American, JetBlue Negotiate Code-Share



By Ted Reed 08/16/10 - 04:21 PM EDT

American Airlines/JetBlue story updated with comments from JetBlue.


DALLAS (TheStreet) -- American Airlines(AMR) and JetBlue(JBLU) are negotiating a code-share agreement that could be in place as early as the first quarter of 2011. "We are negotiating, working towards perhaps a code-share in the future," Art Torno, American's vice president for New York told TheStreet. He emphasized that no agreement has been reached so far.

A code-share, which enables airlines to sell tickets on one another's flights, would be a natural step in the increasing cooperation between American and JetBlue, which in March announced plans to work together in New York where both operate hubs at Kennedy International Airport. The two carriers recently announced plans to enable customers to earn frequent flier miles on either airline on connecting flights.

The next step, said JetBlue spokesman Bryan Baldwin, is for the carriers to post interline itineraries on their websites.

"We've said all along that we are open to discussions with American to grow this relationship, but at this time we have no plans to enter into a traditional two-way code-share relationship with American," Baldwin said.
The initial deal involved an interline agreement enabling sales on one another's flights, but the proceeds are remitted directly to the operating carrier. In a code-share, revenue is pro-rated between the airlines and each airline can put its own code on the other's flight. Interline agreements are far more common: American has about 135 interline partners. Both arrangements enable baggage exchange between carriers.

Torno said he has worked closely with JetBlue CEO Dave Barger since the initial deal was announced, but the two carriers want to take things slowly. "We're taking baby steps to make sure that what we are doing makes sense," he said. "Whatever we implement, we want to make sure it works."

As the biggest aviation market in the world, New York is hotly contested. Delta(DAL) said last week it will spend $1.2 billion to upgrade its facilities at JFK .

Meanwhile, a merger between United(UAUA) and Continental(CAL) means the combined carrier will push more traffic through the latter's Newark hub.

Torno said American has a competitive advantage with its $1.3 billion JFK terminal and plans over time to move its alliance partners British Airways and Iberia into the terminal as well. Additionally, if a trans-Pacific joint venture with JAL is approved, that carrier would also be expected to move to the American terminal.
American's parent AMR closed down 0.72% to $6.85 on Monday, while JetBlue shares closed down 0.33% to $5.96.

-- Written by Ted Reed in Charlotte, N.C.

American Airlines in talks to revamp JFK terminal
Published: August 12, 2010 10:59 AM
Modified: August 12, 2010 12:03 PM


Carrier seeks to bring alliance partners British Airways and Iberia under one roof to counter Delta's $1.2 billion renovation at Kennedy.

 (Bloomberg) -- American Airlines is in advanced talks to bring alliance partners British Airways Plc and Iberia Lineas Aereas de Espana SA into one “premiere” terminal at New York's Kennedy airport to bolster overseas flights.
“It will require expansion and will be significant in terms of investment,” Art Torno, vice president overseeing American's New York operations, said in an interview. “When we finish that terminal, it will be a watermark for everyone to shoot for.”

Putting the Oneworld alliance members under one roof would help AMR Corp.'s American counter Delta Air Lines Inc., which unveiled plans yesterday for a $1.2 billion renovation at John F. Kennedy International Airport. American and Delta are vying for passengers in New York, the biggest U.S. aviation market.

The cost and scope of the possible changes at American's Terminal 8 are still under discussion with British Airways, Spain's Iberia and the Port Authority of New York and New Jersey, which oversees JFK, Mr. Torno said.
Any investment would be in addition to the $1.3 billion that Fort Worth, Texas-based American spent on a terminal renovation completed in 2007, he said. The 1-million-square-foot facility is American's primary international gateway in the eastern U.S.

American, British Airways and Iberia couldn't begin talks on a single terminal until after July 20, when they won final U.S. approval to jointly set prices, sell tickets and schedule trans-Atlantic flights. That venture doesn't cover other Oneworld members, which include Japan Airlines Corp.
“New York is really a battle for market share,” Mr. Torno said. “I don't think anyone can own New York. Our reaction is a competitive response to protect our interests here in the world's largest aviation market.”

American is adding 15 new destinations from New York this year and 33 additional flights. It will announce more schedule changes involving its alliance partners for the summer of 2011, he said.

Delta will renovate Kennedy's Terminal 4, which is used by foreign carriers, and link it with Terminal 2, where the Atlanta-based airline has flights.
The 1960s-era Terminal 3, formerly used by Pan American World Airways, will be demolished to make room for parking jets. Delta will begin work next month and finish by mid-2013. JFK is a Delta hub for overseas flights and became a focus for expansion after the airline's 2007 bankruptcy exit.

American also is remodeling Concourse D and Concourse C at New York's LaGuardia airport, where its domestic flights are based. The carrier, which is investing about $30 million in the projects, is considering whether to connect the two terminals or build an additional Admirals' Club lounge, Mr. Torno said.

Filed Under : American Airlines, Commercial Real Estate, Delta Air Lines, Port Authority of New York and New Jersey