JetBlue Wins Ecuador Fight Against Eastern Airlines

The United States Department of Transportation (DOT) sided with JetBlue earlier this month in the ongoing dispute between the carrier and Eastern Airlines over frequencies to Ecuador. JetBlue will now be able to move its seven weekly seasonal frequencies between Fort Lauderdale and Quito to serve a second daily New York to Guayaquil flight.

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JetBlue has prevailed in this feud with Eastern Airlines. Photo: Vincenzo Pace | Simple Flying

DOT sides with JetBlue

In early June, the DOT returned a favorable verdict in the ongoing JetBlue-Eastern dispute over Ecuador frequencies. JetBlue filed in March to move seven of its Fort Lauderdale (FLL) to Quito (UIO) frequencies per week to service a second daily New York (JFK) to Guayaquil (GYE) flight.

Eastern Airlines wanted two of those weekly frequencies currently allocated to JetBlue to be reallocated and allow Eastern to grow its New York to Ecuador services. JetBlue, however, was not a fan of that plan, and the two spent the last few months justifying their positions and leaving it up to the DOT to decide.

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JetBlue forcefully defended its move over the past few months. Photo: Vincenzo Pace | Simple Flying

The US and Ecuador do not have an open skies agreement. Instead, there are 120 weekly frequencies available to US carriers for service to Ecuador. American Airlines holds 42 weekly frequencies, Delta holds 14, Eastern holds 20, JetBlue holds 29, Spirit holds seven, and United holds nine.

What started the dispute?

On March 23rd, JetBlue filed a motion with the DOT to reallocate seven Fort Lauderdale to Quito flights to service a second daily New York to Guayaquil flight. JetBlue initially planned to launch that second daily flight on June 10th, subject to approval from the government, and run those flights through most of the year, assuming the demand environment allows for it.

However, this move ruffled some feathers. JetBlue’s partner, American Airlines, filed to move seven of its Dallas-Quito frequencies and seven Dallas to Guayaquil frequencies to Miami to enable the airline to launch two more daily flights to Ecuador from Miami. American’s filing came shortly before JetBlue’s.

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The American-JetBlue alliance prohibits cooperation outside of the Northeastern US Photo: Getty Images

Spirit Airlines saw this and argued that this implied more cooperation between the two airlines than the Northeastern Alliance (NEA) allows between American and JetBlue. AA and JetBlue can only cooperate on routes touching the Northeast, and cooperation on routes outside this market is forbidden. If American and JetBlue coordinated on moving their Ecuador frequencies, it would violate the terms of the alliance. Both airlines denied any coordination between the two airlines.

Eastern Airlines latched onto Spirit’s complaint and added its own concerns about undermining competitive and public interests in New York. In its filing, Eastern raised concerns that, as the only nonstop competitor to JetBlue between Guayaquil and New York, it could be forced out of the market because it only has four weekly flights to service the route. Eastern wanted two more to become available, reallocated from JetBlue.

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Eastern Airlines wanted to fly six weekly flights between JFK and GYE. Photo: Vincenzo Pace | Simple Flying

JetBlue responds to the competitive environment

Denying coordination or cooperation with American, JetBlue instead presented its argument that the competitive dynamics on the New York to Guayaquil route had changed, allowing it to add a second daily flight and have it be a viable route.

JetBlue highlighted LATAM’s suspension of widebody services between New York and Guayaquil as the reason it wanted to expand in the market, believing it to be underserved. Meanwhile, Southern Florida to Quito is already well-served and a very competitive market with flights from both Fort Lauderdale (FLL) and Miami (MIA). JetBlue will still fly a daily frequency between FLL and UIO.

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JetBlue stated it saw an opening in the market to expand services when a competitor dropped out. Photo: Vincenzo Pace | Simple Flying

American Airlines also stated it was responding to the demand market by moving its flights to Miami from Dallas. Miami is a large originating market for traffic to Ecuador, and American Airlines has a strong hub in Miami that is designed to accommodate easy connections to South America.

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The DOT does not rule out NEA concerns

While the DOT has sided with JetBlue over Ecuador, it did note that it was reviewing a separate complaint over the alliance. Driven by Spirit Airlines, the DOT believes that the right vehicle for reviewing the NEA is through that complaint and not via JetBlue’s motion to move Ecuador frequencies around.

The NEA has allowed both American Airlines and JetBlue to grow their footprints in New York and Boston. However, this has not come without objection. Spirit Airlines and Southwest Airlines have expressed concerns with the NEA and are hoping for some changes after a full review from the DOT.

That review is ongoing, though American and JetBlue are continuing to move forward with the NEA. In the matter of Ecuador frequencies, both American and JetBlue have received the go-ahead to alter their Ecuador services.

Do you think the DOT made the right decision? Let us know in the comments!

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