JetBlue Can't Win.
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- Опубликовано: 3 май 2024
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Chapters:
Intro - 0:00
PIA - 0:56
The JetBlue / Spirit Deal - 2:14
JetBlue's Conundrum - 2:45
PanAm's Downfall - 4:41
JetBlue and PanAm Parallels - 6:47
One Last Problem - 8:05
The DOJ's Decision - 9:26
Outro: 10:28
________________________________________________________________________
Late last year, JetBlue rocked the aviation world. The carrier announced it buying Spirit Airlines for nearly $4 billion. The deal was designed to inject new life into JetBlue, and help it regain prominence after years of declining market share. But just a few weeks ago, those hopes were dashed. The DOJ announced it would block the deal, which seemed like a major loss for the carrier. But in reality, it’s a blessing in disguise. If you take a closer look, JetBlue’s takeover of Spirit is eerily similar to PanAm’s acquisition of National Airlines - a deal that ended up sinking the famed carrier. And had the Spirit deal progressed, JetBlue may have suffered a similar fate. Let me explain… 
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I should note - as some people have pointed out - the deal with Spirit and JetBlue isn't 100% dead yet. The DOJ is suing to stop it, but there's no guarantee they win that lawsuit. If they don't, the deal will be allowed to proceed and JetBlue will merge with Spirit. However, considering the Biden DOJ’s aggressive stance towards antitrust - and the clear issues with airline consolidation in recent years - I believe this will be a difficult case for JetBlue to win.
This video was aimed more at drawing parallels between JetBlue and PanAm and less about the specifics of the DOJ suit. Let me know if you folks would like me to do a more in-depth look into what that process looks like and I'd be happy to!
Yup JetBlue Airways and Spirit Airlines Merger stopped by The DOJ is good move for them.
@@cobyexplanes jetBlue will probably be dead, but hopefully not in my lifetime
As a Denverite, I have flown Spirit and Frontier out of Denver International. Back in the mid-teens, Spirit had a much more prolific schedule out of DIA than it does now, which is meager by comparison. During that same time, Frontier grew beyond its regional roots in a much more significant national way.
I’m curious how one would find out the overlapping and competitive nature between Spirit and Frontier to understand what the cost to consumers actually would be. I just flew from PHX & noticed several gates were shared among these three carriers, with none having a major presence there. With analysis, perhaps the people & customers could be convinced to support a merger between two of the three that actually could work to our benefit.
A little confused here.
Just because the DOJ rejected Jetblue's offer to purchase Spirit doesn't mean its over. Every airline merger has been initially rejected by the DOJ. It will now go to court, they may have to give up some concessions to get the deal approved.
Spirit shareholders weren't rejecting Jetblue's advances, it was Spirit's board of directors rejecting it.
While I do agree that if the merger is successful, it will leave frontier with no reason to keep ticket prices so low initially. It will eventually give Avelo, Sun country, Breeze, and Allegiant a opportunity to expand. At the same time a merge of Jetblue and Spirit will help in contesting ticket prices against the legacies.
Exactly. This is far from over.
How will it help contest prices? Spirt has a very lucrative network of routes. Taking a budget Carrier away from routes such as NYC to Miami, Las Vegas to LAX etc will increase prices in the long run due to less competition.
It would go through smoothly if the big guy got his 10 percent 😁
This is a good call out - I wasn’t clear enough that this isn’t the end of the deal. Perhaps I spent too much time focusing on the parallels between JetBlue and PanAm.
What happens next is that both sides will fight it out in court. But considering the Biden DOJ’s aggressive stance towards antitrust - and the clear problems with airline consolidation in recent years - it’ll be quite difficult for JetBlue to win.
Just because the DOJ objects to it doesn’t mean that it’s a done deal. This is far from over and will be settled in the court and Jet Blue and spirit will merge do some research before you post this crap.
i honestly think jetblue can recover
I surely hope they do
@@_nivlaCsame
Recover from what? Contrary to what Coby claims at the beginning of this video, JetBlue has been consistently adding planes, pilots, and destinations, year after year, and carrying more passengers almost every year since it started operating. It doesn't have anything to "recover" from - its strong earnings numbers are why it was in a position to absorb a smaller airline.
There certainly are similarities between the Pan Am/ National and JetBlue/ Spirit mergers. But it’s a big oversimplification to draw any conclusions from that…
Yup. JetBlue and Spirit are 2 national Carriers almost identical fleet types. There is a pilot and plane shortage that this merger greatly circumvents. Their are more differences than similarities to me between these mergers.
@@jacobspringsteen457 Not to mention that was 40 years ago and the industry is now entirely different as well as the business models.
Honestly the Pan Am/National and VA/Alaska mergers have more parallels...like the fact that Alaska is already selling assets less than a decade after the merger
@@punyhunk8686 Not at all. Alaska hasn't been "selling assets". They are making fleet replacements they always planned to as the leases expire and new aircraft come in. It's actually been a very successful and well implement acquisition for Alaska. It was always about beefing up their presence at SFO/LAX which it accomplished.
Pan Am acquired National just before airline deregulation, specifically for their domestic routes, which the CAB had consistently denied them as Coby explains. Had they waited a very short while, they could have grown their own domestic route structure that actually fed into their existing, huge international flight network. National’s pilots were likened to crop dusters while Pan Am’s were the envy of the entire airline industry so the flight crews didn’t mesh. The fleets didn’t match up, and the overall cultures and services offered by the 2 companies were 180° apart from each other. I lived through that mess so I remember it well.
The network “incompatibility” you highlighted is a feature of the merger, not a bug. JetBlue wants to serve the middle of the country in a way that they’ve never been able to, and which would be difficult to grow organically at this point. Not all of Spirit’s routes would remain viable under a merged cost structure, but many would, and it would give them a foothold in the midsection of the country that they could then adapt.
JetBlue is after Spirit for their route network. Spirit has some big operations at LAX, ATL, and Vegas which are some of the largest airports in the US, as well as Spirits big Caribbean/South America network. That is most likely what they're after. Virgin America would have maybe worked in the short term, but their routes were very consolidated to solely WC-EC traffic and not much else in between, much like Alaska.
And they are also after their airplanes.....
I was on a flight right after the United Continental Merger was completed. I heard the flight attendants talking and comparing notes on how they choose their assignments. I don’t know the specifics, but it seemed like a lot of them lost their seniority, and were not happy with the routes they were being assigned too.
I was on a PSA flight, and was talking to the flight attendant about how much we both liked US Air better. This can’t be over, the time to stop mergers was TWA/American, the time to stop mergers was Northwest/Delta, Continental/United, US Air/American. National service is much worse with some airports formerly being served by four airlines, being served by one, maybe two.
Still got my continental blanket from ua74
While doing EWR-HAM in nov 11'
Poor babies complaining. That's what happens when it's all based on a seniority system for bidding. Their unions chose the system so that's what happens. The more interesting contrast is what happened in the AA acquisition of TWA assets (wasn't really a merger) vs what happened when DL did the same with buying PA's transatlantic operations. The AA FA union voted to deny former TWA employees any seniority. So they got stapled to the bottom of any seniority list so the first to go when the downturn to hit, let alone getting the routes they wanted. DL, on the other hand being non union didn't have abide by the union rules and made a corporate decision to give former PA employees across the board their seniority so were usually senior to DL employees. Applied at both crew ranks and at corporate employees.
Remember now United employees retirement got gutted while Continentals retirement remained intact and also medical benefits for United were lost so not everything is is what it seems
@@skylineXpert why do people think you can take those blankets with you?
I like JetBlues perks and spacious cabins. It really does make a difference on cross country flights.
The Jet Blue Airbus a320 as originally configured was fantastic. 150 seats with a minimum pitch of 34". I was comfortable in one of their standard legroom seats on a trans continental flight. I'm pretty tall too, 6' 2". Jet Blue is now in the process of stuffing a dozen more seats in every a320 they have. I'm looking forward to riding in one of their new a220 s when they arrive.
Spacious????
@@CMH3376 relatively, compared to American or Frontier.
@@bburkie55 That is incorrect; JetBlue has not added seats to their A320s. They have, however, added A321 and A321LR aircraft to their fleet.
@@bburkie55 "A220s when they arrive"? JetBlue has been operating the A220 for about two years, since April 2021.
Talk about a hot take. Several things I want to mention. Firstly, the merger is far from dead. There's still lots of court proceedings to follow through on, and I would not be surprised if the DOJ gave their blessing for the merger to proceed, albeit at a high cost to the airline. Looking at lots of landing slot and gate space divestitures at a minimum.
Secondly there's a lot more being purchased here than just the airports. Pilots and the airplanes they fly are in very short supply right now. This deal includes a fresh cadre of pilots to move JetBlue's expansion plans into high gear, along with the same family aircraft Spirit flies and their orderbook for even more Airbus planes. It'll allow JetBlue to turbocharge their growth and aggressively expand.
Finally despite being fairly regional along the east coast JetBlue has a very robust network that can support itself. It isn't trying to do what PanAm did where it had to completely rework its operation in a post de-regulation world.
It's a costly gambit for sure, there's going to be a lot of money spent in the next few years, but as the U.S emerges from the pandemic with robust leisure and mixed business/leisure travel, Jetblue could catapult itself way up the rankings in competitiveness with the legacy airlines.
The blocking is just a roadblock I'm sure was anticipated. As this things usually work, they will probably negotiate a settlement on specific points. Is JetBlue taking a huge gamble on this and definitely overpaid I agree. But going back to the Pan Am days is one of your usual far fetched ideas. That was now decades ago in a very different situation.
I thought the biggest driving factor for JetBlue's acquisition was the fleet. They want Spirit's A320s to give them room to expand on new routes.
There were many driving factors. Fleet just being one. They also need scale and access to more airports to keep up with the big 4. Also need the staff. It's a gamble that may or may not work.
Plus they want Sprits gate space at LAX to expand their Transcon routes
@@CJbrinkman602 They already have that handled with the AA codeshare. It's almost hourly from JFK between the two on that one.
They needed not just the airframes, but also the pilots, flight attendants, and bases. Purchasing 194 aircraft and hiring 3300 pilots would normally take decades of gradual expansion. In addition to the pilots and planes, Spirit has several bases in the middle US which will allow JetBlue to drastically expand its route network.
A JetBlue and Alaska merger would make more sense to me. That would give them a place in the west.
Networks are compatible, they both have alliances with American, and Alaska is in Oneworld, but merging another majority-Airbus fleet into Alaska would probably be the major hurdle in this.
Maybe if this deal insn't allowed to go through Alaska buys JetBlue
@@cco53587 Fleet is not really a constraint. That's overplayed. They both have sufficiently large fleets to maintain them separately. AA/DL/UA do that all day everyday. You reach a scale of 50 of a type, it's not that big a deal as long as managed correctly.
I agree. JetBlue should merge with Alaska, and Spirit should merge with Frontier.
@@brianna_lynch right but that wouldn’t benefit the consumer any. The larger these airlines become, the more they can take from our pockets with out us having any other choice.
Other then spirt leaving us ✨
I'm a regular on JetBlue and used to own a little bit of their stock. I've been hardline against the Spirit merger. It would be a long, painful process just to get extra planes and pilots when they can instead restructure all of their expansion plans and lean on their alliance with AA while they get their operations in order. Spirit only approved it so their shareholders could cash out.
Just restructure expansion plans? How? There’s no gate space available, airbus is taking forever to deliver planes, and leaning on the AA alliance isn’t exactly growing your own airline.
I think AA may hit some roadblocks.
Love Jetblue. They are doing good- expanding routes to Europe. Love the amenities and in flight features
So true
Love the videos Coby but this video is misleading. Several times you said or insinuated that the deal was off or blocked. DOJ just said they would fight to block it, not that it was quashed. This is really important to correct.
Hardly the only flaw. It often seems he just gets stoned and starts just making stuff up as he goes along with tangents.
@@johniii8147 I too was really surprised at the number of incorrect and misleading statements Coby makes in this video. Disappointing to see him announcing to all how poorly he understands the economics of this acquisition.
This will actually be a tough case for the Justice department to make in this case. All the traditional push backs here in such cases don't really exist here. Other than FLL, they really don't compete that much on routes or slot constrained airports. Spirit has little to no presence at either BOS or JFK which are Jetblue hubs. There is very little overlap in network here. They are not really competing for the same customers.
It depends on the goals of the merger, If it's to just to operate them as a low cost no thrills carrier, then I think JetBlue will ultimately succeed. As they will remain as a competitor in the market keeping fares low. If though its just to capture Spirits assests and route rights, and merge them into JetBlue, the business culture then I think the DOJ will be successful at blocking the merger, not because of JetBlue, but as Stated here would leave Frontier with no competitor in the low cost airline market!, it seems not fair though to block the merger because of JetBlue's behavior, but the potential bad acts of a third party, that the loss of Spirit in the low cost sector could generate!!
@@tf51d The plan is the latter. They want the assets. Things have gotten even more complicated recently for JB. They now have a document showing that that they will be able to charge 40% higher fares in certain markets. That will be hard to overcome.
I think the DOJ’s reasoning is wrong. There are several other airlines that are bigger and continuing to grow (Allegiant, Avelo, Breeze, etc.). If anything, this blocking is inhibiting any other new airline to grow further in the US, as they are keeping the two ULCC’s with the most market share, and letting the big four win. That’s just my thought though, if anyone has info or something on this feel free to correct me
Hot take: This is just the government and their corporate backers throwing a fit because JetBlue offers something American business hates: High quality service at an affordable price.
That's not the "American way", which is a gentleman's agreement to force people to pay a premium for anything even remotely good.
It lets the big four win, and it prevents the expansion of the high quality, low price model. Since airlines like Allegiant are larger but about as lovely to ride on as a meat grinder.
There are a couple of things this assessment missed regarding PanAm. PanAm was arguably recovering by the late 80s. They even posted a profit in the third quarter of 1988. However, the bombing of Flight 103, the Gulf War, and a recession would lead to the carrier's demise. JetBlue definitely doesn't have the same problems that PanAm had to deal with.
On another note, PanAm had almost succeeded in taking over Northwest Airlines in 1989, thus furthering expanding their domestic network, but the were outbid.
I flew out of JFK in 2000 and saw one of these JetBlue planes on the tarmac and asked myself what kind of sorcery is this? Looked them up online and when they started flying out of BOS, was taking them all the time down to FLL. I'm more a Delta fan right now, but B6 is always a good trip whenever I take it. And the fact they fly out of little ORH is so nice...
I'm going to disagree with your 2nd point about wages if you've only based it on the percentage labor cost of expenses or a percentage on the P&L. It's well documented that Spirit is one of the most profitable airlines with how much money they make in fees. And I've only heard so much that Spirit pilots are well compensated with a nearly $10,000 higher than JetBlue base salary. While Spirit could be paying more in operations causing their labor to be a smaller percentage, they do pay more per employee (GlassDoor confirms this too). However, Spirit has a limiting expansion issue on its own that makes sense for them to sell.
I'm with you on the other points being a concern though I think JetBlue could bounce back from overpaying by about $1 billion. The culture of the two companies is the biggest barrier in my book.
On the plus side, JetBlue will be solving its own industrywide pilot shortage issue by doubling its staff and fleet. Spirit and JetBlue share 50% of their routes so it'll buff up JetBlue service and any redundancy can go towards new service.
EDIT: Also forgot to mention that both airlines are also flying the same or similar equipment so it'll be easy for training and maintenance.
As for the DOJ's decision. I think Frontier having virtually no competition is not true, but Breeze Airways, whose CEO is the founder of JetBlue, has a good shot of filling the hole left by Spirit.
Every merger is blocked initially, this doesn't say anything about what the outcome will be
AA didn't "gobble up" US; it was the other way around. US kept the AA name because of it's better known historical name & that's the same logic used when HP bought US.
How much would it cost to reconfigure the seats in the Spirit fleet to match what JetBlue customers expect? Or would they keep using the Spirit brand for a cheaper and less comfortable product?
I'm sure they are still figuring it out. If they do merge it will be a multi year process. First and foremost they have to get under the same operating certificate with the same processes in place. Likely phases in over a 3 to 4 period in terms of product and interiors.
The plan is to transition pilots & planes periodically over to the Jetblue model.
Jetblue has stated they intend to dissolve the spirit brand and make everything the current JetBlue status quo going forward.
@@Benstein347 Which will take years.
A big thing to note is that JetBlue did have a West Coast presence and a big hub in Long Beach, Ca., but decided to pull out after many years of service there (Southwest came in and took over several of their gates). JetBlue went on the expand their operations at LAX after that, but not to the same level of operations that they had at Long Beach. So, with that in mind, a question I have from something mentioned in the video: Why would JetBlue be buying Spirit to expand their presence on the West Coast when they basically gave away their presence their just a few years ago?
A la the AA/TWA merger, JetBlue will likely make a deal to get the merger approved by divesting some slots in Florida, specifically in Fort Lauderdale, Orlando, and Tampa
Not really comparable. It wasn't really a merger with AA it was an acquisition of assets transaction. They were just picking up the crumbs remaining with a failed idea of using STL as a reliever hub for ORD at the time. None of those airports you mention have slots in place so not much to negotiate there. Only JFK/EWR/LGA/DCA are slots in play. I actually worked on the AA/TWA deal as a consultant and regulatory concerns were never really an issue. It was the fight with Carl Icahn that was the majority shareholder in TWA is where the dispute was. AA didn't want anything to do with the remaining JFK operation at TWA. They had already bought the valuable piece of their international LHR routes a decade before. AA didn't take any of the TWA widebody aircraft or any gates or slots at JFK. Didn't want them.
@@johniii8147 is that what paved the way for JetBlue's strong presence at JFK?
What did you make of the BLV pork barrel? I think they sold it as the American 'hub' making STL too crowded, necessitating a second airport for the region. Been a long time, don't really remember but I do recall it being a real fleecing.
They nearly always reject it first time, it will go to court and it will go through. Maybe not exactly the deal but it will
The DOJ has a very aggressive stance on this issue and that does not look likely.
The Pan Am acquisition of National was an interesting conundrum because while it turned out to be a disaster it's difficult to come up with a more feasible alternative. No other airline had a more viable domestic network to integrate with PA, they didn't have the resources to build one up themselves, and not competing at all domestically post deregulation would almost certainly mean a loss in market share to the point of collapse as well.
PeopleExpress would have worked better. North Central or later Republic.
They would absolutely have to balance wages lol. The flight attendants union had already worked out a deal for spirit flight attendants to get their pay increased.
But yet JB flight attendants have been trying to get an increase for years😳😳😳
This is like something that happened at Colombia. The merger of Avianca-Viva was denied and almost the whole country aviation sector collapsed
I would be most interested to see how Jet Blue will be able to smash two completely different business models into a single entity. How much time and money will Jet Blue have to spend in order to change the seating and adding wifi etc.
Bye the time JetBlue figure that out they will be in Debt and file for Bankruptcy ????
Could they just keep them separate under a single ownership, like Lufthansa and Eurowings or Aeroflot and Pobeda?
This is actually sad. I’m such a diehard JetBlue fan, even though I worked for United. I remember seeing stewards from JetBlue and being jealous of them because they always seemed so happy, and their uniforms were so nice. I’m still rooting for them from the side. Their jets are nice, their aesthetic is luxurious, even in Coach, and they have great benefits: and quick easy operations.
If JetBlue just made Spirit their ULCC arm, like WestJet does with Swoop, maybe it could work. They’d have an interline network of some sort and JetBlue would still take some revenue from “Spirit”.
That may work, but i doubt they would ever do that. They are already making plans to retrofit the planes asap after the merger as they can make more money (particularly on mint) with their current model
Along the lines of what Adam is saying, I am chomping at the bit to be able to fly on JetBlue. The Sprit network is fairly strong, but they don’t connect, it’s fairly fragmented, and their service is rubbish. If they were run by JetBlue, It’d sell like hotcakes.
That will not happen because JetBlue’s pilots union, ALPA, prohibited them from operating a brand within a brand in their CBA and requires all pilots to be in single integrated seniority list. Not going to happen…
I spent the last year baffled that Jetblue thought this would work. Even in what might be the smoothest merger, NW and Delta, there is still a bit of contention. Legacy Delta pilots have been known to say "Deltas" on the radio to refer to themselves as "Delta South." AFAIK, Frontier and Spirit employees were actually excited when Frontier Spirit was announced. Namely because of the expansion of domiciles. It seems like this would have had nothing to offer either Spirit or Jetblue employees. I guess this also means that the government would also have blocked Spirit-Frontier.
Nobody was happy about the spirit frontier merger. Everyone would have left immediately. Thanks for adding your garbage to the conversation though
Not sure I agree with this take. Spirit & JetBlue have synergies in their fleets. The aircraft flown are identical, down to their engine choices. Spirit also has a bunch of newer A320Neos while JetBlue got 321Neos but not any 320s (yet). More slots at LAX, EWR, LGA & FLL will definitely help JetBlue.
The issue is that JetBlue has already announced that they would refurbish Spirit to JetBlue standard which will cost a lot of money.
honestly I don't entirely agree.
I do agree that Jetblue will have sort of a hard time with reconfiguring Spirit's planes and dealing with the staffing issues, and doing all that fun stuff.
but where I don't agree is the network similarities with PanAm.
PanAm was a largely international airline. and struggled because they didn't have a domestic network. JetBlue is a largely domestic carrier. where they struggle is in the west coast and the central US. but JetBlue can do fine with just the markets they have in the East coast, the problem is they can't really grow further, and if they don't grow maybe Alaska or other airlines may grow too big and end up buying it. and JetBlue doesn't want that.
PanAm bought National but the reason PanAm bought National is to feed into PanAm's international flights, except... National's network wasn't compatible with PanAm's international flights.
JetBlue is aiming to buy Spirit, but Spirit does serve JetBlue's needs. JetBlue can be the dominant carrier in Florida, and they can also get the lucrative LAX slots and gain market share at Las Vegas and smaller markets in the central US between major cities.
I do also have the opinion that JetBlue's deal will leave Frontier without competitors and they'll have to raise prices. but I do think that JetBlue by increasing their market share in the Central and Western US... they can probably compete more directly with Southwest and in a way Alaska. and maybe they'll have to reduce their own prices.
idk. I may be wrong but I think JetBlue will be fine honestly.
yep that was a usual far fetched idea trying to compare to Pan Am that is now 30+ years dead and decline for a decade before that after deregulation. Not relevant to the situation at hand here. But there are no "slots" at LA. Just maybe some gates. It's about network not slots at this point.
What did in Pan Am was, repeatedly, it was denied new overseas routes from U.S. gateways that were ups for U.S. carriers with large domestic hubs.
Let's say DOT wanted to start flights between Houston and Frankdurt. Pan Am would apply, citing its decades of flight to Germany. Continental would apply, citing its myriad of cities served from its IAH hub and the easy connections that it could offer to Frankfurt.
So, Continental would up with the route.
It was the same story with service, whether to Europe or Asia, at hubs like O'Hare (UA and AA), Atlanta (DL), Detroit (NW), Charlotte (US). So, why fly to the main PA hut at JFK for Europe, or SFO for Asia, when a hub much closer to home offered flights to Europe and Asia?
While, the National merger presented culture issues, the real problem was route structure. National was about funneling passengers to and from Florida.
If Pan Am could have pulled off a merger with American or United, it would still be flying. Both carriers have a Midwest hub at ORD, which offer flights to Europe and Asia. AA was building up the DFW hub. Both had domestic route structures into JFK and SFO.
Jetblue bought Spirit for the simple reason that a Frontier/Spirit merger would be an existential threat to JB. JB would have been fine with all 3 existing separately, but as soon as Frontier and Spirit announced a deal, it forced JB's hand.
True and if the justice department rejects a merger of JB and Spirit, it will reject one with Frontier too.
I hear your concerns and I agree with the ultra low cost argument, however southwest and jet blue are also cheeper than the big 3 and I hope they expand to better compete with them. Plus spirit is not an option for me jet blue is so having them expand is adding more flights for people who also currently do not consider spirit an option.
I'm sure JetBlue had most of these in mind. Buying up spirit and paying their employees the same probably isn't a huge deal to them, and I'm sure Spirit's employees wouldn't mind a pay bump and other organizational perks. Renovating the planes for more legroom might be a headache, but that's the biggest hurdle I think they'd have to clear.
That said, I still think it makes more logistical sense for Spirit to merge with Frontier when it comes to maximizing the combined network.
Oh they have tons of hurdles to overcome I think they probably pulled off more than they can handle. Putting in new seats is the EASY part.
The DOJ attacking JetBlue is not unexpected. They did that with every merger. And every merger got through
Exactly. So strange to see this video claiming outright (in the first 20 seconds) that "DOJ announced it is blocking the deal" when it is just an expected part of the acquisition process. The maker of the video doesn't seem to understand much about how this works.
Didn’t they block AA purchasing Jet blue?
@@joeyshortino2875 AA was never going to buy JetBlue. There were doing a alliance in the Northeast. Still are btw. Court hasn't done anything yet. Typical government stuff taking years to resolve
This acquisition is more asset based, JetBlue wants their airplanes, delivery slots, pilots and slots. The slots at ATL, LAS, DFW and ATL are a great asset and will help B6 fly those lucrative cross-country routes. In addition, it'll increase competition with the BIG 4 which can be good for the consumer.
JetBlue acquired slots @ Schiphol.
They will fly their 321NEO LR from New York to Amsterdam.
Just to be sure… aren’t obligated to give free meals on transatlantic flights?
400 for a return is seriously cheap.
Usually I would rather pay the little extra to fly KLM or Delta. But would love to give them a try… but again I want my free food.
And the 321LR is a single isle…. And it’s budget… so it could be cramped in there. On the other side… I flew continental/United 757 on that same route in 2011… survived it as well.
Great video! In my region Frontier is the cheapest flyer, by far! Thanks! I will always fly Southwest when able.
I’ve always thought that American Airlines would have a much more forceful presence at JFK if they bought out JetBlue. The other possibility is that Alaska could merge with JetBlue, strengthening Alaska on both coasts. Alaska/JetBlue could then compete with Delta. Delta elbowed into Seattle and poached Alaska customers, and Alaska could take the fight to other Delta strongholds.
Actually, Avelo and Allegiant offers the least. My Avelo flight had a 27" pitch in the uber-cheap seats....
You forget to mention Breeze and Alvelo. Sure they’re small airlines, but they’re growing. Also, the lawsuit isn’t settled between jetblue and the DOJ. I think that goes to court in October? Your analysis might prove to be right in the long run. Only time will tell.
I think JetBlue needed to buy a Spirit or Frontier, because they're next best option after buying VIrgin America was to pursue a new position in the market that was the,mind the pun, the JetBlue of the transatlantic, but they can't afford to lose their stronghold in the US. I fly JetBlue all the time, it's one of my favorite airlines of all time, and gladly choose it, but it's very, very hard to take a domestic flight from Boston Logan, my home airport, to anywhere else if you don't fly Jetblue or American. The hourly shuttle from Logan to LaGuardia and back is operated entirely on JetBlue operated flights even when sold as American Airlines flights.
I don't believe for a moment that the look & feel of the product customer's receive had anything to do with it, it was to resupply their domestic route network, with a fleet and crew that enough similairity to retrain as Jetblue look & feel, and make whatever money they could still capitalize on for not buying Virgin America.
Where your theory falls short is Jetblue is not buying spirit for the siphoning customers but to use the slots in certain airports.
This means Jetblue will likely gut Spirit and convert most of their routes to Jetblue operations.
That was the whole point of the video 🤦🏻♂️
I wonder if JetBlue can seek more International routes from its bases in the East Coast. If the West coast is hard to crack, maybe they should look further East and South, outside the US.
Coby, I agree with you. But the merger could still go through because a judge in Boston on Oct. 16th will make a decision on whether to grant the merger or not. So this potential merger proposal isn't over as yet. If the judge rules in favor of the merger I'll be happy. Most Americans hate Spirit for their poor customer service, lost bags, and high fees. They are consistently ranked last or second to last when it comes to customer satisfaction in national airline polls. If the merger goes through Jetblue will only control 4% - %10 of the airline market which is very small.
Great video - luv those shots of my favorite airport Long Beach
Pan Am's acquisition of National was not the only reason. It was an important reason, but it was part of a two-decade death spiral. Pan American World Airways' crashed for these reason: (1) The energy crisis and skyrocketing oil prices in the early-1970s. (2) A fleet of 747 jumbo jets that flew mostly empty as a result of the recession that ensued from energy crisis. (3) Deregulation of 1978 that (a) removed fare regulations/protections/standardization along with (b) international and domestic route limitations, and (c) spheres of influence, but (d) encouraged a flurry of new competitor airlines, many now bankrupt or merged. (4) The purchase of National Airlines with its incompatible corporate culture and fleet, not to mention NA's "coast-to-coast-to-coast" route map that made Florida the center of NA's universe. (5) Pan Am became an international terrorism target as a US flag carrier, resulting in the Lockerbie Disaster of 1988. (6) The 1988 recession. And last (7) the First Gulf War, which drove up fuel prices and all but stopped international travel.
I don't know if this is possible but my dream would be a JetBlue-Southwest merger this way you'll get all the amenities JetBlue offers (free wifi, satellite tv, satellite radio, unlimited free snacks & beverages, and most legroom in economy) plus the free checked luggage that Southwest offers. What do you think about that?
That would never work. I mean jet blue and southwest could more easily change there business models to feature those amenities.
Southwest is a LCC, they don’t go transatlantic, they fly one type of plane to save on staffing, training and maintenance. They have one class seating arrangements.
Jet blue is a full service, they fly international routes, and have a range of different aircraft. They offer different classes of service.
The only connection is there dedication to costumer service. Merging these two airlines would be an absolute hell. Could it be done? Sure I guess? But would it be worth it at the end of the day? The answer is no.
@@joeyshortino2875 whatever you say but Spirit doesn’t offer those services that JetBlue offers either and only flies one type of aircraft. At least Southwest offers free checked luggage while Spirit doesn’t offer anything. So how could the JetBlue-Spirit merger work?
Followed the DoJ vs. Spirit trial, and post trial briefs. The DoJ simply did not make their argument. Judge Young is going to have a big problem siding with the DoJ as they tried to lower the bar and claimed that "Substainial" was not the bar they had to meet. Bam! Jet Blue sends case law to court showing "Substainial" is indeed the bar the DoJ must meet. Of course the DoJ claims their lack of evidence was sufficent to prove substainial harm in competition. Many legal analyst felt that the DoJ insulted the Judge and were trying to pull the wool over his eyes. Also, the original Judge was Obama appointed, that would have been a slam dunk for the DoJ, but Judge Young (Reagan Appointed) ended up trying the case and has a rep for following the law. This made the case substainially more difficult for the DoJ. No decision yet from Judge Young, but it looks like the Merger will go through.
Pan Am went under because they bought 747s for international travel that were too expensive to use for domestic.
Just food for thought...... Another thing not mentioned here is the fact the JetBlue(B6) also wants / needed more aircraft quickly to grow their market, faster than the manufacturer can produce flying tin cans, not to mention that aircraft manufactures are months behind on current delivery orders... B6 would have doubled their fleet size with Spirit (NK). However, had the merger gone through, Frontier (F9) would have been handed the keys to the ultra low cost carrier kingdom... F9 would have thrived and still will. F9 has the youngest Airbus fleet in the nation as they rotate (lease return) their planes out as they age replacing them with the new A321neo XLR's with much better fuel economy (with the PW1134GA2'-JM GTF's) and range for long haul. Had the B6 / NK merger gone through, B6 would have also been weighed down with more old A319, 320, & 321's classics (and a few older, but new 321neo's with the PW113XG'-JM GTF's) with increased maintenance costs.
Merging Spirit with JetBlue would be like trying to merge Dollar Tree with Target.
It is not a merger; JetBlue has come to an agreement with Spirit's shareholders to purchase the assets of Spirit's airline outright. JetBlue is just adding 190 aircraft and 3300 pilots to its assets.
1) Hawaii IS domestic.
2) The $300 million lawsuit against Pan Am Lockerbie families and the increase in fuel from the Gulf War contributed to its demise. Jet Blue had no such issues.
3) This video should question why United was allowed to acquire Continental and American was allowed to acquire US Airways but Jet Blue was denied Spirit. It looks like blatant favoritism for the larger legacy airlines.
Coby, this is far from a done deal. With Avelo and Allegiant, JB's lawyers have a strong case. Yes concessions will be made, but they'll still get Spirit. Look at past "blocked" mergers.
Honestly the main reason of acquisition is same type aircraft, A320 and stealing the A 320 pilots from spirit and preventing them from going to work for other airline. The route network and airport slot is second.
Jetblue and Spirit merger would be a good thing as each has a positive to bring to the table... let's face it if DOJ don't allow the deal siting low cost loss.. Spirit could change there strategy to match what jetblue does.. and jetblue still could acquire Spirit and keep it as a separate company but the sister company under the jetblue umbrella until it can secure a single operating certificate.. as a NK emp I have no say cause at the end of the day it's all about the shareholders and there money
I think the biggest concern were those low key high low fares.. if u knw wat I mean..so surely DOJ thought deeply abt the consumer as compared to corporates looking to make profits..
Another awesome and informative video. Minor correction: Twice you showed the US Supreme Court building when referencing the US Department of Justice. Wrong branch of government, bro! (DOJ is a branch of the Executive branch, not Judicial.)
my question is... if the merger of spirit and Jetblue affect the American consumer, what could be happen if frontier merger with spirit? nothing? because if that reduced the competition of low costs airlines will be happen ir they do sooo... 🤷
I can see Jet Blue, not failing, but merging into American. They already share flights and would be a Mega-Carrier, if the govt approves it.
1. JetBlue is far more profitable than American. It is in a financially strong position, and unlikely to be purchased by another airline.
2. DOJ would block a purchase of JetBlue by one of the big three, as it would be monopolistic. In contrast to #5 JetBlue buying #7 Spirit, which will doubtless be approved after some negotiating with DOJ.
JetBlue's been goiing downhill for a while now. Should have never got rid of David Neelman
I always thought the Spirit merger was a horrible idea. It would cost a fortune to bring all of Spirit's aircraft to Jetblue standards. Every other merger we've seen in the U.S has been airlines with the same business model.
Or it would cost to bring JB down to spirit standards 🤔
@@stevesmoneypit6137 they wouldn’t dare
It won’t cost them more than buying new 320s from Airbus. They’re divesting from the Ejets but they plan to expand their total fleet. 320s from Spirit and 220 orders are going to get them there.
@@austinrothjr They need to move up to Boeing
@@stevesmoneypit6137 How is that a move up?
Wassup Coby yo I gotta ask you do you know a lot about airline crashes from
Back in the day like National 102 ups flight 6 like that stuff
Whats your youtube keywords to find so much plenty cinematic like the aircraft flying, busy airport, city, and etc, i am new airline youtuber from Indonesia btw
Excellent business analysis as always. Well done !
Good insights! Thanks!
One thing is for certain, JetBlue needs to fire their COO Joanna Geraghty and CEO Robin Hayes.
I would’ve liked to seen it grow, because Jet Blue is going international
I'm flying jetBlue June 7. CHS-JFK-GYE, hope it happens!!!
Really won't have anything to do with your flight in June. This is LONG process. Just plan to be late as Jetblue always is.
Just a minute! NA was an excellent carrier and had a very loyal following. Given the option between flying EA or NA, most seasoned travelers chose NA every time. PA arrogantly destroyed everything at NA when they took over, completely poisoned the well. They had an incompatible fleet. They had never been a domestic carrier and their arrogance eventually destroyed them.
Spirit has the reputation of being the dregs. One of the low-class clientele group of carriers. They would have poisoned Jet Blue because Jet Blue's loyal following would have rebelled at the Spirit clientele invading their flights.
Whats your keyword to get an airplane cinematic video such as landing take off cruising and ils view of landing(such as high quality video), please answer it Coby❤❤❤
If Jet Blue was blocked because they wanted Frontier to not being alone. Will they block Frontier to buy Spirit as well?
Recently found your channel - love it and I'm bingeing through all the videos. One suggestion: love the graphs but they stay on for too short a time - keep graphs and charts for longer and less of the stock footage please and thanks.
Blocked Merger =/= End of an Airline.
There also seems to be a misunderstanding...JetBlue isn't merging their business product with Spirit, they are wholly acquiring Spirit and its assets. Anything Spirit will become JetBlue, not a hybrid of the two. This includes Spirit's business model. Spirit in its entirety will cease to exist afterwards.
Not quite the same since PanAm was much more famous than Jet Blue and sort of the US equivalent of a flag carrier.
Animation at 3:55 showing SFO-LGA lol. Umm I don't think the LGA perimeter rule is going away
Let us not forget that the main reason Pan Am overpaid for National is because Texas Air’s Frank Lorenzo kept forcing the price up with counter offers and then dropped out of the bidding, leaving Pan Am committed at a much higher price. The same Frank Lorenzo who’s hostile takeover of Continental resulted in Continental declaring bankruptcy for the sole purpose of breaking the unions. Texas Air then acquired Eastern Airlines and essentially bled the airline of its assets, thus forcing Eastern out of business. If ever there was a real life Gordon “Greed is good” Gekko, Frank Lorenzo fit the part.
Would they need to merge the companies after the purchase, though? Could JetBlue keep Spirit as a subsidiary, like Eurowings for Lufthansa or Pobeda for Aeroflot, connecting their networks but keeping their philosophies apart?
The reason PanAm failed wasn’t because they bought National Airlines, it was more because the US government didn’t allow them to expand domestically and then allowed domestic airlines to expand international. It doesn’t have anything to do with the purchase, or JetBlue.
I like jet blue. Recently I decided to vacation in Paris but was disappointed to find out that jetblue doesn't have any flights to Paris. Just made me think how valuable having the right routes into the right destinations can make all the difference for an airline.
jetblue would need to get bigger planes like an a330 or maybe a B757 which probably wouldt happen because I dont think that jetBlue is ever going to get a plane from boeing.
Jetblue absolutely flies to Paris now. Service started last month to CDG from JFK and will be served from BOS next summer. They are serviced with the A321NEO LR
@@ewaybevinn i didnt know the A321 NEO LR released? i thought it released in 2024
@@Misdemeanors262 no we have been flying them for two years. we have Neos with 2 ACT tanks, and LR's with a fwd cargo ACT
@@ewaybevinn oh
Another thing that PanAm had to contend with that JetBlue does not is deregulation.
PSA is the best airline I have ever flown. JetBlue is off it’s game. Quitting Long Beach, first & last flights guaranteed hours late or canceled, broken equipment are now standard on flights. At least JetBlue includes them free of charge. Spirit charges for all extras. Not a good merger for either airline.
So, if the merger goes through, JetBlue will have all of Spirit’s A320neos right? They won’t have to buy any of their own? And I’m using they will cancel Spirit’s A319neo orders?
I think there's a lot of missing information in the first half of this video.
1. Nobody is really worried about the DOJ blocking the merger, it's happened with every carrier and it's only happening because of their "partners" from Chicago and Dallas. (etc United and American) One of the big reasons why this merger will go through is because they can't block it based off previously set precedents , it would be silly for them to not block any of the legacies from merging but then only block the JB/NKS merger.
2. I think you missed it a little bit on the Virgin America bid. Alaska way overpaid for Virgin America, and everybody else that was part of the bid backed out. That's probably closer to the Pan Am 2.0. Also, Alaska being the Pan Am 2.0 makes a lot more sense because Alaska is already selling off the entire Airbus fleet they bought from Virgin America. If that's not unexpected, I don't know what is. Whatever happens with this merger, it's still a lot less messy than the ASA/VA merger.
3. One other detail is that jetBlue has to pay Spirit $400,000,000 if the merger gets blocked.
Why JetBlue is not like PamAm. 1. Its fleet has one airplane model and Spirit has the same plane. 2. Unlike JetBlue Pan Am had exposure from a terrorist attack in Scotland. 3. There have been far larger more complicated airline mergers since PanAm - National that never sunk the legacy carrier afterward. 4. JetBlue and Sprint do have a matching network in the Northeast, California, Florida and even the Caribbean. 5. PanAm failed when markets deregulated and there was no existing carrier to feed their long haul international flights the National merger was a symptom of a larger structural issue - They would have failed with or without merging.
9:33 - Because Delta's lobbying power doesn't want Jetblue to expand with more planes and slots they would have gotten from Spirit. Look at politicians who are openly opposing this deal like Elizabeth Warren and how much campaign contributions she gets from Delta. Also The whole argument that both airlines wouldn't mesh. Jetblue has stated all Spirit planes would be converted to Jetblue and their staff would be brought under their company.
The Virgin America - jetBlue merger is one I dreamed about since Virgin came to be at SFO. jetBlue being at NYC and Virgin America being at its sister city of San Francisco seemed like a match made in heaven, and it would have been if they did a code-share and won a merger, but alas, the inferior Alaska Airlines took Virgin out back and put her down. Never seen ANYTHING good come from Alaska, no low fares, no expansions, nothing.
There is much to the Pam Am story then you tell here. It is a very long and complicated story. Jetblue wanted Spirit's slots and their fleets match. Southwest bought Airtran for slots. Worked out good for them. Your story is an opinion piece.
JetBlue is actually doing well with their economic & service in my POV haven't rode in a minute doe idek about that buyout.
Two important things you overlooked that completely reframe the argument you’re trying to make: aircraft and pilots. The aviation industry in 1978 was vastly different than it is today; you can’t really compare an airline like PanAm with JetBlue/Spirit. The pilot shortage is a big problem that all the airlines are having to face collectively, and it has no easy solution. Lesser known is the aircraft shortage due to supply chain issues that have not fully recovered in the commercial aviation sector. JetBlue’s fleet is aging and Spirit’s is very young. JetBlue is paying $3.8 billion for a quick and (relatively) easy path to acquiring both hundreds of relatively new aircraft and about 4k qualified pilots. The additional route structure and basing is only an added benefit of the deal, not the driving factor. I’m fairly confident the deal will be approved eventually, given concessions to the DOJ. Really, the DOJ has no case here and a good judge will likely put them in their place for overreach. The merger will be costly and challenging with the vastly different business models, but JetBlue sees it as worthwhile in the log run to strengthen their primary assets…pilots and aircraft.
The business culture differences are certainly a big hurdle. Does JetBlue go ultra-low cost? Or, does Spirit abandon its cost model and become another mainline airline? Or, can the two airlines, under the same ownership, operate as separate entities?
I'm sorry, but no. Pan Am didn't just have a minimal domestic network, they had literally no domestic network. The CAB barred them from organically starting one even after de-regulation while simultaneously allowing their domestic competitors access to the international market. The result was flying mostly-empty gas-guzzling 747s overseas while hemorrhaging cash. The National acquisition was a survival move made by an airline in an entirely different era and arena than JetBlue. Additionally, there were many other factors at play in their downfall (Lockerbie being one of the final nails in the coffin).
You also mentioned the Alaska-Virgin merger but failed to take note that that merger faced many of the same issues (especially over-paying) that you bring up, but Alaska has only become (arguably) stronger in the long run. Frankly the AS-VX aligns much more closely with B6-NK: two domestic-regional majors looking to defend their territory and hit new markets, while also trying to merge two completely different work groups and cultures.
Prefer to see JetBlue purchase Eastern Airlines from Dynamic Air/Swift Air ,operating under the Eastern name.They would then have the Heathrow routes JetBlue currently serves ,along with Eastern’s routes to South America and expand its Miami presence.Eastern provided excellent service to South America back in the 80’s.
Pan Am also had labor issues
I have flown JetBlue a few times over the past year and each experience was worse than the last. Massive delays, remote terminal locations and truly incompetent employees. Spirit, well in that case everyone knows what they're getting. Nothing but basic transportation.