During an antitrust trial over the Northeast alliance with JetBlue, American Airlines was presented with an uncomfortable truth: the carrier had some slots at the capacity-controlled New York JFK airport, which it was unaware of. Let's find out how this happened.

Forgetting to have slots: yes, it happens!

Slots at congested airports such as those serving the city of New York are invaluable assets for airlines that want to expand in this highly profitable market. Although one might think that an airline keeps counts of how many slots it owns at a specific airport, it is not always the case. Or, at least, this was not the case for American Airlines.

Delta Air Lines (Team USA Livery) Airbus A330-941 N411DX
Photo: Vincenzo Pace I Simple Flying

During a trial over the Northeast partnership with JetBlue, American Airlines stated that the only way the carrier has to compete in the New York market is to form an alliance with the smaller carrier. Indeed, American argued it is impossible to access additional slots at the capacity-controlled New York airports. However, a rather uncomfortable truth emerged for the airline, which turns out to have forgotten about some slots it still owned at New York JFK airport that could have allowed American to strengthen its presence in this market. But how can it be that a carrier forgets about something so valuable as the slots it owns at congested airports?

The root of the lapse

After an audit found out that American Airlines was underutilizing some of its slots at JFK, the Federal Aviation Administration - FAA - reclaimed seven slots from the carrier. When asked about the underutilization of such a precious asset, American Airlines' Chief Commercial Officer, Vasu Raja, explained that it was linked to American Airlines' merger with US Airways in 2010. After the merger, some of the airline's slots in New York were apparently forgotten.

American Airlines Boeing 777-223(ER) N789AN
Photo: Vincenzo Pace I Simple Flying

Vasu Raja, who used to manage the American Airlines' network, stated that the slots accounting and combination after the merger was carried out manually. Nonetheless, he recognized the mistake and said there is no good reason to justify it, which, according to his words, makes the airline's management "(...) sound completely ridiculous".

How did the unused slots emerge?

The discovery of the unused slots emerged during the antitrust trial regarding the Northeast alliance with JetBlue. But what in particular let American Airlines' mistake come to light?

Before the COVID-19 pandemic outbreak and the Northeast alliance with JetBlue, American Airlines was planning to reshape and expand its presence at two major hubs in the Northeast of the US, namely Boston Logan International and New York John F. Kennedy International. In this context, there was an e-mail exchange between Vasu Raja and an American Airlines regulatory affairs director, Brent Alex. In the e-mail, Raja confirmed that the airline had ceded some slots after the early 2010s following the merger with US Airways.

American Airlines Boeing 787-9 Dreamliner N840AN (2)
Photo: Vincenzo Pace I Simple Flying 

In the e-mail exchange, Raja wrote that American Airlines thought it had 216 slots after ceding seven to the Federal Aviation Administration, while the FAA thought the carrier owned 200. In the end, American Airlines was allowed to hold onto 210 slots.

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Why an alliance with JetBlue?

In the antitrust trial, American Airlines stated the Northeast alliance with JetBlue is essential for the airline to compete in the highly profitable and competitive New York market, currently dominated by Delta Air Lines and United.

In the 12 months up to July 2022, JetBlue was the largest airline at New York John F. Kennedy airport; however, the airline has a limited possibility to grow because of the reduced network compared to legacy carriers such as American Airlines. Therefore, combining JetBlue's slots at JFK with those of American Airlines at LaGuardia and American Airlines' worldwide network, the two airlines believe they can successfully and efficiently compete against the Delta-United domain.

Although the alliance was approved during the Trump administration, in 2021, the Department of Justice sued the carriers, alleging that, by codesharing on complementary networks via New York and Boston, the alliance would eliminate significant competition between the airlines, with the risk of average fares being increased and the quality of service reduced. However, the two airlines responded to the accusations by stating that fares have not increased in the 18 months since the alliance was formed and convenience for customers has improved.

What do you think of American Airlines forgetting about some slots at a congested airport like JFK? Let us know in the comments below!

Source: The Points Guy