| From: Glenn Petersen | 4/30/2023 3:15:24 PM | | | | | | The Path to Abundant Air Travel
Removing regulatory restrictions and other constraints will result in more, cheaper and better options for air travelers
Gary D. Leff
Discourse
April 28, 2023
When it comes to air travel, we need more options. Image Credit: Moment
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More passengers fly within the United States each year than any other country. On many levels, this makes sense, given the size of the U.S. economy, the distances involved, and that aviation is an industry where the U.S. remains highly competitive, from the manufacture of aircraft to the making of jet engines. And supposedly, the industry is also a poster child for deregulation, culminating with 1978’s Airline Deregulation Act.
Yet while there are hundreds of brands of breakfast cereal, there is limited product differentiation from a limited number of U.S. airlines. Moreover, air travel isn’t becoming materially more reliable—the percentage of U.S. domestic on-time arrivals was no greater in 2022 than it was in 2002. We should have more options, and better performance. In short, we need air travel abundance.
The Problem
Contrary to the narrative that today’s airline industry is a deregulatory success story, commercial air travel remains one of the most highly regulated industries in the country. Effectively what changed after 1978 was that the federal government no longer told airlines where they’re allowed to fly, and how much they can charge. That’s no small deal. However, nearly every other element of the experience continues to be dictated—and even directly managed—by the government.
For example, unlike much of the world, such as in Europe and Australia, nearly every U.S. commercial airport is owned by a local government. What’s more, airport security isn’t just regulated to government standards; it’s also mostly carried out directly by the government through the Transportation Security Administration (TSA.) And from the time the plane pushes back from the gate to the time it arrives at its destination, it’s told exactly where to go by air traffic controllers, who are government employees.
Elsewhere in the world you’ll find nonprofit organizations conducting air traffic control, with better technology to direct planes more effectively and efficiently. You’ll also find private security services following government standards. In both cases, these arrangements have been shown to be best practices because the government isn’t simply regulating itself.
The U.S. government isn’t just overinvolved in important areas like air traffic control; it involves itself in mundane decisions as well, and in areas where it is clearly not needed. At the start of the pandemic, for example, when American Airlines wanted to hand out hand sanitizer to passengers, they had to seek buy-in from the Federal Aviation Administration (FAA). That involved both meetings with their local certificate office (there’s an office of the FAA just for regulating American Airlines) as well as higher-ups in Washington, D.C. You might think that makes sense—perhaps hand sanitizer is flammable—but the FAA had already studied the issue and found little risk.
The meetings were performative and completely unnecessary. But this kind of thing is very common; nearly every element of the customer’s air travel experience involves the government. This in turn can descend into farce. For instance, when airlines want to add doors to business class seats, they need to ask permission from the FAA because it requires an exemption to federal regulations. When American Airlines recently asked permission, the FAA refused to consider their submission—because the electronic letterhead the airline used in its request didn’t list its address.
This extensive and largely unnecessary regulation, layered on top of specific rules that limit entry into the market, constrains the availability of air travel. That means it’s less convenient and more expensive to travel—but even more than that, it means the products airlines offer us are much more limited.
So, what should we do? Here are a few simple suggestions that will lead to cheaper, better and more abundant air travel.
Legalize New Airlines
It’s nearly impossible to get approved for a new airline. That’s why new entrants usually buy up existing operating certificates from nearly defunct carriers.
For example, one of two significant airline startups to launch service during the pandemic was Avelo Airlines, founded by Andrew Levy, the former CFO of United Airlines and chief operating officer of Allegiant. But Levy didn’t just start a new airline, he took some of his financing and bought Xtra Airways, a shell of a carrier that had already sold off its fleet—save for one ancient Boeing 737-400, so it could retain its FAA Air Carrier Certification.
Even if you can start a new airline, you are limited in how much money you can take from foreign businesses and airlines. So long-established foreign carriers, like Air France and Japan Airlines, aren’t allowed to control U.S. carriers, or even operate flights within the U.S. As a result, the last major carrier to launch was Virgin America in 2007, since acquired by Alaska Airlines. And that startup was delayed by issues over whether it was really controlled by U.S. investors—or by Virgin Atlantic founder Richard Branson’s group in the U.K.
There hasn’t just been a failure to start new airlines. The number of airlines in the U.S. has shrunk markedly, declining by over 70% during the past 30 years as a result of mergers and bankruptcies. While the largest airlines today have significantly more reach than they did 20 years ago, and U.S. air travel has grown overall in the past two decades, small cities aren’t served by non-stop flights to nearly the same extent that they used to be. The share of airline trips under 500 miles has fallen in half, to just 14%, representing a loss of 30 million travelers. What’s more, many small cities have lost commercial service altogether.
Meanwhile, with ultra-low-cost carrier Spirit Airlines having entered into an agreement to be purchased by JetBlue, it would be great not to lose a low-fare competitor. So, we should welcome Ireland’s Ryanair, Britain’s easyJet or some other low-cost foreign carrier into the U.S. market. At the higher end, Singapore Airlines makes investments in foreign carriers. It would be great to see a prestige airline like Singapore or Emirates enter the U.S. market. The entrance of these and other low-cost and prestige airlines into the U.S. market would boost competition, which in turn would mean lower costs, better service and more options.
More Capacity
To grow airline capacity, we need to expand airports, move more aircraft through our airspace, and hire more people to fly the planes. Yet we don’t have the gates or runways to expand air travel. And, not surprisingly, the current limits favor incumbent airlines and the status quo, not innovation.
Airport construction is constrained by the same problems that plague so many other public infrastructure projects. Thanks to factors such as overregulation and NIMBYism it’s difficult to build a new airport (the last new major one built in the U.S. was Denver International—which opened in 1995) or even build a new runway. In the U.S. there are very few private commercial airports. Local governments could unlock over $130 billion privatizing the largest airports, but the path to do so is incredibly cumbersome.
The most congested U.S. airports, New York’s JFK and LaGuardia, and Washington’s Reagan National, have limits on the number of takeoffs and landings that are permitted. The government has given existing airlines “slots,” or takeoff and landing rights, and these are effectively subsidies for incumbent carriers that keep out competition. We should auction takeoff and landing slots, rather than granting property rights to airlines (that they can use or sell). Another idea is to use congestion pricing to allocate scarce resources to their greatest value use.
It can be difficult for airlines to enter a new market even without slot controls. Long-term gate leases and regulatory capture at government-controlled airports have allowed incumbent carriers to maintain their hold on major hubs.
Meanwhile, attempts to modernize air traffic control have floundered for 30 years. The FAA manages major projects badly, but the effort is also constrained by trying to make capital investments within annual congressional appropriations cycles, which stifles the kind of long-term spending plans that are needed for these types of projects. As a result, we still largely use radar rather than GPS and voice rather than digital communication, and we are only just now switching from paper flight strips (including changes to speed and altitude that are handwritten) to electronic data to manage traffic flow.
The private nonprofit NavCanada (which rolled out electronic flight strips way back in 2002!) oversees not just Canadian airspace but also the North Atlantic. It operates much more cost efficiently than the FAA. And they’re way ahead technologically as well. In contrast, having one agency that is both regulator and service provider (self-regulation, but by government) was identified as a poor practice by the International Civil Aviation Organization, all the way back in 2001. The U.S. is one of just a few countries out of compliance with arms-length safety guidelines.
Spinning off air traffic control into a private entity would be better for accountability and allow for more targeted and consistent investment. Meanwhile the FAA’s Office of Inspector General has found that attempts to modernize air traffic control within the agency have wasted billions of dollars. And things aren’t likely to get better because FAA management and procurement problems are endemic.
More Pilots
It’s all well and good to remove barriers to starting an airline and to create more airport capacity, but there aren’t enough pilots because the government has instituted rules making it more difficult, time-consuming and costly to become a pilot—rules that have nothing to do with safety.
Up until 2013, pilots had to have a commercial license, which required 250 hours of flying, in addition to being type-rated for the specific aircraft they were flying. Following the 2009 Colgan Air crash, the requirement was increased for most candidates to 1,500 hours even though the two pilots involved in that crash already had over 1,500 hours. (The captain of the downed plane had 3,379 hours.)
Not everyone needs 1,500 hours. Military pilots are allowed to fly with 750 hours, those with a B.A. in aviation can fly with 1,000 hours, and those with an associate degree in aviation can fly with 1,250 hours. But even these requirements are onerous and unnecessary—certainly for a co-pilot.
Except for the hours of flight time, on top of a commercial license, pilots don’t have specific objectives or proficiency requirements. It’s just a time requirement. What’s more, there is absolutely no relationship between safety and the 1,500-hour rule—a rule that no other nation has adopted. And, of course, the U.S. allows pilots from nations without such a rule to fly here and depart from U.S. airports. There could be better training and testing with more structured flying instruction that’s easier, more meaningful and less expensive to accomplish. The only thing the 1,500-hour rule does is serve union interests by limiting entry into the profession.
Development of New Aircraft
We should ensure that new aircraft are safe—but we shouldn’t unnecessarily delay new technology in the name of safety. New aircraft in recent decades haven’t become substantially more advanced. Indeed, Boeing’s latest narrowbody, the 737 MAX, was designed to be as close as possible to earlier 737 models. And while materials and electronics have become more complicated, fundamental propulsion technology has remained the same. That could be about to change—if we don’t stifle innovation.
United, along with Mesa Airlines, ordered 200 small electric planes from Archer Aviation. These vertical takeoff and landing planes (eVTOLs), flying up to 150 mph for up to 60 miles, aim to whisk passengers from urban downtowns to United’s hubs in the next couple years. The estimated cost for the flight from Manhattan to JFK airport, for example, would be about $50.
American Airlines has pre-ordered 250 similar aircraft from Vertical Aerospace and taken options on 100 more planes that promise to “carry four passengers and a pilot and fly at speeds up to 200 mph over a range of over 100 miles.” These eVTOLs could be operational “as early as 2024,” according to the company. In reality, however, electric-powered planes may be further off than hoped for due to FAA regulatory hurdles.
As transportation researcher Bob Poole explains, the FAA has unnecessarily complicated the airplane certification process for these new types of planes: “[J]ust about everyone in the emerging eVTOL industry assumed that type certificates [which certify an airplane’s safety and airworthiness] were to be handled under… the same regulation used to certify conventional commercial airliners. FAA would have attached special conditions to the… regs to account for the ability of eVTOLs to take off and land vertically. Instead, FAA has decided to define these new aircraft as “powered lift” vehicles to be certified under… special class rules.” Since those don’t exist for aircraft like this, the government needs to create a set of rules before flight can be allowed.
In contrast, a more conventional regulatory process will be used in Europe, which means, in essence, that the U.S. is saying European safety regulators can’t be trusted (an odd thing after various Boeing debacles), and that manufacturers will have to pursue two completely distinct processes.
A Future Where Airlines Innovate
Today we see some startup airlines trying to find workarounds for rules that have limited innovation. For instance, JSX is an air carrier that operates regional jets with just 30 seats and flies in and out of private airports, allowing passengers to skip busy commercial airports and TSA checkpoints. More than one executive at a major airline has told me that as JSX grows and becomes more of a competitive threat to expect lobbying of Congress and the FAA to disallow their business model. The bulk of JSX flights occur between cities less than 500 miles apart, which have otherwise seen a significant decline in service.
If we allow the creation of more new airlines, if we allow foreign investment and expertise into the domestic airline business, and if we relax the restrictions that keep airports and airspace congested and create a scarcity of trained pilots, we’ll have more abundant and better air travel. Ultimately it’s about eliminating the artificial constraints to efficiency and new competition.
We can have a future where travel is an easier, cheaper and more pleasant experience—where we’re delayed less often and where commercial airlines genuinely compete with a host of different products so we can buy the one that suits us best instead of one size fits all. But to have this kind of abundance, we need a more open and competitive system that focuses on passengers and their needs rather than existing airlines and other special interests.
The Path to Abundant Air Travel - Discourse (discoursemagazine.com) |
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| From: Sam | 5/4/2023 8:03:10 AM | | | | | | Delta's pilot deal turns up the heat on rival airlines' union negotiations
Reuters May 04, 2023 06:00:00 AM ET
May 4 (Reuters) - Delta Air Lines' industry-changing pilot contract that offers $7 billion in higher pay and benefits is putting pressure on rival carriers to hand out similar deals ahead of a busy summer travel season.
Any proposal that falls short of Delta's deal will likely have no takers among the unions, but airline executives say even matching that contract could balloon operating costs at a time when a worsening economy has clouded travel outlook. The Delta deal, working conditions and other topics will be discussed at a global conference of pilots in Montreal through Sunday.
"Delta is out there as a marker," American Airlines CFO Devon May told Reuters. "That's what we are looking towards as we are working with our pilots union to get a deal done."
The Fort Worth, Texas-based carrier has estimated that matching Delta's offer will cost it about $8 billion over four years. American Airlines, United Airlines and Southwest Airlines are all in the middle of contract negotiations with their pilots.
Southwest and United have not quantified the potential impact publicly, but both expect a marked increase in non-fuel operating costs.
Jason Ambrosi, head of the Air Line Pilots Association (ALPA) and an architect of Delta's deal, told Reuters the big increases in pay rates and benefits will not break airlines. They serve as a way for pilots to make up for concessions made during earlier crises like after Sept. 11, he said.
"Guess what? That's what pilots are worth," Ambrosi said. "I'm not going to make any excuses for why we got the deal we got."
But some industry officials say hefty raises for pilots will likely spark demands for similar deals from flight attendants and other workers, potentially resulting in millions of dollars in additional costs.
Delta, whose earnings have recovered from pandemic lows faster than rivals, has to deal with just one major union. Its flight attendants are not unionized. But American, United and Southwest have unions with multiple worker groups.
Delta's deal has put competitors in a bind.
One Southwest official, who asked not to be identified discussing labor talks, said the company is "realistic" about the situation and any deal less than Delta's would likely be voted down.
Airlines have leaned on higher ticket prices amid strong travel demand to mitigate cost pressures, but consumer spending is at risk.
MARKET SHIFT
Industry executives say Delta's agreement has shifted the market. The carrier's pilot union said it made no concessions in the deal, which included dozens of work-rule improvements and quality-of-life related items.
In an update to its members this week, United's pilot union said it is seeking similar improvements.
Dennis Tajer, a spokesman for American's pilots union, said while pilots are not ready to sacrifice market-linked compensation, work-life balance and scheduling certainty have become a far bigger priority.
"The new currency for our pilots, regardless of age, is quality of life," he said. "Delta came in and changed what pilots believed was possible."
American pilots have voted to authorize a strike if a new employment contract isn't reached. Southwest pilots are voting for a similar measure and United pilots are picketing.
While pilots cannot walk off the job until the National Mediation Board grants them permission, union officials warn further delays will make it harder to attract and retain talent and that impacts airlines' flight schedules.
United executives declined to provide a timeline for the pilot deal. They said the airline has the pilots it needs to fly its summer schedule.
American has said it has as much as 50 underused mainline jets and about 150 regional aircraft grounded because of a shortage of pilots.
Tajer, the union rep for American's pilots, said while the company is not facing a problem in attracting pilots, it is hard pressed for enough instructors to train them. A deal will increase the population of instructor pilots, he added.
Southwest, too, has a surplus of under-utilized aircraft. Casey Murray, head of the Dallas-based airline's pilot union, said it has lost more pilots in the first four months of this year than it did in all of 2022.
ALPA's Ambrosi said any gains at larger airlines will also be felt at mid-sized players like JetBlue, Spirit , and Frontier, which will have to pay competitive wage to retain pilots or else will have an "attrition issue."
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| From: Sam | 5/11/2023 10:50:26 PM | | | | | | United Airlines pilots want higher pay rates than Delta, says union head
Reuters May 11, 2023 02:53:00 PM ET
CHICAGO (Reuters) - United Airlines will need to offer higher pay rates than what rival Delta Air Lines gave to its pilots under a new contract, its pilot union head Garth Thompson said. |
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| From: Sam | 5/11/2023 10:52:02 PM | | | | | | Southwest pilots vote to authorize strike
Reuters May 11, 2023 03:03:00 PM ET
(Reuters) - Southwest Airlines Co pilots' union said on Thursday its members had approved a strike mandate by an overwhelming majority ahead of the busy summer travel season.
The Southwest Airlines Pilots Association (SWAPA), which represents 10,000 pilots of the Dallas-based carrier, said 98% of its members participated in the vote and 99% voted in favor of authorizing a strike.
Southwest said the vote result will not impact its operations: "We are staffed and prepared to welcome travelers for their summer travel plans."
Southwest has been under regulatory scrutiny since a staffing crisis due to bad weather during the Christmas holidays overwhelmed its crew scheduling software, disrupting travel plans for 2 million customers.
"Pilots (have) already made their voices heard about the operational disasters and the lack of progress after three-plus years of stagnant negotiations," SWAPA said.
Earlier this month, pilots of American Airlines Group also approved a strike mandate.
(Reporting by Aishwarya Nair in Bengaluru; Editing by Vinay Dwivedi)
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| To: Sam who wrote (1802) | 5/12/2023 12:11:35 AM | | From: Sam | | | | More on LUV, from WSJ--
Southwest Pilots Vote to Authorize a Strike -- WSJ
Dow Jones Newswires May 11, 2023 04:25:00 PM ET
Pilots at Southwest Airlines voted to authorize a potential strike, seeking to ramp up pressure in yearslong contract negotiations with the company.
The Southwest Airlines Pilots Association said it released the results of the referendum early after votes came in more quickly and decisively than it expected, with 98% of pilots participating and 99% voting to authorize a potential strike.
Still, the vote doesn't mean pilots are likely to walk out in the near future, as federal law makes it difficult for airline unions to go on strike.
Southwest said the vote would have no impact on its scheduled operations. The union said Thursday that the results of the vote would empower it to seek to be released from mediated talks in order to strike.
Pilots at three major airlines are in the midst of negotiating new labor deals. Such talks often become heated, but an industrywide shortage of pilots that emerged after carriers encouraged thousands to retire during the Covid-19 pandemic has changed the typical dynamics. Pilots' unions have had more leverage to push for increased pay as well as changes in scheduling practices that they say will improve their quality of life.
Southwest and its pilots have been in negotiations for over three years as the pilots have pushed for a major overhaul of the company's scheduling practices. The union has emerged as one of the airline's sharpest critics in the wake of its operational meltdown at the end of last year, arguing that the disruption is evidence of deeper problems within the company.
"The lack of leadership and the unwillingness to address the failures of our organization have led us to this point," said Capt. Casey Murray, the union's president.
Adam Carlisle, Southwest's vice president of labor relations, said the vote wouldn't change the airline's commitment to the negotiating process. "Our negotiating team continues to bargain in good faith and work toward reaching a new agreement to reward our pilots," he said.
Such votes have been a common tactic in airline negotiations, though actual walk-offs have been rare in the U.S. American Airlines Group pilots also voted overwhelmingly in favor of a similar strike authorization earlier this month, though the airline has said the two sides are making progress toward a deal.
Pilots at Delta Air Lines also voted to authorize a strike last year before eventually reaching a deal that set a new high-water mark for pilot pay and included raises of at least 34% over its four-year term.
The law that governs U.S. airline labor contracts requires that both sides exhaust all efforts to resolve their disputes before workers can strike. The National Mediation Board, which is already overseeing the negotiations between Southwest and its pilots, would have to agree that talks had reached an impasse and offer the sides a chance to arbitrate before releasing them into a 30-day "cooling off" period. The president and Congress could also then intervene.
Write to Alison Sider at alison.sider@wsj.com
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| From: Sam | 5/17/2023 12:27:54 PM | | | | | | Pilots are getting feisty everywhere.
CORRECTED-FedEx Express pilots vote in support of strike - ALPA union
Reuters May 17, 2023 12:23:00 PM ET
(Corrects paragraph 2 to says over 97%, not 99%, took part in the vote and that 99% of them, not 97%, authorized a strike)
May 17 (Reuters) - Pilots of FedEx Express, a unit of FedEx Corp, have voted "overwhelmingly" in support of a strike, the Air Line Pilots Association (ALPA) said on Wednesday.
From over 97% of members who participated in the vote, 99% authorized union leaders to call a strike, if needed, to achieve a new contractual agreement with the delivery firm.
FedEx pilots are currently working under contractual provisions and benefits arrived at in 2015, and negotiations for a new agreement had begun in 2021.
"The ball is in the management's court, and it's time for the company to get serious at the bargaining table and invest in our pilots," said Chris Norman, chair of the FedEx ALPA master executive council.
FedEx did not immediately respond to a Reuters request for comment.
Its shares erased gains to trade roughly flat after the announcement.
Pilots are pushing for better contracts at airlines and parcel firms amid a shortage of aviators. Earlier this month, Southwest Airlines Co's pilots union said its members had approved a strike mandate by an overwhelming majority ahead of the busy summer travel season.
Under U.S. law, pilots cannot walk off the job until the National Mediation Board grants them permission.
The board must first decide that additional mediation efforts would not be productive and offer the parties an opportunity to arbitrate. If either side declines, both parties enter a 30-day "cooling off" period, after which pilots and management can engage in self-help - a strike by the union or a lockout by management.
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| From: Sam | 5/19/2023 10:07:05 AM | | | | | | American Airlines pilot reach an agreement on new contract
Reuters May 19, 2023 09:56:00 AM ET
CHICAGO, May 19 (Reuters) - Pilots at American Airlines have reached an agreement in principle on a new contract, their union said on Friday. |
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| From: Sam | 5/19/2023 5:13:26 PM | | | | | | | Judge Rejects Partnership Between American Airlines and JetBlue -- Update | |
Dow Jones Newswires May 19, 2023 04:41:00 PM ET
A federal judge ruled in favor of the Justice Department's effort to unwind a partnership between American Airlines and JetBlue, finding that their arrangement suppressed competition in key northeast markets.
American and JetBlue formed their Northeast Alliance in 2020, agreeing to work together across three New York-area airports and Boston. The Justice Department, along with six states and the District of Columbia, in 2021 filed an antitrust suit seeking to unwind the alliance, alleging it has eroded competition and will push up airfares for fliers. A trial was held in federal court in Boston last year.
U.S. District Judge Leo Sorokin on Friday ruled against the companies, finding that the arrangement transformed once fierce rivals into collaborators. He barred the airlines from continuing the partnership.
The partnership "has eliminated the once vigorous competition between two of the four largest domestic carriers in the northeast, replacing it with broad cooperation in pursuit of the shared interests of their partnership," the judge wrote.
The court ruling is a boost to the Biden administration's more aggressive approach to antitrust enforcement, which has suffered a series of setbacks in other recent cases.
JetBlue and American had argued that they needed to join forces to effectively challenge rivals in New York and Boston. Sorokin said the argument was unconvincing.
Neither airline responded to requests for comment. The Justice Department didn't immediately respond to a request for comment.
Write to Alison Sider at alison.sider@wsj.com |
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| To: Sam who wrote (1806) | 5/19/2023 6:05:30 PM | | From: Sam | | | | More details on the AAL and JBLU rejection.
| American and JetBlue must end alliance, US judge rules | |
Reuters May 19, 2023 05:57:00 PM ET
WASHINGTON, May 19 (Reuters) - American Airlines Group must end its alliance with JetBlue Airways Corp , a federal judge ruled on Friday, agreeing with the U.S. Justice Department that the arrangement means higher prices for consumers and ordering the companies to part ways within 30 days.
The decision represented a victory for President Joe Biden's administration, which has taken a hard line on consolidation and tie-ups in the aviation industry. The Justice Department, six states and the District of Columbia sued in 2021 to unwind the deal announced in 2020, calling the "Northeast Alliance" a "de facto merger" of the American and JetBlue Boston and New York operations that removes incentives for them to compete.
In his ruling, U.S. District Judge Leo Sorokin said the partnership "substantially diminishes competition in the domestic market for air travel."
"These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation," the judge wrote.
American is the largest U.S. airline by fleet size and low-cost carrier JetBlue is the sixth-largest. The airlines use the alliance to coordinate flights and pool revenue.
JetBlue shares fell 1.8% for the day, while American closed down 1.5%.
Both airlines said after the ruling they were evaluating their next steps.
JetBlue said it was disappointed with the decision and that the "Northeast Alliance has been a huge win for customers" by extending the airline's low fares "to more routes than would have been possible otherwise."
American said, "The court's legal analysis is plainly incorrect and unprecedented for a joint venture." It added that the alliance "has been a huge win for customers and anything but anticompetitive."
The Justice Department did not immediately respond to a request for comment.
The JetBlue-American partnership was approved by the U.S. Transportation Department shortly before the end of former President Donald Trump's administration.
The Justice Department in the lawsuit said that the alliance would put nearly $700 million in extra annual costs on consumers and gives the airlines more than 80% of market share in flights from Boston to Washington and six other airports including the New York area's JFK, LaGuardia and Newark.
Lawyers for JetBlue and American have said the alliance has not raised air fares or resulted in fewer flights, has expanded flights and made the two airlines more competitive with Delta Air Lines and United Airlines on U.S. northeast routes.
Sorokin said the alliance's "effects resemble those of a merger of the parties' operations within the northeast" and that "American and JetBlue no longer compete with one another within the scope" of the partnership. The judge gave the airlines 30 days to end the alliance.
Separately, the Justice Department, joined by four states, filed a suit in March aimed at stopping JetBlue from buying discount rival Spirit Airlines, saying the planned $3.8 billion merger "will lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes." The suit is set for trial in October.
TD Cowen analyst Helane Becker said she believes the American JetBlue ruling "has negative implications for the JetBlue/Spirit merger."
Airline mergers in recent years have led to a highly consolidated industry in which American, Delta, United and Southwest Airlines control 80% of domestic travel, the department said.
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| From: Sam | 6/27/2023 3:25:13 PM | | | | | |
| | Trending: Delta Expects to Meet High End of 2023 Adj EPS View |
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| Dow Jones Newswires June 27, 2023 03:09:00 PM ET
15:09 ET -- Delta Air Lines is one of the most mentioned companies in the U.S. across all news items in the last 12 hours, according to Factiva data. Shares were higher 6% to $45.89 after Delta said it expects to reach the high end of 2023 adjusted earnings guidance of $5 to $6 a share. The airline said a "constructive industry backdrop" includes pent- up travel demand that hasn't been satisfied yet. Delta raised its 2023 free cash flow projection to $3 billion from $2 billion. Dow Jones & Co. owns Factiva. ( josh.beckerman@wsj.com )
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