Friday, 17 July 2020

JetBlue and American Airlines announce strategic partnership - is it the first step to a merger..

The hometown airline of New York and one of the biggest carriers in the U.S. have announced a new strategic partnership that they promise will offer seamless connectivity and greater choice for passengers. Critics fear will lead to legalised price-fixing and is the first step to a full-on merger.

JetBlue Airways and American Airlines announced the new deal on Thursday, saying the partnership would "accelerate each airline’s recovery as the travel industry adapts to new trends as a result of the pandemic."

This new deal includes an alliance agreement that proposes codeshare and loyalty benefits at New York and Boston, supposedly stimulating growth and driving value for customers and crewmembers of both airlines. Part of the deal will see the airlines swapping slots at New York's airports which will see American Airlines launching international routes from (JFK) to Tel Aviv (TLV) and to Athens (ATH) and JFK to Rio De Janeiro (GIG) will return as a daily seasonal route in winter 2021.  
In addition to continuing to serve popular long-haul destinations like London (LHR) and Madrid (MAD). 

JetBlue will be adding flights at LaGuardia (LGA) and Newark (EWR), while also increasing its presence at JFK for seamless connections to American’s expanded international network. 

Through their integrated networks, JetBlue and American will operate reciprocal codeshare flights, with matched prices, improved schedules, and access to more domestic and international destinations. JetBlue and American loyalty members will also enjoy new benefits while the carriers are exploring additional premium experiences for customers.

“Pairing JetBlue’s domestic network with American’s international route map creates a new competitive choice in the Northeast, where customers are longing for an alternative to the dominant network carriers,” said Joanna Geraghty, president and chief operating officer, JetBlue. 

“This is an incredible opportunity for both of our airlines,” said American Airlines President Robert Isom. “American has a strong history in the Northeast, and we’re proud to partner with JetBlue as the latest chapter in that long history.”

“JetBlue customers will have more routes and destinations to choose from through American Airlines’ extensive global network,” said Scott Laurence, head of revenue and planning, JetBlue. “Together we will offer customers better options than either of us could alone. This partnership enables JetBlue to bring our low fares and great service to even more customers by expanding our presence in our hometown, growing relevance in Boston, and supporting our successful Mint franchise.”

Vasu Raja, Chief Revenue Officer at American Airlines said: “Both airlines’ customers value access to more destinations, whether it’s a JetBlue customer who wants more direct access to South America from New York, or an American customer who wants more robust service to Florida. Together, we can give our customers the best of both worlds.”

American will be reconfiguring more aircraft operating in the Northeast into a two-class cabin arrangement to better mirror JetBlue's onboard offering, and further synergise the two carriers. And whilst both airlines are keen to point out that JetBlue is not joining the oneworld alliance or sliding into the transatlantic trade pack of AA/IAG airlines, yet neither airline would rule it out for the future. JetBlue is going to continue with plans to launch and operate its own transatlantic flights to London in 2021.

Numerous aviation commentators and advisors have offered the opinion that the strategic partnership, which is yet to be formally approved, is the first step to a full-on merger of the two carriers which have both been badly hit by the downturn in business caused by the coronavirus COVID-19 pandemic. Both carriers have been forced to lay off staff - with American warning that 25,000 could be laid off permanently when its federal aid package comes to an end in the coming months.  Whilst a take over of JetBlue is not on the cards, American simply just doesn't have the funds available for a big outright purchase at the moment, but a stronger tie-up would make economic sense.  AA needs a stronger feeding supply to its international route network in these days of reduced demand and JetBlue can provide that.  Together the carriers will fight off competition from the likes of United and Delta, but if the demand for travel remains as low as many analysts predict in the U.S.,  more airline consolidation is not only likely but necessary.  When asked, both carriers have said 'No' to the question 'are you merging?'  yet that hasn't stopped number crunchers from both airlines pouring other each other's figures in recent days. A merger between the two carriers would also have less scrutiny and official objection,  following a long period of close cooperation that such a partnership would achieve. 

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