Is JetBlue positioning itself for the next big airline merger/acquistion? One airline analyst says yes, though I remain skeptical.
That analyst is Dan Reed, a Forbes contributor who has written about airlines the last 26 years. He makes the following argument:
Geraghty appears that she’s building a not-so-subtle case – one that she hopes at least some analysts and/or investors will buy into – that the idea that acquiring JetBlue would be good way for one of the Big Three carriers to protect its future profits.
Joanna Geraghty is JetBlue’s President and Chief Operating Office. Reed believes, based upon repeated comments from Geraghty, that JetBlue is making the case to one of the big three legacy airlines–American, Delta, and United–that they need to buy JetBlue to avoid even deeper lost profit.
Reed argues that JetBlue’s A321neos are not ideal for transatlantic transport and that JetBlue lacks “a large enough domestic route network to move sufficient numbers of U.S. passengers to Europe via JFK or to attract large numbers of Europeans bound for U.S. destinations beyond New York.”
I disagree on both points. JetBlue’s route network is indeed limited, but both Boston and New York are sufficiently well-connected to offer service to London. Furthermore, I think the concept of wide body aircraft being inherently superior is simply not the case. Jet Blue’s service and amenities more than make up for the lack of a second aisle.
In terms of mergers, the only viable JetBlue wedding I see would be with Alaska. Even that is far-fetched, but would create a unified airline with a strong east coast and west coast presence. That would be a merger of growth, not a merger to fend off competition. Even in the era of Trump I don’t think regulators would sign off on a JetBlue acquisition from American, Delta, or United.
CONCLUSION
JetBlue still has great potential to bring fare discipline to the transatlantic market. My prediction, at least for now, is that it will continue to got at it alone.
> Read More:
- JetBlue Strongly Hints At London Service, Citing “Obscene” Fares
- JetBlue-United Merger?
- Review: JetBlue A321 Mint New York To Los Angeles
image: JetBlue
First paragraph has a typo, second paragraph is missing the end of a sentence.
“I think the concept of wide body aircraft being inherently superior is simply not the case.”
Narrowbodies are great for point-to-point flying between secondary airports but the A320neo will have a hard time matching the seat costs of a 787 and that’s going to matter on routes that can fill a 787.
JetBlue isn’t going to successfully compete on JFK-LHR or JFK-CDG with a couple of neo frequencies. Boston departures would work better since competitors at least have fewer daily flights to major European capitals.
Hmmm,…..AA and DL are big at JFK…..maybe it’s time for United to get back into that airport.
Isn’t fare discipline a euphemism for keeping prices high?
On another front, even assuming this was correct, who would and could buy them? There’s already been far too much consolidation in the airline industry domestically. United has chosen to abandon JFK and returning would just hurt their Newark hub. American is likewise vacating JFK as much as possible in favor of Philadelphia, so they would be hurting themselves by buying JetBlue. Delta is the winner of the other two removing themselves from JFK, but it’s tough to picture any sane government allowing Delta to garner even more power there. Southwest could do it, but they prefer secondary airports where possible. I suppose Alaska might possibly do it, but that would be a big move for them.
If there is one thing I’ve learned since getting into aviation, it’s that avgeeks are perennially obsessed with predicting mergers and acquisitions amongst airlines. I don’t know what it is, but it’s a constant.
Gary is spot on here. A321 can’t compete on a TATL route against a 787. Further, as you said yourself, there is no sane way any government would allow a legacy carrier to purchase B6. JetBlue’s service and amenities matter when comparing Mint to business class by the other major carriers, but that is a small percentage of the total seats (although undoubtedly an outsized portion of the profits) They aren’t that far above the competition in the back half of the plane that they will be able to count on price sensitive customers picking them over the competition. TATL prices are at historically low prices and the pressures from the ULCC’s like Norwegian and WOW have caused the full service carriers to reduce prices to compete, I don’t believe there is room in the for B6’s model.
B6 and AS are natural partners and would truly make a 5th major US airline to compete with the legacy 3 and Southwest. There is no way either can afford one another any time soon though. Could IAG or Lufhtansa group purchase a 49% stake in one to infuse enough cash to purchase the other?
I agree with JoEllen. This would be the only viable way for UA to get back to JFK. Then hopefully we would see JFK-LAX/SFO/LHR/etc. I can dream, can’t I?!!
A slot’s a slot. And there’s an argument to be made for filling slots at “at capacity” airports such as LHR with widebody planes.
Strange considering it looked like JetBlue was going to buy Virgin America.
I very much doubt such a strongly performing Airline with a large market share and good profits would try and ‘sell’ itself eliminating its brand.
Brand identity is very strong for JetBlue and a merger would mean that image would be in danger. Look at what happened with Virgin America.
Considering JetBlue’s size and the only airlines that would be able to afford to buy the airline it would be unlikely to get regulatory approval.
Since American airlines can only have something like a 15% foreign ownership outside airline, groups who would want to purchase it are out of the question.
Would any of the big three want a domestic airline with its extra cost? Considering they all franchise many of their domestic routes likely costing thousands less each flight than having an in-house operation.
And Alaska doesn’t want Virgin America’s Airbus aircraft so wouldn’t want JetBlue’s.
Hard to take someone seriously when they can’t spell the company’s name correctly…
Great opportunity for United Airlines back to JFK.