Aviation Industry Updates: Feb 27, 2024

JetBlue, Spirit Urge US Appeals Court To Allow Merger To Go Forward

KEY POINTS:

• The airlines in a brief told the Boston-based 1st U.S. Circuit Court of Appeals that the judge wrongly barred their merger despite recognizing it would "improve competition, and thus reduce prices, for the vast majority of consumers."
• The airlines said the rationale driving the deal was by buying Spirit, JetBlue would roughly double in size and become a viable challenger to the four carriers that dominate U.S. airline travel.
• Yet they said that U.S. District Judge William Young on Jan. 16 nonetheless held that the deal violated federal antitrust law after he "improperly chose to elevate the interest of a small set of hypothetical consumers over the interest of everyone else."
• Young, who presided over a non-jury trial, concluded the deal would harm consumers by eliminating no-frills Spirit's low fares and its ability to put pressure on other higher-priced airlines.
• The Justice Department is slated to respond to the airlines' appeal on April. 11. The court plans to hear arguments in June, ahead of the July 24 deadline the companies' merger agreement set out to close the deal.

Why Is Frontier Airlines Targeting Big Cities In Its Shifting Network Strategy?

KEY POINTS:

• Frontier Airlines is switching up its network strategy in a big way. The carrier, which has traditionally preferred routes from smaller, low-cost airports to high-density leisure destinations, has announced many new routes that have demonstrated a shift towards trunk routes between expensive, busy airports. Following a $32 million net loss in the third quarter of 2023, it is unsurprising to see a novel strategy deployed by the airline.
• On 14 December, Frontier introduced a telling collection of routes, indicating an increased interest in entering large, high-volume markets between established markets. Industry experts have begun to question whether or not the move can be deemed an attempt to compete against ultra-low-cost competitor Spirit Airlines.
• Others, conversely, have hypothesized that the airline's strategic adjustment is targeted at legacy carriers like United, Delta, and American, seeking to capture demand by undercutting these players on price. In this article, we will examine Frontier's latest network expansion moves and attempt to discern the motives behind this change.

Simple Flying

United To Lean More On MAX 9 And Airbus A321 Amid Boeing Delays

KEY POINTS:

• While United has not cancelled the order, the airline has removed them from its internal plans. That has raised questions about the carrier's ability to grow domestic capacity by almost 30% by 2026 under its "United Next" plan.
• At Citi's industrial conference, Leskinen said the airline would not be able to grow as fast without MAX 10.
• "What you're going to see now is much more MAX 9 and 321 aircraft," he said. "The mix of which I don't know yet. It depends on the prices."
• Reuters last month reported that United had approached rival Airbus about buying more A321neo jets as possible alternatives to its MAX 10 order.
• Leskinen said United is "deeply disappointed" with Boeing due to aircraft delivery delays. The Chicago-based airline has options to mix some additional Airbus product into its "Boeing heavy fleet" and extend the life of some planes that are ready to retire, he said.

Reuters

Delta Seeks Reversal of US Plan to Scrap Airline's Aeromexico Partnership

KEY POINTS:

• The U.S. Transportation Department (USDOT) said last month it had tentatively decided not to renew Delta's antitrust immunity agreement covering its partnership at Aeromexico partnership, citing the Mexican government decision to make sweeping changes at the country's main capital airport.
• Delta said in a filing with USDOT that if the seven-year partnership is unwound, "nearly two dozen routes between the United States and Mexico would be at risk of cancellation," and at least 10 other routes could see smaller airplanes and fewer seats.
• Delta said fares would increase and "$800 million in annual consumer benefits would evaporate. A substantial number of jobs would be lost on both sides of the border." The airline estimated 1.8 million roundtrip seats on transborder flights representing of the 4% total are at risk if the partnership is unwound.

Reuters

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