Will A JetBlue-United Partnership Emulate The Continental-United Partnership Path?

Never Miss Another Deal - Follow DansDeals on Facebook

I’ve been saying for a while now that a JetBlue-United partnership or merger is inevitable, and Reuters now confirms that a partnership is being negotiated.

But what will that partnership look like?

Let’s go back in time for a minute.

Gordon Bethune turned Continental Airlines around From Worst to First in the 1990s and 2000s. He did not want to merge his highly regarded airline with United, which went through 2 bankruptcies in the 2000s, and took flak for calling United “HIV-Positive.”

His hand-picked successor, Larry Kellner, was forced out as CEO for refusing to merge with United. But Larry did agree to partner with United and join the Star Alliance. That happened in October 2009.

Jeff Smisek was made CEO in 2010 with the directive to merge with United, which he did. However, the merger was initially disastrous for both airlines, with low employee morale, poor customer scores, subpar financial performance, and shrinking market share. Mr. Smisek was responsible for downsizing the airline, closing down its Cleveland hub, giving away precious gates and shrinking from 1st to 3rd in LAX, removing transcontinental and international first class, and leasing all of its JFK slots to Delta.

That allowed Delta to grow into an NYC and LA powerhouse, while it cost United a fortune in lost corporate contracts from companies that refused to fly to Newark over JFK or that wanted a transcontinental and international first-class cabin.

Scott Kirby was proud of his time at American and considered it a big win when he was able to push United out of JFK and score corporate contracts thanks to their 3 cabin planes operating between JFK and Los Angeles.

Mr. Smisek was forced to resign following a scandal with the Port Authority of New York and New Jersey to add a “Chairman’s flight” from Newark to Columbia, SC for Port Authority Chairman David Samson, in exchange for airline favors.

In 2015, Oscar Munoz took over for Smisek, going on a listening tour, and fixing many of United’s problems, famously switching from undrinkable Fresh Brew Coffee to Illy as he looked to turn around from the penny-pinching Smisek days. After all, Gordon Bethune famously said, “You can make a pizza so cheap, nobody will eat it. You can make an airline so cheap, nobody will fly it.” Small changes and investments indicated a new way of thinking, and customers loved it.

Munoz gave way to Scott Kirby in 2020, who switched teams from American after being denied a CEO promotion there.

Immediately, Mr. Kirby pushed to get United back into JFK, which became possible due to unused slots during COVID, but the airline was forced back out in 2022 when those free slots dried up.

Which brings us to today.

JetBlue is desperate for a bigger airline partner and for cash.

United wants access to JFK, something that JetBlue has more than enough of.

A new partnership won’t mimic JetBlue’s Northeast Alliance with American, which allowed them to coordinate on pricing and schedules. That alliance was approved by the previous Trump administration, before being shut down by the Biden administration.

But it will certainly include mileage reciprocity, elite benefit reciprocity, and codesharing.

And I’d have to imagine that it will include JetBlue leasing JFK slots to United. United would use those to add back JFK service to Los Angeles and San Francisco at a minimum.

Will the partnership go deeper than that?

JetBlue would certainly love Star Alliance membership and United can make that happen.

Of course, Continental started with a partnership and entry to Star Alliance before that turned into a merger with United.

It’s unclear if the current Trump administration would approve a merger, but it would make sense for JetBlue and United. United would get access to all the JFK slots and gates they need and would gain a big presence in Boston and Fort Lauderdale, as well as JetBlue’s fleet. JetBlue would be bailed out of its years-long operational funk and financial underperformance.

For consumers, it would mean one less competitor, which would drive up fares. But whether underperforming airlines like JetBlue and Spirit can survive on their own in this changed post-pandemic environment is an open question.

Either way, it should be an interesting ride. Stay tuned!