JetBlue Orders New Airplanes, Focuses East

We already talked about the massive number of orders rolling in at the Paris Air Show this week, but there was one that caught my eye. That’s right, it was JetBlue’s announcement that it will be buying A320neos, larger A321s, and reducing its planned fleet of Embraers. This was a very interesting and telling order about the future of the airline.

JetBlue A320neo and A321

Here’s what’s happening.

  • JetBlue is ordering 40 A320neo aircraft. These are the re-engined A320s that offer fuel savings and greater range.
  • JetBlue has 52 regular A320s on order now. Thirty of those will be converted to larger A321s and eight will be pushed back a couple years. All A320s will have winglets installed.
  • JetBlue will grow its Embraer 190 fleet to only 75. Previously it was going to be 100 with options for more.

If there was any question where JetBlue was planning to go in the next few years, we know now the answer for sure. It starts with CEO Dave Barger’s BlueNote (internal memo) which says this:

I believe that our network strategy focused on Boston and the Caribbean/Latin America has given us the right to grow.

In other words, JFK is good but it’s not a huge growth opportunity. That’s largely an airport constraint, but it’s a reality. So growth will be in Boston (which has already been growing like crazy) and in the Caribbean/Latin America, where we’ve actually seen some pretty good growth as well. Everywhere else? It’s just going to be a matter of how they fit into these focus areas.

The upgrade to the A321 makes a lot of sense in this context. It’s a bigger airplane, and that means more seats. There are 150 seats on a JetBlue A320, and I’d bet we’d see about 30+ more on the A321. It costs less per seat to fly those airplanes, so for markets with high demand, it’s a no-brainer. To me, it seems that this airplane can do really well flying between the Northeast/South US and Latin/Caribbean markets. Those are markets that are highly leisure so they don’t need as much frequency. That’s why American used to fly its big old A300 aircraft down to the Caribbean. Load ‘em up and ship ‘em out.

Interestingly, JetBlue also sees an opportunity “in the potential application of the 321 on some of our heavy transcon markets such as JFK-LAX, JFK – San Francisco.” I can see some limited use there, but I expect the A321 won’t be seen on the west coast nearly as much. This does however highlight the shift in focus from Long Beach and Oakland to LAX and San Francisco for longer haul flights.

The A320neo, however, will likely fly west far more often. One of the problems JetBlue faces, especially during winter months when winds are strong, is a lack of range on the A320. This is particularly an issue for flights from Boston, which you’ll often see in cities like Vegas or Salt Lake because they ran out of gas on their way to California. The A320neo will give a range boost that will allow those airplanes to make it without any trouble.

Then again, this might not be necessary. With JetBlue also putting winglets on its current A320s, those airplanes should be able to make it as well. So the A320neo will just provide a more fuel efficient airplane that might make marginally unprofitable flights today a reality tomorrow. Or it could make wildly profitable flights even more wildly profitable. The reality is that if you want to order an A320 these days, you order the neo unless you have an urgent need in the next couple years. (You listening, Boeing? That 737 isn’t going to cut it for much longer.)

The last piece of this announcement is the Embraer 190. That really was David Neeleman’s baby as he envisioned opening up smaller markets with that plane and its 33 percent fewer seats than the A320. That dream is not the dream of JetBlue today, that’s for sure. The plan was originally to have around 100 Embraer 190s in the fleet (and there were options for more), but JetBlue is cutting that back to 75. This could be an alteration to the existing order, but it sounds like there might be a plan to instead lease out or sell 25 of the airplanes in one way or another.

The 190 is an interesting story. Many of its routes were failures – places like Columbus, Ohio and Nashville quickly disappeared when they just didn’t work. Now JetBlue thinks it’s found good placement for 75 of the airplanes but it doesn’t want any more than that. There are only 46 today, so there will still be more growth in the fleet, but it’s just not as rosy as the airline once thought. The 190 is taking a back seat.

To me, the upshot of this announcement is that JetBlue affirms its position as an east coast airline and it’s tailoring its fleet to fit the missions it wants to fly. The Boston-New York-Caribbean-Latin markets are clearly the focus. What about the west coast? Seems like we won’t be seeing much if anything out here. Maybe the A320neo will enable Hawai’i flying but that’s years away, and I wouldn’t count on it. Instead, the west cost will continue to be a spoke that feeds the east coast with the exception of the small short haul outpost in Long Beach. At least, that’s how it looks today.

39 Responses to JetBlue Orders New Airplanes, Focuses East

  1. A says:

    So will the E190’s be used to add new markets, or just reduce capacity on over served existing markets? I’ve flown JetBlue once and I liked their product but their route map has some gaping holes through the middle of the country. Columbus may have flopped but why not try DFW, MSP or DET? Any chance they could get a gate at ATL? And I realize flying out of country adds complexities but the legacy carriers get a lot of $$$ for flying to YVR, YYZ, YYC. I’m just dreaming here, but a big fleet expansion should open up new opportunities, right?

    • tharanga says:

      jetblue tried atlanta once, and failed miserably. they could always try again, but the duopoly of DL and the new WN will probably limit B6 to no more than a token presence there, which doesn’t sound too profitable.

      B6 does plenty of short haul international already. One assumes they’ve assessed Canada and rejected it. I think it’s expensive flying there – fares are high because costs are high, not necessarily because margins are high

      • A says:

        Thinking from a purely business traveler perspective the airports I mentioned DFW, MSP & DTW all have more O&D traffic than a lot of markets already served by B6. As someone who has traveled from those airports to places like Boston wouldn’t they be larger domestic markets to break into and compete with the likes of DL & AA?

        I’ve also done a lot of business travel across into Canada. I know it costs more in terms of fees, but I fail to understand how WestJet can fly Canadians so cheap to sun destinations in the US while a relative short hop from major US airports like ORD costs double? Maybe there’s something I don’t know, but I know there is lots of business traffic volume from the US to cities like Toronto. I think that’s a market B6 could expand into if done smart.

        • tharanga says:

          I hear you, but these are all megahubs of established carriers, as you mention. So far, they serve ORD, CLT, SLC, DEN in terms of such locations. I have no idea whether they find such routes to be profitable, or whether they think there are better uses of resources at the moment.

        • Isn’t Jet Blue informally partnered with AA to feed traffic into their operations at both BOS and JFK via an interline agreement? I think AA even cut service in some markets in deference to the arrangement. They also traded some slots pairs. Consequently it is unlikely for Jet Blue to move on DFW or other strong AA markets anytime soon. As long as they are providing decent feed into AA’s long-haul and international services, and AA reciprocates, I would not expect any moves to upset the apple cart.

          • Fred says:

            It does at JFK, which has the problem of being essentially at capacity with controlled slots. Feeding traffic to each other there helps keep flights full and serve more customers when you can’t add new flights.
            JetBlue doesn’t have anything like that at BOS iirc, especially since American doesn’t have too big a presence there.

          • tharanga says:

            american has a decent presence at BOS. they’ve cut out most of the non-hub routes, but they still move a lot of people. about as many as US or DL.

  2. Kevin says:

    I would like to see JetBlue add some Caribbean service from IAD (maybe 3-4 times per week rather than daily service). United’s service from IAD to the Caribbean is paltry at best, so I think there’s an untapped opportunity there.

    • Totally agree, DC’s three airports combined have pathetic service to the Caribbean. What little service we do have is characterized by sporadic frequencies, few destinations, poor service and high prices due to no competition for UA at IAD and US at DCA for these monopoly runs.

      B6 should start by connecting the DC area to its new SJU focus city and (hopefully) expand from there. I could get greedy and hope for DCA-SJU but I’ll take what I can get!

      • One addendum – FL is slowly building Caribbean capacity at BWI. They are starting a new daily to BDA along with 1x/2x daily service to MBJ, daily to NAS and 2x to SJU.

  3. The other day you said you were flipping a coin to see if todays blog would be on JetBlue or Spirit. If I had known what I saw this morning in the paper I would have tried to get that coin to land Spirit side up…..lol

  4. tharanga says:

    on the E190: for an airline of jetBlue’s size, or really any size, 75 is still a pretty sizable fleet. 75 < 100, but still nothing to sneeze at.

    oh, and I'd love to see IAD/DCA to the caribbean

  5. Kevin says:

    DCA-SJU is 1550 miles, so that won’t be happening unless they get a slot exemption for that. There’s no reason why the “beyond perimeter” slots all have to be WESTbound. If Congress approves more exemptions, I’d love to see a DCA-SJU application. Also, US only does DCA-BDA on weekends in peak (summer) season now, so there’s another opportunity. Back to IAD—IAD-SJU/SXM/NAS/MBJ should be the low-hanging fruit, and maybe they could grow from there.

    • Kevin slot exemptions for DCA to the west are because of the large population, and the high ranking folks on Capital Hill who want to fly nonstop from DCA back to their home states…..lol

      There is no reason why they can’t do a Saturday only exception since it’s mostly leisure travelers heading to the caribbean. That’s what LGA had (has??) as when ATA was around they flew nonstop SFO-LGA on Saturday only.

      • CF says:

        LaGuardia does go perimeter-free on Saturdays, but National doesn’t have the same rule. So that isn’t an option.

    • Interesting questions regarding DCA slots and Caribbean service.

      US used to have daily service to BDA (at least during the summer months) and that is 836 miles.

      US currently has daily service to NAS on E75s which is 958 miles.

      SJU “seems” like it should be a no-brainer (slot issues notwithstanding) because there is no customs requirement. Obviously, lack of customs severely curtails the number of potential Caribbean destinations from DCA.

  6. The marketplace certainly seems to be telling Boeing to re-engine or replace its 737. The A320neo family is selling quite briskly at Paris; and American is talking about placing an order with Airbus.

    • IHSW says:

      Frontier-parent Republic yesterday also announced an order for 40 A319neo and 40 A320neos as well. I’m curious how that may impact their launch-customer order for the Bombardier C-class they announced last year.

  7. Paul says:

    Hoping they use some of those planes in PHL

  8. Bob says:

    I think B6 will merge with Virgin America

    • Stephen says:

      Rumors have it that Jetblue has made offers this year to buy Virgin America but they have been rejected.

      • Don says:

        I’ve said it before. Love both Jetblue and Virgin America. Jetblue will be merged with US or AA in a year or two. Jetblue ONLY pulls small profits at best and their stock is low. Multi-millionaires want a big profit not pennies. And AA or US DOES and CAN buy them if they wanted. Instant mega access to JFK and other growing B6 markets. Virgin America will die out because they can’t pull a full year profit no martter how great they are. They have record this and record that. This is not a non-profit organization (even though it is an airline…lol). The investors will want it to have profitability or they will get mad and yank their money. What is it year 4 now; and no sign of hope.

  9. Bruce says:

    Nice analysis. Whaddya think about the B6 seasonal nonstop LAX-Anchorage? Lotsa carriers operate seasonal nonstops to ANC from their hubs. US even has a daily trip from PHL. But no one for NYC since CO suspended several seasons ago. Could NYC-ANC be a last bit of western expansion for B6?

  10. Sanjeev M says:

    JetBlue, Frontier, and US Airways all have realized that while E190 is perfect size wise, you just don’t get the CASM like you do on larger aircraft.

    That’s why AA, UA, DL have hesitated on CSeries.

    I do agree with JetBlue expanding at Dulles, which has quite a few gates open for taking.

  11. Stephen says:

    The E-190 will seat 190 people and will be used on more business routes like JFK-DCA and BOS-BWI, etc. They will also be used on intra-Caribbean routes and of course thinner city pairings on the east coast. The company has also dropped the 100 options and is shopping 25 E-190 slots from what I have read. The A321’s will be used most likely from EWR/JFK/LGA to FLL, MCO, Puerto Rico and Dominican Republic. The cargo part of Jetblue is picking up nicely and that should help with extra lift and cargo space.

  12. Bobber says:

    200 A320neo’s for AirAsia – shitabrick!

  13. Rich says:

    This isn’t really about JetBlue — but does anyone know if the planned 320neo (or even 320 w/ winglets) will have the range for West Coast/Hawaii?

  14. Steve says:

    Brett, wouldn’t it make sense for Jet Blue to expand BWI beyond its Boston-only operation? All those gates in pier D, currently occupied by Air Tran, are going to be empty-empty-empty by year’s end. It’s already well-known that Southwest is moving the Air Tran operations to A-B with Southwest by late Fall (at latest). Surely SOMEONE wants the FL slots at BWI, now that WN ate its competitor? It won’t be Virgin because BWI can’t support LAX/SFO; but there’s huge opportunity for B6 in Florida and the Caribbean from BWI, no?

    • CF says:

      I don’t see that at all. At BWI, I see an airport dominated by Southwest that will only grow with the acquisition. AirTran already serves Caribbean routes and Southwest will keep and expand those. There’s no problem with gate space right now, so JetBlue doesn’t need this merger to go in there more if it wants. And with this merger only strengthening Southwest’s position, I don’t know why JetBlue would want to go in there.

      • I am hopeful that the WN/FL combination (and resulting behemoth it creates at BWI) will convince B6 to focus more on new opportunities, Caribbean and otherwise, at IAD and DCA.

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