United and JetBlue rigorously crafted their Blue Sky partnership to keep away from any regulatory issues. The airways aren’t codesharing, there isn’t a pricing or schedule coordination, and usually, they’ve adopted the steering that the choose who shot down the Northeast Alliance (NEA) between American and JetBlue gave on the right way to assemble a authorized partnership. However that doesn’t imply that everybody is comfortable simply letting this occur with no combat. No person must be shocked to listen to that Spirit is now making an attempt to do what it may to dam this partnership.
Spirit has proudly taken the lead on difficult couplings prior to now, most notably the NEA. That combat resulted in a powerful act of juggling because it was simply shortly after that it agreed to be acquired by JetBlue. It was twisting itself in knots, however it has at all times tried to make the identical level… that the massive US airways partnering with smaller carriers is anticompetitive. It gained the NEA combat, however it misplaced its personal merger bid with JetBlue. However don’t fear — the standalone Spirit apparently nonetheless has its legal professionals on retainer.
No federal overview of the JetBlue/United deal is required, however the Division of Transportation (DOT) and Division of Justice (DOJ) can at all times resolve to problem something. Spirit needs to encourage that. This explicit objection from Spirit is filed as a grievance with the Division of Transportation (DOT). Spirit needs the overview interval prolonged by 60 days. It additionally needs to see the agreements launched publicly for overview, and it says there must be a public remark interval. Why? As a result of that is anticompetitive, damnit. How? Nicely, that’s the entire level of this submit. Listed below are the 4 most important thrusts:
Regardless that the airways gained’t coordinate on pricing and schedules, “tacit coordination seems apparent, and one must consider within the tooth fairy to not acknowledge that, given United’s huge measurement and JetBlue’s dominant place in New York and Boston that, at the least within the Northeast, this mixture will result in each greater fares and better award level necessities….”
JetBlue might want to buy United miles to award to its prospects after they choose to fly United, and that’s costly. “That incremental value should essentially be coated by greater JetBlue fares.”
This agremeent will end in “coordination on high-value company accounts.”
The 2 airways working collectively “helps perpetuate the unchanging lack of entry in each New York space and Boston airports to new entrants and restricted incumbents providing aggressive costs to the general public.”
So, mainly, it’s saying that this can result in much less competitors and better fares. We’ve all heard that argument earlier than, however does Spirit have an precise case to help these accusations?
Spirit’s grievance winds round a wide range of issues that feed into these anticompetive arguments, even taking place the slippery slope by saying that this can spur each American and Delta to enter into comparable agreements with different small carriers. I don’t wish to burst their bubble, however American already does this with Alaska. And Delta? Yeah, proper.
In fact, Spirit factors out the route overlap right here, saying that United and JetBlue have 18 overlap routes plus one other 55 that United flies from Newark which JetBlue flies from JFK. That is all true — presumably, I didn’t examine — and that will matter in a merger or three way partnership that required antitrust immunity. I don’t think about that the feds will purchase the argument that this must be evaluated the identical approach since that is only a loyalty partnership with a number of fringe advantages.
So, Spirit will get inventive in making an attempt to spotlight points in two particular areas of this distinctive partnership. I’ve realized that it actually loves the phrase “unprecedented” on this submitting.
Linked Loyalty Applications
Spirit calls this United/JetBlue tie-up an “unprecedented integration of the United MileagePlus and JetBlue TrueBlue loyalty applications.” I discover that tough to consider contemplating the mixing between Alaska and American that exists at present. What am I lacking right here?
Anyway, the argument is that individuals in these loyalty applications would fly their most well-liked airline, however they might then contemplate all different airways when their airline didn’t have a superb possibility. Now they’ll look to the companion airline first and ignore the opposite airways.
Ticket Gross sales and Interlining
We’re once more in “unprecedented” territory right here as Spirit says that DOT wants to think about whether or not “unprecedented promoting of each airways’ tickets on one another’s web site, coupled with an interline settlement, is successfully a codeshare.”
I’m making an attempt to know precisely why that is unprecedented. I assume it’s the concept each airways would promote the opposite airline’s flights on their very own web sites with no codeshare and with no connection on that airline. I imply, I can go on Alaska’s web site at present and purchase a flight solely marketed and operated by American. But when I am going to American’s web site, I consider it solely sells Alaska flights which are codeshares. I believe the concept right here is that Spirit needs to argue that that is successfully a codeshare with out the precise codeshare, so it’s unprecedented for an interline settlement.
Spirit ties this all collectively in the long run by saying that after that is in place, the hooks are in and it may’t simply be unwound. Why not? Keep in mind, United will probably be utilizing JetBlue’s Paisly for non-air gross sales whereas JetBlue will use United’s Kinective Media for seatback display screen promoting. As soon as these relationships are going, there are greater switching prices concerned in dismantling this factor.
So what do I make of all this? It looks like an uphill battle. I definitely don’t blame Spirit for making an attempt, as a result of it has nothing to lose. If the wheel is squeaky sufficient, perhaps it’ll get some slots grease. However I can’t think about this complete factor being shot down primarily based on these arguments. If there’s one factor that the choose’s ruling within the NEA case did, it outlined a transparent path on what sort of partnering can be problematic. This doesn’t appear to suit that mould.
