:18 pm

And official.

DOJ along with the Attorney Generals of Arizona, California, D.C., Florida, Massachusetts, Pennsylvania, and Virginia file lawsuits to block the venture.

Link to court filing
https://drive.google.com/file/d/1Qg1AuX ... _OUmp/view
 
alasizon
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 8:41 pm

LAXintl wrote:
And official.

DOJ along with the Attorney Generals of Arizona, California, D.C., Florida, Massachusetts, Pennsylvania, and Virginia file lawsuits to block the venture.

Link to court filing
https://drive.google.com/file/d/1Qg1AuX ... _OUmp/view


Why would AZ and CA even join on? There is zero impact to them. Arguably, the venture helps AZ by theoretically freeing up some AA assets that can be redeployed elsewhere (i.e. PHX).
 
heretothere
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 8:48 pm

I wonder if there’s a scenario where AA/B6 agree to drop the BOS portion of the NEA. Pre-Covid, B6 was already building a “complete” network there, and AA had shown signs of building on their own as well. Plus, unlike NYC, the tie-up there arguably creates a clear #1 instead of big 3 parity.
 
LHRFlyer
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 8:49 pm

JetBlue has published a statement in response:

https://www.businesswire.com/news/home/ ... 006083/en/

Dear Crewmembers,

COVID-19 has thrown unimaginable challenges at us, and we’ve worked together to manage them every step of the way. We played defense to reduce spending and maintain our 21-year no furlough commitment, but we also went on the offense by investing in new routes and BlueCities that bring more of JetBlue’s competitive effect and low fares to the market. Our Northeast Alliance (NEA) with American Airlines is an example of how we played offense to not only get our fleet and Crewmembers flying again, but also set up JetBlue for long-term growth and bring more competition to the Northeast.

Given our focus on the NEA, I wanted to talk about action the U.S. Department of Justice (DOJ) is taking in federal court to unwind the NEA. Regardless of what the DOJ claims about us in court and in the media, it’s important you know that JetBlue’s commitment to competition and low fares remains as strong as ever. This is not at all like a merger with American – we have two different business models and are not working together on pricing. It’s also important that you have the full picture on benefits the NEA is already delivering, and I want to reassure you that the DOJ’s action will not affect our plans to continue implementing the NEA.
 
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UPlog
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 8:51 pm

Can't fault the DOJ calling the alliance "effectively a merger" of the two at Boston and NYC.

The consolidated flying under the alliance represents 2/3 of JetBlue network and closely ties B6 fate to AA while reducing incentives to compete against AA.
 
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LAXintl
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 9:14 pm

alasizon wrote:
Why would AZ and CA even join on? There is zero impact to them. Arguably, the venture helps AZ by theoretically freeing up some AA assets that can be redeployed elsewhere (i.e. PHX).


California is involved as the complaint cites examples of how lack of competition between AA-B6 led to fare increases between $20-40 in markets like San Diego along with high combined market concentration on routes such as the BOS/NYC-LA basin.

Arizona is likely involved as the market concentration of combined AA-B6 is considered "highly concentrated" in several PHX city pairs and beyond connection points in NE.
 
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Midwestindy
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 9:14 pm

I think this is a very important graphic:

Image

https://www.businesswire.com/news/home/ ... 006083/en/
 
HunterATL
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 9:34 pm

DOT has stayed the proceedings pending the resolution of the anti-trust complaint and promised its assistance in support of DOJ's action through data, documents, etc.

DOT also acknowledged that it has "independent statutory authority under 49 U.S.C. 41712 to prohibit unfair methods of competition in air transportation to further its statutory objectives to prevent predatory or anticompetitive practices and to avoid unreasonable industry concentration." DOT stated that it will not exercise its independent authority until after the conclusion of the anti-trust action. DOT's acknowledgement that it has the statutory authority to review the partnership even after its agreement with AA and B6 is itself a victory for Spirit as the partner airlines argued DOT had no authority.

https://downloads.regulations.gov/DOT-O ... ment_1.pdf
 
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Rajahdhani
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Tue Sep 21, 2021 11:17 pm

https://www.cnn.com/2021/09/21/business/american-airlines-jetblue-doj/index.html
"An attorney for American Airlines told CNN that the carrier "feels confident" that the case does not provide evidence as to how the alliance is harming consumers.
JetBlue CEO Robin Hayes said Tuesday that the company's "commitment to competition and low fares remains as strong as ever."
"This is not at all like a merger with American -- we have two different business models and are not working together on pricing," he said. "It's also important that you have the full picture on benefits the [Northeast Alliance] is already delivering, and I want to reassure you that the DOJ's action will not affect our plans to continue implementing the [Northeast Alliance].".


Reported via CNN (via update) on By Christina Carrega and Pete Muntean, CNN - Updated 5:50 PM ET, Tue September 21, 2021:

So thanks to them for the reporting, and it seems strongly indicative of both AA and B6 towards forward progression with the deal. CEO Hayes's comment final line was rather decisive, and frankly on point. Here's to knowing that it will all work out in the end, for the best.
 
MIflyer12
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 11:18 pm

jayunited wrote:
janders wrote:
Nothing stops DOT/DOJ from reviewing the deal.

As is DOJ did express concern that the alliance could cause coordination that leads to increased ticket prices. The outgoing Transportation Secretary literally on her final day in office signed off on the joint venture which certainly raised eyebrows.


Then why not object to American's partnership with Alaska Airlines? Why single out American partnership with JetBlue while saying nothing about their West Coast partnership with Alaska?


Who is to say that the DOJ and DOT are done with a review of domestic coordination? Maybe AA-AS is next.

The DOT both arguing it retains review authority after the initial pass, and stepping aside for the DOJ, is very important. The DOJ needs to prove its case in court to prevail - but yes, that's the primary process for eliminating anti-competitive combinations.

HunterATL wrote:
DOT has stayed the proceedings pending the resolution of the anti-trust complaint and promised its assistance in support of DOJ's action through data, documents, etc.

DOT also acknowledged that it has "independent statutory authority under 49 U.S.C. 41712 to prohibit unfair methods of competition in air transportation to further its statutory objectives to prevent predatory or anticompetitive practices and to avoid unreasonable industry concentration." DOT stated that it will not exercise its independent authority until after the conclusion of the anti-trust action. DOT's acknowledgement that it has the statutory authority to review the partnership even after its agreement with AA and B6 is itself a victory for Spirit as the partner airlines argued DOT had no authority.

https://downloads.regulations.gov/DOT-O ... ment_1.pdf


ScottB wrote:
Frequent flyer programs are not "competition." If anything, they are anti-competitive -- that's part of why airlines bother with them. Pricing is competition, and arguably the relative weakness of both AA and B6 at LGA forced both to be more aggressive in pricing at that airport. Nothing about a substantial increase in market concentration at JFK is pro-competitive. Combining the #2 and #3 carriers at JFK into a virtual largest (by 2019 numbers) makes a slot-restricted market even more concentrated. Combining the #1 and #2 carrier at BOS into a virtually merged carrier with over 50% market share is not pro-competitive.


Yep, but we can also recognize there are many forms of concessions that could lead the DOJ to withdraw its suit. Look at the progression at the DOJ of the DL/US LGA/DCA slot swap, or the AA/US merger. Perceived DOJ problems can be negotiated away.
 
Abeam79
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Tue Sep 21, 2021 11:25 pm

I dunno, I'm no lawyer, but this DOJ smells like it may backfire. The court may sense too much politics involved. Because when you look at the data, for the most part, there has been lower prices and more competition. How you can argue against something with clear data? The court will look at the data and maybe just tell AA/B6 to give up a few codeshare transcon routes maybe? but beyond that, I don't know how you can ignore all the relevant data presented with the NEA.
 
sxf24
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Tue Sep 21, 2021 11:44 pm

Abeam79 wrote:
I dunno, I'm no lawyer, but this DOJ smells like it may backfire. The court may sense too much politics involved. Because when you look at the data, for the most part, there has been lower prices and more competition. How you can argue against something with clear data? The court will look at the data and maybe just tell AA/B6 to give up a few codeshare transcon routes maybe? but beyond that, I don't know how you can ignore all the relevant data presented with the NEA.


Courts will look at the law and judge whether the DOJ’s argument that this effectively a merger and anticompetitive. If judged on domestic fares in competitive AA-B6 markets where one will take over for the other, the DOJ has a strong point.
 
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Polot
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Tue Sep 21, 2021 11:52 pm

Abeam79 wrote:
I dunno, I'm no lawyer, but this DOJ smells like it may backfire.

It can’t “backfire”. Worse case scenario it is determined that DOJ has no case and status quo is kept.
 
Pi7472000
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Tue Sep 21, 2021 11:58 pm

This is great news!! AA and B6 should not be allowed to have a partnership! I hope they do this with AA and Alaska next!!
 
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Polot
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Re: AA & B6 announce Northeast Partnership

Tue Sep 21, 2021 11:59 pm

Midwestindy wrote:
I think this is a very important graphic:

Image

https://www.businesswire.com/news/home/ ... 006083/en/

The fact that a similar graphic is missing for Boston is telling...

NEA covers more than NYC, but that is where AA/B6 is focusing the PR as that is where their defense is strongest.
 
joeblow10
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 12:04 am

You can forget any more hypothetical mergers that everybody constantly talks about … at least under this DOJ (and likely under most admins)
 
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Midwestindy
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Re: AA & B6 announce Northeast Partnership

Wed Sep 22, 2021 12:15 am

Polot wrote:
Midwestindy wrote:
I think this is a very important graphic:

Image

https://www.businesswire.com/news/home/ ... 006083/en/

The fact that a similar graphic is missing for Boston is telling...

NEA covers more than NYC, but that is where AA/B6 is focusing the PR as that is where their defense is strongest.


Because it is the slot controlled city (LGA/JFK), i.e. where they have the most to lose.
 
RJNUT
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 12:35 am

they should just bring back filed "joint fares" like in the 60's , 70's and 80;s so airlines can just feed each other thru interline prorate pricing.
 
Abeam79
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 12:55 am

Pi7472000 wrote:
This is great news!! AA and B6 should not be allowed to have a partnership! I hope they do this with AA and Alaska next!!

And sky team, and star alliance or the majority of the delta JV’s. If your going to make an argument against “partnerships” try to scale back your obvious cheering for your already quasi monopolistic legacy carrier.
Also the data doesn’t help the DOJ. I can see a few divestitures but that may be the extent of it
 
tphuang
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Re: AA & B6 announce Northeast Partnership

Wed Sep 22, 2021 1:02 am

LAXintl wrote:
alasizon wrote:
Why would AZ and CA even join on? There is zero impact to them. Arguably, the venture helps AZ by theoretically freeing up some AA assets that can be redeployed elsewhere (i.e. PHX).


California is involved as the complaint cites examples of how lack of competition between AA-B6 led to fare increases between $20-40 in markets like San Diego along with high combined market concentration on routes such as the BOS/NYC-LA basin.


So, I saw that claim and it seems to be a terrible example for DOJ to use. AA stopped flying JFK-SAN in April of 2019 due to MAX shortage and have only operated that route for 2 weeks in winter of 2020. Fares do increase for a number of reasons. Less competition certainly is not the case here.

It seems to me that if B6/AA even do a little homework, they should be able to strike down some of these claims.

Pi7472000 wrote:
This is great news!! AA and B6 should not be allowed to have a partnership! I hope they do this with AA and Alaska next!!


It does seem like DL supporters are the most excited here. Just reading some of the excerpts, it seems like most of the pushing is here done by DL.

Polot wrote:
The fact that a similar graphic is missing for Boston is telling...

NEA covers more than NYC, but that is where AA/B6 is focusing the PR as that is where their defense is strongest.


NYC is slot controlled. Boston is not. B6 has quite a bit of Boston growth planned to.

Here are the number of markets added by AA/B6 since NEA got announced. Brand new markets where neither operated pre-COVID
IND
CMH
CVG
YYZ
STL
MCI
SAT
MKE
YVR
AVL
HHH
TVC
ILM
JAC
+ a few routes DL added as retaliation
YYZ
DFW
CLT

here are the number of routes AA/B6 competed on pre-COVID
LAX
AUS
CLT
ORD
DFW
JFK
LGA
PHL
PHX
DCA
SYR
ROC

Now sure, you could argue that they were competing on large routes, but all these routes (with the exception of PHX/SYR/ROC) still have have competition and a lot of competition in some cases. And DFW/CLT now see additional DL competition. If we put that aside, it's basically BOS-DCA/PHL that see AA/B6 having overly dominating market share + LAX/LGA/ORD where there are 1 fewer competitor. Both LAX and ORD still have plenty of other competition. And that's if you buy the argument that they can control pricing without the ability to coordinate on pricing.

And routes like IND/CMH/CVG/STL/YYZ/MCI/MKE all have quite a bit of demand and saw really high fares pre-COVID from lack of competition. They will see lower fares now from more competition.
 
MohawkWeekend
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 1:51 am

This is just the first. They are gunning for all industries - tech, media, drug, and yes airlines. And it's about time - ExxonMobil ? Southwest and AirTran? Please......

How Joe Biden Administration’s Stricter Scrutiny Of Mergers May Impact Pending Media Mergers
By Ted Johnson
https://deadline.com/2021/07/joe-biden- ... 789405/Ted Johnson
 
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STT757
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 2:04 am

 
777Mech
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Re: AA & B6 announce Northeast Partnership

Wed Sep 22, 2021 2:29 am

trueblew wrote:
FSDan wrote:
I'm on the side of this partnership adding competition rather than reducing it. Before the agreement, B6 and AA didn't overlap that much anyway. B6 had massive capacity in the Northeast-to-Florida market while AA had very little outside of MIA (which B6 didn't serve). B6 had lots of capacity in the Northeast-to-Caribbean market which AA had largely abandoned years ago. The biggest overlapping markets were those like JFK-SFO, JFK-LAX, and BOS-LAX where there were usually at least 3 other airlines besides B6 and AA offering competition as well.

By allowing AA and B6 to offer a broader network, it really does make them more competitive with UA and DL than either airline was individually. At the same time, I don't believe it results in so much consolidation that either UA or DL become uncompetitive (certainly not in NYC - BOS is a bit more concentrated but also doesn't have slots like NYC does).


This basically sums it up. The only reason this is being challenged is due to the temper tantrum being thrown on Virginia Avenue.


Who is throwing a tantrum on Virginia Ave? There's no airline I know of with a Virginia Avenue address.
 
FlyingElvii
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Re: AA & B6 announce Northeast Partnership

Wed Sep 22, 2021 2:30 am

MIflyer12 wrote:
jayunited wrote:
janders wrote:
Nothing stops DOT/DOJ from reviewing the deal.

As is DOJ did express concern that the alliance could cause coordination that leads to increased ticket prices. The outgoing Transportation Secretary literally on her final day in office signed off on the joint venture which certainly raised eyebrows.


Then why not object to American's partnership with Alaska Airlines? Why single out American partnership with JetBlue while saying nothing about their West Coast partnership with Alaska?


Who is to say that the DOJ and DOT are done with a review of domestic coordination? Maybe AA-AS is next.

The DOT both arguing it retains review authority after the initial pass, and stepping aside for the DOJ, is very important. The DOJ needs to prove its case in court to prevail - but yes, that's the primary process for eliminating anti-competitive combinations.

HunterATL wrote:
DOT has stayed the


ScottB wrote:
Frequent flyer programs are not "competition." If anything, they are anti-competitive -- that's part of why airlines bother with them. Pricing is competition, and arguably the relative weakness of both AA and B6 at LGA forced both to be more aggressive in pricing at that airport. Nothing about a substantial increase in market concentration at JFK is pro-competitive. Combining the #2 and #3 carriers at JFK into a virtual largest (by 2019 numbers) makes a slot-restricted market even more concentrated. Combining the #1 and #2 carrier at BOS into a virtually merged carrier with over 50% market share is not pro-competitive.


Yep, but we can also recognize there are many forms of concessions that could lead the DOJ to withdraw its suit. Look at the progression at the DOJ of the DL/US LGA/DCA slot swap, or the AA/US merger. Perceived DOJ problems can be negotiated away.

Because Mother Delta sees this as a threat to its big Northeast expansion planning? Delta has a long history of using political pushes to stifle competition. Even if it doesn’t work, they can make a mess of it that AA and B6 have to deal with for a long time.

And it is also an opportunity for F9 and Spirit to pickup some New York slots on the cheap.
 
FlyingElvii
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Joined: Wed Dec 27, 2017 10:53 pm

Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 2:32 am

Abeam79 wrote:
I dunno, I'm no lawyer, but this DOJ smells like it may backfire. The court may sense too much politics involved. Because when you look at the data, for the most part, there has been lower prices and more competition. How you can argue against something with clear data? The court will look at the data and maybe just tell AA/B6 to give up a few codeshare transcon routes maybe? but beyond that, I don't know how you can ignore all the relevant data presented with the NEA.

Agreed, this stinks of a political move. Delta protecting turf, perhaps?
 
FlyingElvii
Posts: 1713
Joined: Wed Dec 27, 2017 10:53 pm

Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 2:35 am

RJNUT wrote:
they should just bring back filed "joint fares" like in the 60's , 70's and 80;s so airlines can just feed each other thru interline prorate pricing.

While convenient, it was abused heavily by a couple of carriers in the 90’s/early 2000’s, to the point that Delta finally said, “Screw it! We’re out!”.
 
phatfarmlines
Posts: 1994
Joined: Thu Sep 27, 2001 12:06 pm

Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 2:45 am

joeblow10 wrote:
You can forget any more hypothetical mergers that everybody constantly talks about … at least under this DOJ (and likely under most admins)


I disagree. Air carriers can argue that the networks have shrunken driven by COVID-19.

That was the whole premise of the DOJ - airlines are too big!

And we've seen our fair share of consolidation under the Obama/Biden administration, so not necessarily a Dem/Rep admin control either.

777Mech wrote:
Who is throwing a tantrum on Virginia Ave? There's no airline I know of with a Virginia Avenue address.


I can't tell if you're being facetious, but you would be technically correct that the airline HQ in question is not on Virginia Avenue.
 
panamair
Posts: 4470
Joined: Fri Oct 12, 2001 2:24 am

Re: AA & B6 announce Northeast Partnership

Wed Sep 22, 2021 2:45 am

FlyingElvii wrote:
Because Mother Delta sees this as a threat to its big Northeast expansion planning? Delta has a long history of using political pushes to stifle competition. Even if it doesn’t work, they can make a mess of it that AA and B6 have to deal with for a long time.
.


Then why did Delta not raise any objections during the initial NEA approval request by AA/B6? If people bothered to read the DOJ case, they would easily see that the DOJ has lumped AA in with DL and UA as the three big bad wolves that need to be checked; DOJ's point is that B6 has been the disruptor in the marketplace, and that by tying 2/3 of its network to AA and engaging in revenue sharing with AA, they are essentially becoming beholden to AA and will no longer bring the "JetBlue effect" to many markets.
This round isn't coming from Delta or United.
 
JRL3289
Posts: 73
Joined: Mon Mar 07, 2016 11:57 pm

Re: AA & B6 announce Northeast Partnership

Wed Sep 22, 2021 4:36 am

heretothere wrote:
I wonder if there’s a scenario where AA/B6 agree to drop the BOS portion of the NEA. Pre-Covid, B6 was already building a “complete” network there, and AA had shown signs of building on their own as well. Plus, unlike NYC, the tie-up there arguably creates a clear #1 instead of big 3 parity.


As far as I'm aware, the only routes where only AA and B6 operate are BOS-CLT/DFW... every other route has two competitors and either both AA/B6 or B6 alone. AA's strength has long been the local demand between BOS and its hubs - but even that was strained tremendously during the pandemic when BOS-LAX was altogether cut for a significant period of time. AA itself lacked the breadth of service the BOS market needed, while B6 has benefitted from the depth of AA's core hub offering.

I'm also not sure that the data also suggests a "clear #1 instead of big 3 parity" in BOS v. NYC. AA/B6 would be the clear leader in both, albeit NYC is nuanced with the multi-airport setup. The struggle I see with arguing for a carveout of BOS from the NEA is that AA's service is so heavily focused on its hubs which happen to be some of the largest O/D markets from BOS. B6 flyers benefit from expanded access/frequency to those markets while AA flyers benefit from the breadth of B6's nonstop network from BOS. It's not that outrageous of a disparity - nor one that seems to be having any adverse effects on market pricing - compared to the individual airports in NYC.

Yet AA/B6 market share in...
BOS: 52.6% (v. DL 15.2%, UA 9.2%)
JFK: 47.9% (v. DL 31.7%)
LGA: 26% (v. DL 37.4%, UA 7.8%)
EWR: 22% (v. UA 58.5% DL 4.7%)
 
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Midwestindy
Topic Author
Posts: 6301
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 11:59 am

If the DOJ wishes to wipe out JVs & Alliances, and give slots to LCCs/ULCCs in an attempt to “increase competition” so be it….

But inevitably this is what’s going to occur:
- A reduction profitability of an already fragile industry
- Loss of n/s service to smaller markets, as slot divestures to LCCs/ULCCs will just result in airlines like NK just adding additional service to routes already with plenty of competitors.
- AA & B6 will go back to being stagnant in the region

For the DL or UA employees cheering this lawsuit, I'd be careful, the DOJ specially called out JVs as well.
 
ContinentalEWR
Posts: 4739
Joined: Wed May 24, 2000 2:50 am

Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 12:24 pm

Midwestindy wrote:
If the DOJ wishes to wipe out JVs & Alliances, and give slots to LCCs/ULCCs in an attempt to “increase competition” so be it….

But inevitably this is what’s going to occur:
- A reduction profitability of an already fragile industry
- Loss of n/s service to smaller markets, as slot divestures to LCCs/ULCCs will just result in airlines like NK just adding additional service to routes already with plenty of competitors.
- AA & B6 will go back to being stagnant in the region

For the DL or UA employees cheering this lawsuit, I'd be careful, the DOJ specially called out JVs as well.


As is often the cases, these suits are highly politicized, misinformed and never really focus on the heart of the problem. The problem is access. The US has an aversion to taxpayer funded infrastructure improvements, resulting in piecemeal approaches to a lot of airport updates and developments, which often end up looking like JFK, where terminals are fiefdoms and the whole result is a lot of inefficiency.

Separately, B6 and AA (more AA than B6, really) aren't significant enough players in the two airports in question. Together, they create more critical mass and a balance somewhat but not evenly.

The industry remains fragile, and very vulnerable, financially, even with near $60 billion in taxpayer money liberally applied to their coffers as a result of the pandemic.

UA has an outsized footprint at EWR. DL is the largest carrier at JFK and the #1 carrier at LGA.

Yes, NK and F9 want more access, but really to what end? NK has proven it can't run an operation properly and that attracted regulatory scrutiny. Perhaps that regulatory scrutiny should focus on that and not the dozens of cities NK may want to fly out of JFK to, where no gates are really available, first.

It's a balance between competition and a free-for all. Not sure NK and F9 do much for the NY market with more flights.

AA had plenty of opportunity and resources to build out NYC further, in the past, notably at JFK. It opted not to, and use third rate planes and services to compete, then found itself with an outsized cost structure while the rest of the industry used (and abused) Chapter 11 to rewrite their own strategies. AA found itself on the outside until 2011 when it finally filed. Between Chapter 11 and an aversion to making infrastructure spend part of the same fabric as outsized military spending, it is the US government, more than the airlines, that make competition lopsided and unbalanced.
 
MIflyer12
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 12:52 pm

ContinentalEWR wrote:
Between Chapter 11 and an aversion to making infrastructure spend part of the same fabric as outsized military spending, it is the US government, more than the airlines, that make competition lopsided and unbalanced.


Making the government responsible for carrier use of Chapter 11... that's a very novel argument.

I don't think you want to go down the path of Spirit's operational difficulties making it unfit to grow, either. Look at WN or AA (and especially AA-owned regional ops and their late/cancelled/mishandled bags numbers in the monthly DOT reports).

The word competition is used 13 times in the statute of the Airline Deregulation Act. The DOT has a duty to promote competition. One citation:

"(9) The encouragement, development, and maintenance of an air transportation system relying on actual and potential competition to provide efficiency, innovation, and low prices, and to determine the variety, quality, and price of air transportation services."

Yep, it's up to the market to determine acceptable minimum seat pitch within the boundaries of FAA aircraft certification.
 
MohawkWeekend
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 12:55 pm

Biden's Administration is pro-union and is in the mood to trust bust like Teddy Roosevelt. Younger people may not know this but until the 1980's or so, mergers and JV just didn't happen like they do now. The DOJ turned most down. Look at the consolidation in the airline, tech and especially the banking industry. Google, Amazon, Bank of America. Back in the day, there were very very few companies that were "too big to fail". Who won? Wall Street and the Officers of those companies with stock options (see airline CEO's). Who lost - the employees and cities who had facilities "right-sized".

It's about time.
 
ContinentalEWR
Posts: 4739
Joined: Wed May 24, 2000 2:50 am

Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 1:05 pm

MIflyer12 wrote:
ContinentalEWR wrote:
Between Chapter 11 and an aversion to making infrastructure spend part of the same fabric as outsized military spending, it is the US government, more than the airlines, that make competition lopsided and unbalanced.


Making the government responsible for carrier use of Chapter 11... that's a very novel argument.

I don't think you want to go down the path of Spirit's operational difficulties making it unfit to grow, either. Look at WN or AA (and especially AA-owned regional ops and their late/cancelled/mishandled bags numbers in the monthly DOT reports).

The word competition is used 13 times in the statute of the Airline Deregulation Act. The DOT has a duty to promote competition. One citation:

"(9) The encouragement, development, and maintenance of an air transportation system relying on actual and potential competition to provide efficiency, innovation, and low prices, and to determine the variety, quality, and price of air transportation services."

Yep, it's up to the market to determine acceptable minimum seat pitch within the boundaries of FAA aircraft certification.


The scale of NK's meltdown relative to WN and AA's operational difficulties, given NK's size are glaring and rightfully attracted scrutiny, which will inevitably lead to nothing more than a fine and probably a slap on the wrist. Bankruptcy codes are government sanctioned, and in other parts of the world, the way US companies can use bankruptcy protection, is illegal and in almost each case, it is the employees, front line, in particular, that eat the cost through loss of pensions, salary cuts, etc...

The US Government deregulated the industry. Was it necessary? Maybe. Probably. It certainly made flying cheaper and more affordable. But the framework never considered the potential for growth the way the industry experienced it.

According to your logic, only WN and AA experience operational issues. Biased much? Try flying DL and UA sometime. The same problems exist all around and are endemic to the industry.
Last edited by ContinentalEWR on Wed Sep 22, 2021 1:10 pm, edited 1 time in total.
 
ContinentalEWR
Posts: 4739
Joined: Wed May 24, 2000 2:50 am

Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 1:05 pm

MohawkWeekend wrote:
Biden's Administration is pro-union and is in the mood to trust bust like Teddy Roosevelt. Younger people may not know this but until the 1980's or so, mergers and JV just didn't happen like they do now. The DOJ turned most down. Look at the consolidation in the airline, tech and especially the banking industry. Google, Amazon, Bank of America. Back in the day, there were very very few companies that were "too big to fail". Who won? Wall Street and the Officers of those companies with stock options (see airline CEO's). Who lost - the employees and cities who had facilities "right-sized".

It's about time.


This.
 
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william
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 1:14 pm

joeblow10 wrote:
You can forget any more hypothetical mergers that everybody constantly talks about … at least under this DOJ (and likely under most admins)


I was thinking the same thing too. Hey DOJ, look at undoing mini monopolies created when you allowed 6 majors to go down to 3.................Yeah, I know, that plane has left the gate.
 
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Midwestindy
Topic Author
Posts: 6301
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Re: Updated: DOJ sues to block AA - B6 Northeast partnership

Wed Sep 22, 2021 1:17 pm

ContinentalEWR wrote:
MohawkWeekend wrote:
Biden's Administration is pro-union and is in the mood to trust bust like Teddy Roosevelt. Younger people may not know this but until the 1980's or so, mergers and JV just didn't happen like they do now. The DOJ turned most down. Look at the consolidation in the airline, tech and especially the banking industry. Google, Amazon, Bank of America. Back in the day, there were very very few companies that were "too big to fail". Who won? Wall Street and the Officers of those companies with stock options (see airline CEO's). Who lost - the employees and cities who had facilities "right-sized".

It's about time.


This.


We aren't talking about Tech or Banking, we are talking about the airline industry.

Without consolidation, the airline industry wouldn't have survived this crisis, and if they did there would have been a heck of a lot more "right-sizing" of employee counts.....I can tell you that much....

ContinentalEWR wrote:
Midwestindy wrote:
If the DOJ wishes to wipe out JVs & Alliances, and give slots to LCCs/ULCCs in an attempt to “increase competition” so be it….

But inevitably this is what’s going to occur:
- A reduction profitability of an already fragile industry
- Loss of n/s service to smaller markets, as slot divestures to LCCs/ULCCs will just result in airlines like NK just adding additional service to routes already with plenty of competitors.
- AA & B6 will go back to being stagnant in the region

For the DL or UA employees cheering this lawsuit, I'd be careful, the DOJ specially called out JVs as well.


As is often the cases, these suits are highly politicized, misinformed and never really focus on the heart of the problem. The problem is access. The US has an aversion to taxpayer funded infrastructure improvements, resulting in piecemeal approaches to a lot of airport updates and developments, which often end up looking like JFK, where terminals are fiefdoms and the whole result is a lot of inefficiency.

Separately, B6 and AA (more AA than B6, really) aren't significant enough players in the two airports in question. Together, they create more critical mass and a balance somewhat but not evenly.

The industry remains fragile, and very vulnerable, financially, even with near $60 billion in taxpayer money liberally applied to their coffers as a result of the pandemic.

UA has an outsized footprint at EWR. DL is the largest carrier at JFK and the #1 carrier at LGA.

Yes, NK and F9 want more access, but really to what end? NK has proven it can't run an operation properly and that attracted regulatory scrutiny. Perhaps that regulatory scrutiny should focus on that and not the dozens of cities NK may want to fly out of JFK to, where no gates are really available, first.

It's a balance between competition and a free-for all. Not sure NK and F9 do much for the NY market with more flights.

AA had plenty of opportunity and resources to build out NYC further, in the past, notably at JFK. It opted not to, and use third rate planes and services to compete, then found itself with an outsized cost structure while the rest of the industry used (and abused) Chapter 11 to rewrite their own strategies. AA found itself on the outside until 2011 when it finally filed. Between Chapter 11 and an aversion to making infrastructure spend part of the same fabric as outsized military spending, it is the US government, more than the airlines, that make competition lopsided and unbalanced.


Agree with most of this, although JFK isn't just infrastructure it's also airspace.

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