United-JetBlue Tie Up Leaves American Airlines Bloodied
In a move that has sent ripples through the aviation industry, United Airlines and JetBlue have announced a strategic partnership dubbed “Blue Sky.” This collaboration aims to enhance customer experience by integrating loyalty programs and expanding route networks, all while maintaining independent operations.
Key Features of the “Blue Sky” Partnership
While both carriers suggested Blue Sky is significant, it’s unclear what changes for flyers today. Here’s a refresher on the deal.
Reciprocal Loyalty Benefits: Members of United’s MileagePlus and JetBlue’s TrueBlue programs can now earn and redeem miles or points on flights operated by either airline. This integration offers travelers more flexibility and value for their loyalty.
Shared Booking Platforms: Customers can book flights on both airlines through either carrier’s website or mobile app, streamlining the booking process and providing more options for travelers.
Elite Status Perks: Elite members from both airlines will enjoy benefits such as priority boarding, complimentary access to preferred and extra legroom seats, and same-day standby or flight changes when flying on the partner airline.
Airport Slot Exchange: JetBlue will provide United access to slots at JFK International Airport for up to seven daily round-trip flights beginning in 2027. In return, the two airlines will exchange eight flight timings at Newark Liberty International Airport, enhancing operational efficiency for both carriers.
Technology Integration: United plans to utilize JetBlue’s Paisly platform for selling hotels, rental cars, cruises, and travel insurance, enhancing ancillary service offerings for customers.
For travelers, especially those in the New York market, this could be a welcome combination and the start of something bigger to come. Elite True Blue Mosaic members might have more to gain in a broader network on United as it continues to add more redemption partners for loyal flyers. Aligning systems and redemptions could pave the way to an acquisition or merger in the future.
Reflecting on the Northeast Alliance: A Cautionary Tale
It’s impossible to discuss this new partnership without recalling the ill-fated Northeast Alliance between JetBlue and American Airlines. Initiated in 2020, this alliance aimed to coordinate schedules and share revenue on flights in the Northeast U.S., particularly focusing on New York and Boston.
However, the Department of Justice viewed this collaboration as anticompetitive, arguing that it reduced competition and harmed consumers by consolidating market power in key regions. In May 2023, a federal judge ruled against the alliance, leading to its dissolution.
American and JetBlue seemed to have enjoyed its new partnership and adjusted frequencies to allow for its new network profile. That had to be unwound in an expensive and lengthy court battle. Both airlines spent a lot of money, time, and effort to maintain and grow their relationship only for the government to shut it down.
As Matthew pointed out in the above linked post, JetBlue reached out with its offer for partnership to every US carrier including the unlikely ULCCs. Where I think it goes a bit further is that American fought for something more out in the open, it wasn’t intended to be the start of a merger, but outsourcing package travel technology to United and slot swaps goes a bit further than just the loyalty program cross-utilization.
American comes out in a far worse position. It spend the money and fought for a JetBlue partnership. It’s reasonable that management didn’t aggressively seek to revisit something that might again incur significant cost, but if the deal goes forward without government scrutiny or intervention, then American essentially paved the way and paid the cost for a rival to come in with a slightly different approach to achieve a similar end. Worse still, Delta which holds a much more significant position at both JFK and LaGuardia will likely be unfazed by the partnership, but United and JetBlue will get stronger while American, already challenged in the New York market, will fall further behind.
Comparing Collaborations: Blue Sky vs. Northeast Alliance
At first glance, the Blue Sky partnership and the Northeast Alliance share similarities: both involve JetBlue teaming up with a major carrier to expand route networks and offer reciprocal benefits. However, there are critical differences:
Operational Independence: Unlike the Northeast Alliance, which involved coordinated scheduling and revenue sharing, Blue Sky maintains separate operations for each airline. There is no codesharing or joint pricing, reducing the risk of antitrust concerns.
Scope and Scale: The Northeast Alliance focused heavily on the Northeast corridor, a highly competitive and congested market. In contrast, Blue Sky aims for a broader national and international reach, potentially diluting concerns over market concentration.
Despite these differences, questions remain: Why is this new partnership considered acceptable when the previous one was not? Is the absence of revenue sharing and coordinated scheduling sufficient to alleviate antitrust concerns? Or does this indicate a shift in regulatory perspectives?
When JetBlue added Japan Airlines to its TrueBlue redemption partner program, there was no regulatory concern nor should there be. Emirates was a partner of JetBlue too among many others – why should United be any different?
A Rose by Any Other Name?
The Blue Sky partnership represents a strategic move for both United and JetBlue, offering enhanced benefits for customers and expanded operational capabilities for the airlines. However, it’s essential to scrutinize such collaborations to ensure they don’t inadvertently harm competition or consumer choice.
While Blue Sky differs in structure from the Northeast Alliance, the underlying goal remains the same: to strengthen market position through strategic partnerships. As regulators continue to evaluate the implications of such alliances, it’s crucial to balance the benefits of collaboration with the need to maintain a competitive and fair marketplace.
In the end, whether called an alliance or a partnership, the essence remains. And as with any rose, it’s the thorns that warrant careful attention.
What do you think?