JetBlue's Amsterdam expulsion exposes EU-US Open Skies stress
Among the unintended consequences of capacity cuts at Amsterdam Schiphol Airport, aimed at reducing noise, is that they may also limit competition and contravene the EU-US Open Skies Agreement.
It has been widely reported that the Schiphol slot coordinator, Airport Coordination Netherlands (ACNL), has not allocated the US carrier JetBlue any slots for northern summer 2024. This results from aircraft movement limits to be imposed next year.
JetBlue had anticipated this and its fears now appear to have been confirmed by ACNL's initial slot allocation on 2-Nov-2023.
As a result, JetBlue has called for suspension of KLM's New York JFK services, limiting ATI for KLM and Delta Air Lines, or the transfer of slots.
- JetBlue entered the North Atlantic in 2021 and now has seven routes. It is the biggest LCC by seats on the North Atlantic.
- It launched Amsterdam routes from New York and Boston in summer 2023, disrupting a Delta/KLM monopoly.
- JetBlue has 10% of Amsterdam-New York seats and 30% of Amsterdam-Boston seats, and just 3.9% of Netherlands-US seats.
- Schiphol cuts will hit new entrants disproportionately; JetBlue's expected "100% expulsion" appears to have been confirmed.
- JetBlue is calling for suspension of KLM's JFK services, limiting ATI for KLM/Delta, or the transfer of slots.
JetBlue entered the North Atlantic in 2021 and now has seven routes
JetBlue entered the North Atlantic market for the first time in Aug-2021 with its New York JFK to London Heathrow service.
This was followed by New York JFK to London Gatwick in Sep-2021, Boston to London Gatwick in Aug-2022, Boston to London Heathrow in Sep-2022, and New York JFK to Paris CDG in late Jun-2023.
JetBlue's Amsterdam routes bring its North Atlantic network to seven airport pairs, but in late Oct-2023 it outlined plans to launch a daily Boston-Paris CDG service from 03-Apr-2024 (a route served by Air France and Delta), while also boosting its New York JFK-Paris CDG frequency from daily to twice daily from 20-Jun-2024.
The airline is also adding seasonal flights to Scotland and Ireland, with daily New York JFK-Dublin and Boston-Dublin from 13-Mar-2024 and daily New York JFK-Edinburgh from 22-May-2024. These three routes will operate until 30-Sep-2024.
In the week of 30-Oct-2023 JetBlue is the largest low cost carrier by seats between Europe and North America, but the airline has only 1.1% of seats.
It launched Amsterdam routes from New York and Boston in summer 2023…
JetBlue only entered the Amsterdam market in mid summer 2023, operating daily to/from New York JFK from the end of Aug-2023 and daily to/from Boston from Sep-2023.
On both routes, Delta Air Lines and KLM operated a duopoly before JetBlue's entry. To New York, KLM operated 18 times weekly in the northern summer, dropping to twice daily this winter (northern winter 2023-2024), while Delta's service is twice daily in both seasons.
To Boston, KLM operated four times weekly in the summer, dropping to three times this winter, while Delta's service was twice daily in the summer and is daily in the winter schedule.
…disrupting a Delta/KLM monopoly
Given that Delta and KLM are SkyTeam partners, with antitrust immunity for their profit-sharing joint venture on the North Atlantic, both airport pairs were effectively monopolies before JetBlue's entry disrupted this.
On a city pair basis, the only other competitor is United Airlines, which has a daily Amsterdam-New York Newark service.
In total, based on schedules for the week of 30-Oct-2023, JetBlue operates 14 weekly North Atlantic frequencies from Amsterdam on its services to New York and Boston.
As competition, to the same two cities the KLM/Delta JV has 38 weekly frequencies, and United has seven.
JetBlue has 17% of AMS-NYC frequencies and 41% of AMS-BOS frequencies
JetBlue has 17% of weekly frequencies between Amsterdam and New York City and 41% of frequencies in the much smaller Amsterdam-Boston market.
Weekly departing frequencies on airport and city pairs from Amsterdam that are served by JetBlue, week of 30-Oct-2023
|
Destination |
|||||
|---|---|---|---|---|---|
|
New York JFK |
14 |
14 |
28 |
0 |
7 |
|
0 |
0 |
0 |
7 |
0 |
|
|
New York total |
14 |
14 |
28 |
7 |
7 |
|
3 |
7 |
10 |
0 |
7 |
|
|
Grand total |
17 |
21 |
38 |
7 |
14 |
JetBlue has 10% of AMS-NYC seats and 30% of AMS-BOS seats…
JetBlue operates single aisle 167-seat Airbus A321neo aircraft across the North Atlantic, compared with its competitors' widebodies.
By seat capacity, therefore, its market position is even smaller than it is by frequency. It has 10% of weekly seats between Amsterdam and New York City and 30% of seats on Amsterdam-Boston.
Weekly seats (one-way) on airport and city pairs from Amsterdam that are served by JetBlue, week of 30-Oct-2023
|
Destination |
|||||
|---|---|---|---|---|---|
|
New York JFK |
4,501 |
4,039 |
8,540 |
0 |
1,232 |
|
0 |
0 |
0 |
2,198 |
0 |
|
|
New York total |
4,501 |
4,039 |
8,540 |
2,198 |
1,232 |
|
825 |
2,012 |
2,837 |
0 |
1,232 |
|
|
Grand total |
5,326 |
6,051 |
11,377 |
2,198 |
2,464 |
…and just 3.9% of Netherlands-US seats
Looking at the overall Netherlands-US market: JetBlue has a seat share of just 3.9% in the week of 30-Oct-2023. It is the only competitor that is not part of an immunised joint venture and the only low cost airline in this market.
Delta and KLM have a joint seat share of 80.4% (45.4% for Delta and 25.0% for KLM), while United has 12.8% and American has 3.0%.
Netherlands-United States: airlines ranked by weekly seats, week of 30-Oct-2023
|
Rank |
Airline |
Seats |
Seat share, percentage |
|---|---|---|---|
|
1 |
57,920 |
45.4% |
|
|
2 |
44,676 |
35.0% |
|
|
3 |
16,312 |
12.8% |
|
|
4 |
4,928 |
3.9% |
|
|
5 |
3,802 |
3.0% |
JetBlue's summer slots do not carry historic rights
JetBlue's summer 2023 services to the US from Amsterdam were operating using two daily slot pairs granted by the slot coordinator ACNL on an ad hoc basis. This means the slots do not carry the right to continued use in future summer seasons (known as 'historic rights').
JetBlue's continued operation of its New York and Boston flights into the winter 2023/2024 schedule is based on slots with historic status, which should (in theory) allow it to continue in future winter seasons if it chooses to.
Before the Dutch government's decision to reduce flight movements at Schiphol, JetBlue might reasonably have expected to secure slots to continue its US routes in summer 2024 - possibly at slightly different times - and for those slots to carry rights of historic precedence.
Schiphol cuts will hit new entrants disproportionately; JetBlue expects '100% expulsion'
However, as a result of the reduction in annual movements from 500,000 to 460,000 for northern summer 2024 (an 8% cut, deepening further to 452,500, a 9.5% cut, later in 2024), JetBlue has felt a disproportionate impact on itself as a new entrant.
According to several media outlets, airlines with historic rights at Schiphol are facing a 3.1% reduction in capacity, while 24 new entrants face what JetBlue called "100% expulsion", with no slots for northern summer 2024.
JetBlue: Dutch government in 'flagrant violation' of US-EU Open Skies
JetBlue has pointed out that antitrust immunity was only given to the big North Atlantic JVs because the US and the EU had signed an open skies agreement guaranteeing access to new entrants.
The airline filed a complaint against the Netherlands and the EU with the US Department of Transportation on 28-Sep-2023, with additional filing on 20-Oct-2023.
In the filing, JetBlue argued that the Dutch government is in "flagrant violation of the US-EU Open Skies agreement".
It said that the noise reduction regulation "fails to adhere to legally binding procedures under the agreement, provides no mechanism for new entrant access and, absent Department intervention, will result in the expulsion of JetBlue" from the US-Netherlands market.
JetBlue is calling for suspension of KLM's JFK services, limiting ATI for KLM/Delta, or the transfer of slots…
Prior to the confirmation that its two daily slot pairs will not continue next summer, the action called for by JetBlue for the Department of Transportation to implement was radical.
JetBlue urged a suspension of all KLM's services at New York JFK, which is the only slot-controlled US international airport.
Alternatively, it proposed limiting the antitrust immunity granted to KLM and its North Atlantic alliance with Delta until the Dutch government restores conditions allowing new entry.
Failing the above two options, JetBlue demanded the transfer of at least two daily slot pairs from KLM.
…and has no faith in consultations
JetBlue requested action from the DoT before the deadline for initial slot allocations for the summer 2024 season on 02-Nov-2023, but to no avail.
The airline was cynical about the likely effectiveness of intergovernmental consultations to resolve disputes, as provided for under the EU-US Open Skies agreement.
It referred to the Dutch Government's "persistent unwillingness to alter course, [and] non-cooperation with attempts to promptly convene a special session of the Joint Committee".
Also describing its "failure to provide any explanation" on how new entrant access will be assured, JetBlue argued that "it would be unrealistic at this late stage to place hope in consultations alone".
EU-US Open Skies is under stress
As previously noted by CAPA - Centre for Aviation, there is a case against the Dutch government's reduction in movements at Schiphol that it is not consistent with ICAO's Balanced Approach to noise reduction.
See related CAPA - Centre for Aviation report: Netherlands aviation threatened by limit to Schiphol flight numbers
In addition, the cuts undermine Schiphol's hub function, which has allowed the Netherlands to punch above its weight in aviation terms.
See related CAPA - Centre for Aviation report: Schiphol capacity cuts could undermine Netherlands' aviation strength
Confirmation that a low fare new entrant, and others, are to be expelled from a market covered by a liberal bilateral air service agreement is a significant cause for concern.
The EU-US Open Skies agreement is showing rare, but troubling, signs of stress.