ATW Editor's Blog

Delta responds to commentaries on JetBlue government route award

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Earlier in September, I wrote two blog commentaries about Delta Air Lines’ complaint against JetBlue Airways being awarded a pair of US federal employee travel routes. Delta wrote to the US General Service Administration (GSA) - which manages government operations, including travel for federal employees – complaining about route awards granted to New York-based JetBlue.

The GSA contract permits JetBlue to provide federal travel between New York JFK and Milan, Italy, and also between JFK and Dubai. JetBlue, which operates a fleet of Airbus A320s and Embraer 190s, does not fly either route with its equipment, so they will be operated as a codeshare by JetBlue’s partner, Dubai-based Emirates.

The following is Delta’s response.

Karen Walker Karen.walker@penton.com

 

To the Editor:

Your commentary on the US General Services Administration’s (GSA) recent decision to award the New York JFK-Milan Fly America route to Emirates Airline mischaracterizes Delta Air Line’s position and ignores the real and significant policy concerns that the GSA’s decision raises.  Our objection does not hinge on the fact that Emirates will provide “all (rather than some) of the service” between JFK and Milan.  Rather, we object to the GSA’s decision because JetBlue Airways is wholly incapable of flying the route itself – it has no suitable aircraft in its fleet – and because the GSA awarded the contract to Emirates – a foreign carrier subsidized by the state – when three directly competing US airlines – American Airlines, Delta and United Airlines – currently offer nonstop services between the two cities.

It is somewhat ironic that a law that Congress enacted “to help improve the economic and competitive position of US flag carriers against foreign air carriers,” is not only being used to benefit a subsidized foreign carrier, but a carrier whose unfair competition has harmed US airlines.  Your dismissal of Delta’s legitimate concerns about subsidized foreign competition ignores the real and significant harm those subsidies cause to US airlines.  The subsidized foreign carriers, unconstrained by market forces, will have the ability to win these contracts again and again on unequal terms – all at the expense of jobs in the US airline industry.  Even before the GSA’s decision, Emirates had the highest market share of any airline flying between New York and Milan.  The overcapacity that subsidies have allowed Emirates to introduce on the route has already driven yields to the lowest levels of any major New York-Europe route and made it likely that one or more US carriers will eventually be forced to exit. 

Your commentary also ignores that an air carrier must be a part of the Civil Reserve Air Fleet (CRAF) program in order to receive a Fly America contract.  This requirement balances the risk exposure from participation in the CRAF program with the potential benefits of competing in the GSA City Pair program.  However, participation in the CRAF program is further defined by airlift capability (domestic, short-haul international, and long-haul international), while the GSA City Pair program fails to make a similar distinction.  Unlike American, Delta and United, JetBlue has not committed to provide international long-haul services to the US Government under the CRAF program.  As a result, JetBlue benefits from the long-haul international City Pair award without assuming a commensurate amount of risk under the CRAF program.

 

Peter Carter, Delta EVP & chief legal officer

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