JetBlue Airways CEO Robin Hayes on Monday criticized United, American and Delta airlines for opposing the three-largest Gulf carriers as they expand in the United States, calling the situation “…the perfect illustration of how we see mega-carriers trying to use their muscle and deep pockets to limit competition.”
“The Big 3 act like it’s the end of the world,” Hayes told the Aero Club of Washington, according to a transcript of his remarks. “Make no mistake, this battle is
not about the U.S. airline industry against airlines from the Middle East. We believe it’s three mega-U.S. airlines who favor protectionism over competition.”
Hayes’ remarks came during a broader speech in which he argued United, American, Delta, and Southwest airlines hold a “startling concentration of power” over the nation’s skies.
The four control about 80 percent of domestic market share — enough, Hayes said, to make it tough for JetBlue to expand into congested airports, such as Los Angeles and Atlanta. JetBlue is the sixth-largest U.S. airline, well behind the Big Four and slightly smaller than Alaska Airlines.
“It’s clearly a competitive landscape that is not hospitable to new models, new entrants, or smaller carriers,” Hayes said.
Open Skies Debate
The Open Skies debate is important for JetBlue, which supports the rights of Etihad Airways, Qatar Airways and Emirates to fly whatever U.S. routes they want. In part, that’s good business for JetBlue, since it makes significant revenue shuttling Emirates’ customers from New York and Boston to smaller U.S. cities.
But in his remarks, Hayes said he defends Open Skies agreements because they’re important to the U.S. economy. The same types of agreements that allow the Gulf carriers to fly into the United States would permit JetBlue to fly anywhere in Europe if it wanted to try transatlantic routes. JetBlue is deciding whether to add new jets capable of flying from the East Coast to Western Europe.
“There’s just been so much paranoia and so many myths flying about – frankly, it’s ridiculous,” Hayes said. We’re going to keep fighting, though, because if the Big 3 are
ultimately successful, not only will they have cut off a major flow of foreign tourists to the U.S., but they will have invited other nations to retaliate against the U.S., not only in the Middle East, but around the globe and around JetBlue’s growing international network.”
In a statement, the Partnership for Open & Fair Skies, a trade group funded by American, Delta and United, along with some employee unions, including one representing JetBlue pilots, said it continues to oppose Gulf carriers because they take what the group believes are illegal government subsidies. The Gulf airlines have denied the subsidies are illegal.
“Perhaps if JetBlue did not financially benefit from Emirates’ billions of dollars in illegal subsidies, it would acknowledge that fair trade requires that all parties abide by the rules of international trade agreements,” the trade group said.
Domestic issue, too
It’s not only Open Skies that concerns JetBlue.
Hayes said the largest four U.S. airlines increasingly act like bullies — especially in markets they control. In some cases, JetBlue cannot get gates at big airports.
“Carriers like JetBlue cannot grow as we wish in key markets due to the strength of the consolidated carriers and their tight reins on airport facilities,” he said.
Access has always been an issue for new entrants, but Hayes’ comments come as JetBlue has re-entered the Atlanta market at an airport controlled by Delta. JetBlue has found the market inhospitable.
In Atlanta, JetBlue has complained the airport has not helped it find the gates it needs to run an efficient operation for its current and future flights to New York, Boston, Orlando and Fort Lauderdale, according to reporting from the Atlanta Journal-Constitution. Early this year, the newspaper reported JetBlue wrote to the FAA saying, “it appears that actions have been taken behind the scenes, at this late hour, to try to restrict competition at ATL.”
In his speech, Hayes said the airline has not been pleased with its experience in Atlanta. “It’s hard to believe that at an airport with 193 gates, we were told we could only have one gate – and we have to share it,” he said.
Hayes also asked whether regulators should keep granting long-term antirust immunity to U.S. airlines, who use it to legally collude with international partners.
The biggest joint ventures are across the Atlantic, where United works with Lufthansa Group and Air Canada; American is tied to British Airways, Iberia and Finnair, and Delta partners with Virgin Atlantic and Air France-KLM. But others exist too, such as United’s tie-ups with Air New Zealand and Japan’s ANA, and Delta’s forthcoming joint venture with Korean Air Lines.
“When the Big 3, along with many of their international alliance partners, are granted immunity from U.S. antitrust laws, they are given a permission slip to do what otherwise would be illegal — collude and coordinate on pricing, scheduling and marketing decisions,” Hayes said. [It’s] all based on glorious-sounding promises of how delightful and inexpensive travel will be for consumers.”
Hayes said JetBlue does not oppose joint ventures, but asked the government to approve them for shorter periods, rather than indefinitely. Last year, the government finally changed its policy for one deal, approving a proposed Delta-Aeromexico joint venture for only five years.
Hayes said hoped the U.S. Department of Transportation will follow that short-term template in the future.