Airline Weekly - May 26, 2014
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Airline Weekly - May 26, 2014

JetBlue goes all-out in the transcon war, a war LCCs often lose

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Cover Story

The Full Minty: JetBlue goes all-out in the transcon war, a war with many LCC victims

On June 15, JetBlue will start its boldest effort yet to succeed in the transcontinental market—or more specifically, the bountiful market between New York and California’s two biggest cities, Los Angeles and San Francisco. The airline’s new Mint product, designed just for these two routes, will go further than any LCC has gone before in terms of premium amenities, highlighted by private suites with closing doors. So should incumbents be concerned?

“On my top 20 list of worries,” said American president Scott Kirby, “JetBlue’s Mint product is not on that.” Kirby, who made his comments last week at a Wolfe Research conference, knows a thing or two about the Big Two transcon markets, which (counting LAX and SFO flights from both JFK and Newark) account for almost 4% of all domestic ASMs scheduled this summer, according to Diio Mi. Kirby, after all, learned back at the old America West that these markets are tough nuts for LCCs to crack. America West began flying between New York JFK and Los Angeles LAX in the fall of 2003—it also flew LAX-Boston—only to be driven out two summers later. Today, following America West’s purchase of US Airways, and its subsequent merger with American, Kirby sits in the far more enviable position of competing in those Big Two transcon markets at the helm of a global giant.

Even during last decade’s darkest days, the market between New York and California, and transcontinental markets more generally, were relative sanctuaries for the Big Three giants and their pre-merger predecessors. Southwest would occasionally nibble at the edges, flying a few routes from Baltimore, for example. But it mostly competed on shorter-haul journeys, where its unit cost advantage was much greater—on long journeys, even higher-cost carriers can achieve impressive cost economies, with a flight’s fixed costs divided across a larger number of ASMs. In a last-ditch scheme to avoid collapse, Independence Air tried flying from its home in Washington to Los Angeles, San Francisco, San Diego and Seattle. Far from saving the carrier, the scheme only hastened its demise.

JetBlue began its transcontinental battle shortly after birth, first targeting secondary airports like Oakland and Long Beach and then entering SFO in 2007 and LAX in 2009. It readily admits, though, that while Florida and Caribbean routes do well, its transcon routes have long been an Achilles heel, hence the creation of Mint as a potential... (416 of 1,666 words)

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