AA CEO Gerard Arpey said he "fully expects" that new interline services stemming from an American Airlines-jetBlue partnership announced last week "eventually would be integrated" into corporate contracts. Expected to take effect "in the June timeframe," according to jetBlue CEO Dave Barger, the deal between the two airlines initially will include "simple connections" in 30 "non-overlapping markets" from Boston Logan and New York JFK (18 U.S. cities served by jetBlue and 12 foreign cities served by American), along with through-check-in and baggage transfers. It also calls for AA to transfer to jetBlue eight slot pairs at Washington National and one pair at White Plains, N.Y., and for jetBlue to transfer to AA 12 slot pairs at JFK.
The carriers also are exploring other potential areas of cooperation, including reciprocal frequent flyer programs. The CEOs during a press conference here last week did not rule out code sharing or jetBlue's participation in the oneworld alliance.
The AA-jetBlue agreement reinforces American's (and oneworld's) competitive position in the New York area against Continental (a Star Alliance member), which hubs at Newark, and Delta (a SkyTeam alliance co-founder), which is adding services at JFK and attempting to create a "domestic hub" at LaGuardia.
It also marks the first partnership between jetBlue and a major U.S. carrier, allows jetBlue to enter the Washington National market and represents the latest slot swap agreed to by major U.S. carriers. The current version of a proposed Delta-US Airways slot transfer agreement in New York and Washington, meanwhile, also involves AirTran, jetBlue, Spirit and WestJet.
Cooperative AA-JetBlue Services In The GDS
AA-jetBlue interline service initially would be made available through AA's direct channels as well as "the global distribution systems in the travel agency community," Barger told Management.travel. "That's really exciting to us because heretofore you had to book separate reservations." JetBlue's only existing airline partnerships are code shares with Cape Air in the Northeast United States and with part-owner Lufthansa, and an interline deal with Aer Lingus.
The new interline services to be made available through Boston and New York JFK include connections from such jetBlue stations as Burlington, Vt., and Portland, Maine to AA destinations in Asia, Europe and South Africa, including Barcelona, Brussels, Buenos Aires, London, Madrid, Milan, Paris, Rome, Sao Paulo, Tokyo and Zurich. The deal provides "important opportunities to grow international traffic flowing into and out of the United States for both American and jetBlue," Arpey said.
According to Robert Herbst of AirlineFinancials.com, the new agreement "will add at least $14 million to jetBlue's and $55 million to American's operating income with virtually no increase in costs. JetBlue now becomes a stronger domestic competitor by providing connecting service to American's international destinations. Without this agreement, the only way for American to compete for passenger traffic from the jetBlue cities would require American to add costly domestic routes that would only drive fares lower due to unnecessary additional capacity."
International Implications
By not dismissing the idea, Arpey and Barger left the door open for jetBlue participation in the oneworld alliance. "Who knows where the path will lead, but the jetBlue brand stands very proud [next to] that group of [oneworld] carriers," Arpey said.
Added Barger, "Our teams are real open to a path forward, whatever that may be. The world tends to look through the lens of the three alliances, but I am just pleased that American is interested in the franchise we have built at JFK."
American is a founder in oneworld, while its competitor Star Alliance was co-founded by jetBlue minority owner Lufthansa. JetBlue in November began code sharing with Lufthansa on certain transatlantic itineraries to, from and through JFK and Boston. When asked about any conflict, Barger said, "We believe this is very positive and our board believes is is very positive from a shareholder perspective." The jetBlue board includes two members of Lufthansa's management team.
New Competition In D.C., New York
Already the leading carrier by market share at JFK and Boston Logan, jetBlue pending negotiations with the Washington airport authority in November would initiate service at National with "at least eight daily departures ... to select East Coast destinations."
JetBlue last month also agreed to acquire from US Airways five slot pairs at National as part of efforts by Delta and US Airways to secure approval for their planned slot transfersat JFK and in Washington.
Meanwhile, in New York, American plans to add seven new destinations and 23 new flights split between JFK and LaGuardia. The new routes include multiple-daily services operated by American Eagle from LaGuardia to Atlanta, Charlotte and Minneapolis. At JFK, AA is adding new service to Cincinnati and Indianapolis. Including the new flights, existing services and a previously announced schedule expansion, AA would operate 216 daily departures from the two airports to 63 destinations.
AA also announced plans to renovate its LaGuardia concourses C and D, and is considering how to connect the two. It intends to refurbish Admirals Clubs at JFK and LaGuardia. Meanwhile, AA said it and partner British Airways are assessing a Port Authority of New York and New Jersey proposal to expand JFK's terminal 8, which could allow the two airlines to co-locate their operations.
Delta's New York-area growth plans include expansion of New York LaGuardia-Chicago service to "hourly shuttle" flights, effective June 10. As a result, Chicago O'Hare will become a new Delta Shuttle station with dedicated check-in and self-service kiosks.
Meanwhile, Delta and US Airways agreed to transfer to four airlines slots at LaGuardia and Washington National airports to gain a green light from regulators for their previously announced slot trade at those airports. According to the airlines, AirTran Airways, Spirit Airlines and WestJet would obtain from Delta "five slot pairs each at LaGuardia" while jetBlue would obtain from US Airways five slot pairs at Washington National. The U.S. Department of Transportation in February indicated that Delta and US Airways together would be required to surrender 14 pairs of slots at Washington National and a total of 20 pairs at LaGuardia. In announcing the revised deal, Delta and US Airways said they "do not intend to go forward with the transaction on the conditions stated [by DOT] if the original transaction, as modified by [the newer] agreement, is not approved."