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JetBlue raises concerns about challenges cracking into Atlanta market

As a prominent new airline enters Atlanta, its executives are raising issues about challenges for new competitors flying into Delta Air Lines’ home turf.

New York-based JetBlue Airways says it has struggled for weeks to get the gate space it wants to grow in Atlanta, and contends that the lease terms at the world’s busiest airport hinder competition and favor Delta and other incumbents.

That, according to JetBlue, makes it harder for new competitors to enter Hartsfield-Jackson.

“The city has to actually decide — do we want to foster competition or not?” said JetBlue executive vice president of commercial and planning Marty St. George.

At issue are the particular gates JetBlue uses to operate its flights. JetBlue wants gates on Concourse E for its flights, which is a newer, more spacious international concourse, and says it was promised that. But instead, most of the five flights it launched from Atlanta to Boston on March 30 were assigned to a gate on Concourse D. One of the five flights is operating out of Concourse E.

JetBlue plans to expand with more flights from Atlanta to New York, Fort Lauderdale and Orlando later this year, but “it’s not clear where they would even put us right now,” said JetBlue vice president of sales and revenue management Dave Clark.

Delta spokesman Morgan Durrant said in a written statement: “There are provisions in Delta's lease agreement specific to competition at Hartsfield-Jackson that we are committed to uphold. We welcome competition from any carrier at ATL.”

Hartsfield-Jackson, for its part, says the priority on Concourse E is international flights. An e-mail from Hartsfield-Jackson general manager Roosevelt Council to JetBlue in February says flights are scheduled to gates “based on a number of factors, including international priorities, gate design capacities, TSA/CBP [Customs and Border Protection] staffing, and airline preferences.”

Rob Britton, principal of aviation consulting firm AirLearn, questioned whether passengers care which concourse they’re departing from.

“At the end of the day, at a big airport like Atlanta, does it matter to people [if] there’s newer tile on this concourse than the other one?” Britton said. “There’s a lot of conspiracy theories…. I tend to not believe much of that.”

Airport spokesman Reese McCranie said Hartsfield-Jackson will accommodate JetBlue “as best as we can.” Other airlines have also started service from Atlanta and gotten gate space, including Turkish Airlines with one flight a day, Qatar Airways with one flight a day and small carrier Boutique Air.

On whether the airport’s lease terms were anti-competitive, McCranie said: “The FAA reviewed our competition plan and approved it.”

The airport’s competition plan states that the city and airlines “both understand the need to increase and maintain the availability of Common Use Gates at ATL” — gates which any airline can use, including new entrants. The city considered taking gates away from incumbent airlines and converting them to common use gates, but decided instead to build new gates.

The airport plans to add gates to Concourse T and build a new Concourse G to accommodate growth — but the five additional gates on Concourse T aren’t expected to be completed until late 2021, while 10-gate Concourse G will take until 2027 to complete.

Meanwhile, St. George says that because of Delta’s dominance, “Atlanta citizens pay higher fares than other airports.”

According to the U.S. Bureau of Transportation Statistics, the average air fare in Atlanta was on par with the national average in the third quarter of 2016, the most recent data available.

“I think Delta is basically managing the system to their advantage,” St. George said.

That “system” includes the Delta use and lease agreement at Hartsfield-Jackson, a contract that dictates the terms for airlines to lease gates.

Airlines at Hartsfield-Jackson have preferential leases for gates, meaning they can occupy a gate as long as they meet certain terms, including minimum usage. If they don’t use a gate enough, the airport can reclaim the gate to give it to a competitor.

At Hartsfield-Jackson, that minimum usage is 600 seats a day per gate.

“That’s an extremely low number,” Clark said, adding that that makes it hard for the airport to reclaim underused gates from entrenched carriers to get space for new competitors.

“There are certainly other airports that are doing more to foster competition,” Clark said. “Usually an airport is courting JetBlue. The relationship here has been a little bit different.”

But the gate use terms are part of a 20-year lease signed just last year, leaving limited leeway for the city today.

Atlanta Mayor Kasim Reed often lauds Delta and its relationship with the city, and regularly cites the length of the lease struck with the airline as a point of pride.

Reed and recently-retired Delta CEO Richard Anderson were close, with Anderson serving as a mentor to Reed and Reed appointing Anderson to the chairmanship of a key committee to help the city to cut costs.

Reed and Anderson are so close, in fact, that they both cried at the lease signing ceremony last year as Anderson prepared to retire.

“Whenever I needed to call on somebody for advice, Delta’s support or something that was important to the city of Atlanta, Richard Anderson always took my call,” Reed said then.

Anderson joked during the May 2016 ceremony: “If I had the power to do one thing today, I think I’d name the airport the Hartsfield-Jackson-Reed” International Airport.

It’s not out-of-the-blue that JetBlue is anxious about the competitive landscape at Hartsfield-Jackson. The first time JetBlue tried to enter the Atlanta market in 2003, it was driven out by a significant step-up in competition from Delta and AirTran.

JetBlue’s then-CEO David Neeleman said at the time that “it became a kind of a war between AirTran and Delta.”

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