Blue-sky thinking

When it launched operations in 2000, jetBlue brought something new to the skies of the US.

 

With a single-class product that combined amenities such as spacious leather seating, and live TV and radio at a cut price, jetBlue’s product was not only structured differently from anything on offer from US legacy carriers, but also broke with Southwest’s low-cost model.

 

Starting with a network serving points from New York’s John F Kennedy International Airport (JFK), jetBlue quickly expanded to Boston and then added overnight west coast flights, significantly increasing the utilisation of its growing fleet of A320s.

 

Proving a hit with travellers, the carrier became profitable within its first six months of operations and it continued to grow in the post-9/11 world, adding destinations and aircraft such as the E190 and a new base at Boston Logan, while its rivals shrank or descended into bankruptcy.

 

Fast-forward to today and jetBlue continues on a strong trajectory, adding new routes into the Caribbean and the US north-east as competitors such as American Airlines (AA) have withdrawn, as well as expanding its international reach through ever more airline partnerships, to become a major player on the US aviation scene.

 

“The Caribbean extending down to Colombia has been the engine for our growth as we became Boston’s leading carrier,” Scott Laurence, jetBlue’s VP of network planning, explains to Routes News. “Increasingly we are building schedules that are popular with people; this is about attracting key markets and higher frequency markets.”

 

 

 

New York and Boston

JetBlue is the biggest carrier at JFK and Boston Logan by seats. The airline holds a 24% share at each and, with its JFK expansion, the airport has seen its passenger throughput rise approximately 45% (by 14.8 million passengers) between 2000 and 2011. 

 

Its operations also signalled a revitalisation for JFK, a facility that had been losing passengers as international flights bypassed the long-standing New York gateway. Since 1995, aircraft movements and passenger numbers had remained essentially stagnant, leaving a capacity gap in the world’s largest aviation market. The new airline saw the hole and took the chance to fill it.

 

In the 12 months between August 2011 and August 2012, jetBlue handled 11.9 million passengers at JFK, making it clear where most of that increase was generated. And in Boston, the year-on-year growth has been 10% as operations have ramped up.

 

This year the carrier added Grand Cayman, in the Cayman Islands, Cartagena in Colombia and Samaná in the Dominican Republic to its New York offering. 

 

Initially seen as a leisure carrier ferrying people between the north-east and Florida, jetBlue began to attract business travellers and changed the network and focus accordingly.

 

According to Laurence, in peak season they still get up to 15 hours of utilisation from the A320s and 13 for the E190s, despite the challenges of much of their network being on the east coast. Because of the challenges in the north-east, they look forward to the arrival of the A321 (the airline has 30 on order), which will add 40 seats per operation over the A320.

 

In Boston, despite the airport’s closed footprint, jetBlue is anticipating further expansion next year that will give it a total of 24 gates at Logan, more than enough to manage the anticipated expansion. 

 

Like JFK’s T5, the Logan renovation is being orchestrated by Gensler, and will provide the terminal with service perks that characterise the unique touches that the airline has tried to engineer into its value proposition. When completed, the facility will offer 32 domestic and nine international counters.

 

Initially, the airline conformed to the low-cost template through its single-type fleet, the airplane of choice being the A320 and remaining the only aircraft operated until 2005 when the Embraer E190 entered into service. 

 

It was one of the first ‘new generation’ carriers to add an additional aircraft type and the decision to do so became a topic among aviation observers, many believing that the model required single-type operations. That has not proven to be the case and the E190s provide a scheduling flexibility and seat count alternative that have shown to be fully compatible with efficient, low-cost operations. 

 

“If you look at our presence in Boston, it is these aircraft [the E190] that are predominating. There is a lot of demand for multiple frequencies and we see opportunities to bring in the A321 into the market in the New Year,” Laurence explains.

 

In 2013, A321s will begin to arrive, increasing capacity on heavily travelled routes, while in 2016, A320neos will begin to replace older A320s, adding a bit of range and lowering operating costs.

 

The neos will be especially welcome on transcontinental services where winter westbound flights can require an en route stop at Salt Lake. The neo’s 4% improvement in range should be enough to make such operations history.

 

While it continues to add domestic destinations, new service from Providence has just begun, Charleston is coming and it has stuck its nose under the door in Charlotte where it is looking to grow on US Airways’ home turf. The ascendency of Charlotte as a banking and financial hub makes it an important inclusion for business travellers and the E190 capacity is ideally sized to begin such a challenge.

 

 

The lure of the sun

But the real growth news is in the Caribbean and near South America (what they call “the deep South”). JetBlue’s coverage of the Caribbean continues to expand, helped more than just a little by the decision of AA to draw down its presence at San Juan. It is refreshing its terminal facilities and building a network that not only connects SJU to mainland cities but also to other Caribbean points. 

 

Service already exists to Bogotá and Cartagena has been added. During discussions, markets in Brazil were seen as attractive but the range of the current fleet makes such service a medium, rather than short-term, prospect. 

 

Laurence added that continued expansion southward is at the top of the airline’s short-term agenda. He added that much of the region is “very attractive but that an investment in the larger aircraft required (for more distant cities) would exceed the 6%-8% capacity growth that has been jetBlue’s norm”.

 

Its unique business model has well served jetBlue so far and it currently needs no big changes. When the airline was mentioned as a possible merger partner with post-bankruptcy AA, the rumours were quickly quashed by Dave Barger, the airline’s CEO, who said: “We’re just not interested in participating in the consolidation path, either being acquired or in acquiring another company. Independence is our plan today, and it’s our path on a go-forward basis.”

 

According to the jetBlue sales folk, this drive into business markets has been accelerated by the corporate policy decision of many firms to use the “lowest logical fare” rather than being tied exclusively to a carrier or group of carriers. 

 

Between Boston and Washington Reagan, jetBlue offers 10 daily frequencies, creating a strong competitive offer on one of the nation’s most heavily travelled routes. And, as we know, frequent use builds loyalty and accumulates points.

 

The carrier’s decision to serve and then expand in Boston has been fully vindicated. Unlike New York, which is a hub city for a number of airlines, Boston had no dominant carrier and since the demise of Eastern has not had a single major player operating to Florida; another hole to be filled.

 

 

Plenty of partners

But jetBlue’s desire for independence has not dulled its desire to expand its international partnerships. The carrier currently has 22 agreements in place with carriers across the globe, ranging from tiny Cape Air to industry giants like Emirates, Singapore and Lufthansa. 

 

In each case, the agreements provide interlining across jetBlue’s JFK and Boston hubs for connections between a host of domestic and foreign destinations. According to Laurence, they continually try to build on the existing partnerships, extracting the greatest value in each case. He said that the current basket of partners is working well and they are not “waiting for the phone to ring”.

 

And the reasons and benefits are equally diverse. For AA, which has doubled down on its cornerstone operational model, jetBlue provides feed from many interior points that AA no longer serves with its own flights.

 

For Star Alliance members, jetBlue offers a connection network to and from JFK and Logan that is not provided by the alliance partners, with Star’s primary New York connection point at United’s Newark base.

 

Unaligned carriers like Emirates, El Al and Royal Air Maroc similarly benefit from a network that encompasses a large basket of destinations that would require multiple agreements for the same coverage.

 

But, of course, the chief beneficiary is jetBlue, which through such agreements has primary access to thousands of international passengers who transit its two primary bases. Plus the added side benefit that newcomers who might not know of the carrier are immediately exposed to the product – a great way to make a first impression!

 

 

True Blue and true believers

Its loyalty programme, ‘True Blue’, has just enhanced its appeal with the roll-out of True Blue Mosaic, an enhancement of the current scheme for very frequent travellers which provides added benefits for members, such as extra legroom, early boarding and additional free bags. The programme also has links to other airlines, car rental companies, hotels and a branded credit card. These enhanced perks are especially targeted at frequent business travellers who may enjoy more direct and frequent benefits than can be realised in larger, legacy offerings.

 

A conversation with jetBlue staff and management leaves the impression of confidence in jetBlue’s service, clientele and future. As one of the sales managers said: “When we are an alternative for business travel, people like us and we become their preferred carrier, offering a better product and greater frequency in many prime markets.” And Laurence sees it as being in a good position as it faces problems such as pilot shortages. 

 

He said it has “the draw of a strong successful company working in their favour”. People no longer see the company as an “alternative”, but rather as a fully recognised and established player in the market, having created a “value airline” that is “working well, is profitable and sustainable”. JetBlue intends to keep it that way and build from there.

Blue-sky thinking