Newark Crisis And JetBlue Deal Boost United Airlines In New York

In the New York area, United Airlines has turned a crisis into a benefit at Newark and, taking advantage of American’s misfortune, has aligned with JetBlue at Kennedy.

It’s far too much to say that United has become New York’s airline. United has little presence at La Guardia and, for now, none at Kennedy. Nevertheless, United CEO Scott Kirby took a New York victory lap on Thursday, extolling the improved slot control at Newark and the increased presence at Kennedy.

Kirby appeared on CNBC in the morning. In the afternoon, he spoke at an investor conference and a Wall Street Journal conference. United announced a deal with JetBlue on Thursday.

Last week, the Federal Aviation Administration said it would limit Newark flight operations to 56 hourly, rising to 68 hourly on June 15, when runway construction is complete. The unregulated total had been in the 80s during peak departure times.

The Newark crisis reflected a breakdown in air traffic control, ongoing runway construction and a chronic shortage of air traffic controllers. More broadly, it reflected decades of congested air space and frequent weather issues.

The crisis enabled Kirby to emerge as the face of the airline industry in the country’s largest media market. United took a magnanimous approach to Newark flight limitations, taking the lead in reducing flights.

Reliability at Newark benefits everyone, of course, but it most benefits the hub carrier. Kirby has called Newark “a crown jewel,” noting Thursday that “The United hub there has more international flights gateway to Europe than any other hub in the United States. It’s great. It’s great for customers. It’s great for the country.”

Newark congestion is not a recent problem. The airport “shares airspace with Kennedy and La Guardia and also Teterboro and even facilities like Islip and Westchester and just 90 miles to the south is Philadelphia, more crowded airspace,” said veteran travel writer Joe Brancatelli. “So as Newark grew, first with People Express, then Continental and now United, the skies continued to grow more and more crowded. It wasn’t too bad when all three of the key airports were slot-controlled.” But slot controls were lifted at Newark in 2016.

Weather is also a bigger problem for Newark than for Kennedy. The airport often gets storms before they pass over water, while Kennedy get them afterwards. Also, Brancatelli said, “Two of Newark’s three runways are oriented southwest to northeast. But the winds are often blowing west to northwest. That plays havoc with landings. Even on crystal-clear days, Newark can have substantial delays just because of the wind.”

As for Kennedy, the deal with JetBlue includes reciprocal frequent flyer benefits and, starting as early as 2027, United gets access to slots for up to seven daily round-trip flights a day. The arrangement, called “Blue Sky,” also means that United join a JetBlue program that markets hotels, rental cars and other travel accoutrements.

In July 2020 American and JetBlue announced a strategic alliance that came to be known as “the Northeast Alliance.” It ended due to a federal judge’s ruling that it violated anti-trust protections. This year the American/JetBlue relationship became so troubled that American sued JetBlue.

The Northeast Alliance enhanced competition in New York among the three major airlines. Blue Sky seems to reduce American s potential. “We are interested to see how the competitive dynamic shifts in the New York and Boston markets as a result of this relationship,” said Cowen analyst Tom Fitzgerald, in a report issued Thursday. “We view this as negative for both Delta and American, but more so the latter given it was already challenged in the Northeast corridor and this was the last inorganic option.”

Dennis Tajer, spokesman for Allied Pilots Association, which represents American pilots, said that in New York, where it was once the number one airline, “American took its eye off the ball.”

Tajer noted that American CEO Robert Isom, speaking at a 2019 investor conference, referred to New York as “a boutique-type operation for us in which we run it to serve the corporate clients and high yielding customers that demand access to New York,” especially on the profitable JFK-London Heathrow route. The problem for American, Tajer said, is that New York has become a “bodega-type” operation, providing limited options to a small group of customers.

Kirby “wants a major presence in the New York area and he’s constructing it with this announcement,” Tajer said. “Where it goes is anybody’s guess: we all know they are dating, but we are waiting to see if they will move in together.”

At LaGuardia, Delta is the number one carrier with 43% of year-to-date passengers through March, according to airport statistics. American is second with 24%: Southwest third with 9%: Spirit fourth with 7.7% and United fifth with 7.4%. (At JFK, Delta has 30%: JetBlue has 24%, American has 12%, while Avianca ranks fourth with 2%.)

Looking at National Hockey League sponsorships, United has the New Jersey Devils; JetBlue has the New York Islanders, who play on Long Island and Delta has the New York Rangers, who play in Manhattan.

Perhaps hockey provides the best measure of the regional realities of the New York market.