JetBlue’s Strong Performance Has Spirit on the Run

Spirit has been aggressively growing Dallas/Ft Worth service lately, but not all routes have been successful. Notably, DFW to Boston hasn’t worked out well. For the Fall, it is being re-timed to operate during the day and then it stops completely for the winter. This got me thinking about whether JetBlue might be a Spirit-killer.

In Boston, I kept thinking that JetBlue’s new 3 daily flights were having an impact, so I decided to dig deeper into that by looking at other markets where the two go head to head. The result? It does appear that Spirit is running away from the Blue Crew despite lower fares and lower costs.

I figured the best place to look would be in Ft Lauderdale, where Spirit has long had a big operation. JetBlue has been building its presence there over the last few years as well. I started with schedule data to see if there was a pattern.

Spirit Cuts Where JetBlue Grows
I took July Ft Lauderdale schedules for the last four years and started crunching. There are ten routes that have Spirit and JetBlue competing head-to-head. They are Bogota, Boston, Cancun, Washington/National, Kingston, LAX, New York/LaGuardia, Nassau, Santo Domingo, and San Juan. How did capacity fare? Take a look at this chart.

July Ft  Lauderdale Spirit vs JetBlue

As you can tell, Spirit has been slowly growing the markets where it doesn’t compete with JetBlue. Contrast that with the head-to-head routes where Spirit has shrunk dramatically. We should refine the data further before just coming to a conclusion, however.

Bogota and Kingston have only recently seen JetBlue start service so it’s probably too early to see any impact there. And we can throw out Washington/National as well. Even though that route has seen growth from Spirit in this chart, it’s now gone. In another sign that Southwest is far from the scary competitor it used to be, Spirit has decided to walk away from National and its 3 daily flights each on both JetBlue and US Airways in favor of Baltimore, where it will face Southwest and AirTran’s now 10 daily flights.

If we look at the remaining seven markets, the results have been pretty clear. In six of those markets, Spirit has cut capacity dramatically (only LAX has been flat). If we look at July 2012 vs July 2011, Spirit had 8 routes from Ft Lauderdale that saw capacity drop more than 25 percent. Five of those routes were head-to-head with JetBlue. (The others were Charleston, WV, which was dropped after one year, Aguadilla, PR, and Saint Maarten.)

Spirit Usually Loves Competition
Now, I know the natural response here. “Well of course Spirit is cutting flights where there’s a lot of competition. It’s better off going where there’s none.” That would make sense if we were talking about Allegiant, an airline which generally shies away from competition. But Spirit has done the exact opposite. It thrives on routes that are already served.

This is the airline that went into the Vegas to LA market, one that’s served by American, Delta, Southwest, and United. (Even US Airways served it at the time.) It has been rapidly growing in Dallas where it goes head-to-head with American pretty much everywhere. And as I just mentioned, it left Washington/National to go head to head with Southwest from Baltimore to Ft Lauderdale.

Of course, for Spirit, this all makes sense. It goes in with low frequencies in many of these markets and says it isn’t competing with the incumbent carrier. It’s going in with rock bottom fares to help those who care about price above all to fly. This strategy even works with Southwest. That won’t come as a surprise to anyone who has seen Southwest’s costs and its fares climb over the last few years.

Spirit’s Fare Troubles
But JetBlue appears to be a more formidable competitor for Spirit for some reason. The natural question is whether or not JetBlue is actually a tough competitor or if the airline is just irrational and Spirit wants to avoid going up against that type of behavior. Maybe JetBlue is flooding the market with too much capacity and is losing a ton of money. I figured I had to look at the fares.

Unfortunately, government fare data is only domestic. It’s also quarterly and only goes through the end of 2011 at this point, so I looked at fares flown during the third quarter of 2009-2011 to match the summer season capacity numbers. This data is notoriously buggy, but I’ve tried to clean it best I could.

Since the data doesn’t include international, there weren’t many good routes to look at here but I grabbed a cross section for my first look. I had long time competitive routes to San Juan, Boston, and LaGuardia. I included more recent competitive routes at LAX and National. Then I threw in Spirit routes without JetBlue as well to Atlantic City and Atlanta. Here’s what I found when I looked at year-over-year fare change in Q3.

Spirit Ft Lauderdale Fare Performance

And look at that. Atlanta and Atlantic City saw strong fare growth, which would mean we shouldn’t be surprised to see the big capacity increases in 2012. LAX did fairly well too. That may have some real impact from Virgin America being in that market, but either way, we don’t see Spirit cutting capacity there. National is middling but at the bottom we see the hottest competitive routes with JetBlue where Spirit is cutting seats. Boston, LaGuardia, and San Juan all saw lower fares in summer 2011 than in 2010 on Spirit and now, capacity is going down further.

But is JetBlue Winning?
The picture is getting a little more clear here. Fares haven’t been holding up as well in these JetBlue-competitive markets so Spirit is cutting back. But are fares not holding up as well for both airlines? Or is this Spirit feeling the heat because JetBlue is thriving?

I decided that the best markets to look at would be LaGuardia and San Juan. The results are pretty telling. Let’s start with LaGuardia.

Ft Lauderdale LaGuardia JetBlue vs Spirit

This shows available seat miles (ASMs) which are the best measure of capacity in the market. It also shows average fare. In LaGuardia, JetBlue kept capacity relatively flat last year but fares rose. This year, it added a bunch of capacity and Spirit walked away. But LaGuardia is somewhat constrained by slots, so I really view San Juan as the purest route since it doesn’t have capacity constraints and they are the only two players.

Ft Lauderdale San Juan JetBlue vs Spirit

In 2010, they were both really steady compared to 2009. But in 2010, JetBlue bumped up capacity a lot and Spirit cut it. JetBlue’s fares started to climb while Spirit’s fell. That led Spirit to cut capacity even more in 2012 while JetBlue grew.

We don’t have perfect data, but from what I see, it looks like Spirit is running from markets where JetBlue dominates. It isn’t happening everywhere – LA for example, but it appears to be happening in a lot of places. That’s a strange thing since Spirit has much lower fares and much lower costs as well. But maybe people are gravitating toward the far superior onboard product with JetBlue.

As JetBlue continues to expand from Florida and in the Caribbean, I wouldn’t be surprised to see Spirit cut back further and move to other cities where it is better able to compete. This would seem to say that it’s not ALL about price. JetBlue is giving Spirit a run for its money.

28 Responses to JetBlue’s Strong Performance Has Spirit on the Run

  1. Sanjeev M says:

    Vacationers and cruisers need some baggage. If B6 and NK are charging the same fare, why wouldn’t I choose B6?

    I also wouldn’t discount indirect competition from the legacies (including their FF draw). US Airways is expert in sending masses of northeasters on the cheap via CLT to Florida and Caribbean partly using those tired 734’s. Spirit is usually never cheaper last-minute as they like to fill up the bus well in advance.

    I think its more of a Spirit finding better opportunities in near-international and attacking AA whose cost base is way higher than B6. As a side benefit it leaves low-cost JetBlue to have these nonstop markets for themselves.

  2. There is only ever one reason to fly Spirit: price. It makes perfect, logical sense that they will be less successful when there is a cost-effective alternative. Obviously, flying JetBlue is a heck of a lot nicer than flying Spirit and, if the price is competitive, customers will flock to JetBlue and avoid Spirit when they go head-to-head.

    I recall reading that Spirit’s current cost-per-mile is about 6 1/2 cents. How competitive is JetBlue to that? I have a suspicion that JetBlue can “compete” with Spirit in the sense that it can attract market share, but I have less confidence that it can make money on these passengers when they compete.

  3. DAB says:

    I am not exactly the low-cost target anymore, being UA Platinum…, but I took one Spirit flight FLL-NYC (probably LGA…) maybe ten years ago when my total miles flown was low five digits. The experience was so lousy I decided never to take them again. Maybe they have improved from that low point, but somehow being (trying to be?) ULCC I doubt it…

    Jet Blue on the other hand I have been happy every flight I have been on. If your averages above have any relation to reality, I would certainly pay the $60 difference on a flight over an hour for vastly better service.

  4. It’s not always about price. It’s often about value.

  5. SubwayNut says:

    Remember that that $60 in savings in the base fare on JetBlue includes a carry-on bag plus a checked bag, something Sprit would charge you about that much for so if you have luggage you might as well go with JetBlue, don’t know fully how to quantify JetBlues free drinks snacks and direct TV, something Spirit charges for or doesn’t offer.

    If I know I am going to need to check a bag on a trip I’m much more likely to choose JetBlue or Southwest than the legacy carriers even if there $20-30 more expensive since that amount is one I would end up paying back to the airline at check-in.

  6. Bill Hough says:

    Cranky: “But maybe people are gravitating toward the far superior onboard product with JetBlue.”

    Gosh, ya think?

    Subway nut: “If I know I am going to need to check a bag on a trip I?m much more likely to choose JetBlue or Southwest than the legacy carriers even if there $20-30 more expensive since that amount is one I would end up paying back to the airline at check-in.”

    I’d be willing to tolerate a higher JetBlue or Southwest simply because those airlines at least try to make the flying experience somewhat pleasant.

    • Asad says:

      hah I had the same thought. People don’t just pick the cheapest flight, they want the best value. I’d happily pay a bit more to be treated a bit nicer and have a better in flight experience.

    • Noah says:

      I think thats why spirit keeps shifting routes a la allegiant.

      Go to a city, low fares and full planes. Saturate market, then move on to a new city that is excited for new, cheap service. Until they realize they get what they pay for….

      “Fool me once…”

  7. Don says:

    Spirit is good if you are going on a trip that is less than 2 hours and you have no luggage or if you are very price concious. Anybody that is a business person that pays for their own travel who needs to get to a city for a day and back with only their briefcase will choose Spirit. Also people that like inflicting pain on themselves will also fly Spirit.

  8. I read NK is pulling out of DCA because they cannot get access to more slots whereas there is no such problem at BWI. Selfishly speaking, I am curious as to what will happen to those slots!

    I surmise they are also interested in picking up some scraps from the snail-like WN/FL integration since the two airlines combined make up roughly 85% IIRC of the passenger traffic at BWI.

    IAD’s been a low-fare black hole ever since the spectacularly wretched Independence Air implosion. Even WN has barely been on the Dulles radar since arriving, with their service now reduced to only MDW and DEN after pulling out of their typical FL markets (MCO, FLL, TPA).

    • Bill,

      That is how the Baltimore Sun worded it…as you know DCA is a controlled airport, so no surprise they are having that issue. I have predicted for a while that an airline will fill the AirTran gap at BWI. Will it be Spirit? If you read their press release, there rep implies that they will be growing there BWI operation, not just settling for flights to FLL and DFW.

      For anyone interested, great article last week in the NY Times on the creative ways that airports are utilizing huge dormant terminals. They specifically cited St. Louis, Pitt and others. Go to the NY Times web site and search on airports.

      • Please excuse my “there” instead of “their.” Doing this on the run and had a brain f__t.

      • Saw that NYT article, interesting and sad all at once, especially since I actually bothered to traverse the entirety of STL’s concourse D before they shut it down to reach the “new” terminal that WN currently occupies.

        Perhaps NK sees a potential gold mine for caribbean and intl travel out of BWI? Heaven knows there are plenty of gates available in BWI’s intl terminal! Sorry, low blow. I really think NK could develop a unique niche at BWI, possibly even along the lines of FLL (eventually). Why do I think this?

        Several reasons – there are plenty of people in MD and metro DC that do not want to traverse to IAD (especially for vacation or leisure travel), the existing service to central america and the caribbean from IAD is underwhelming, metro DC has several large populations of central americans (especially salvadorans and hondurans), the metro DC area as a whole is underserved to the caribbean and, finally, there is a gorgeous international facility waiting to be better utilized at BWI (which means NK could probably strike a good deal with BWI management to launch this service). Seems like, at least on the face of things, there are a lot of similarities to how NK’s FLL operation began.

        • Excellent points Bill! You didn’t mention the recently opened ICC, which makes it much easier for a large swath of Montgomery County (large Hispanic population to boot) to get to BWI. Your greater point about BWI vs Dulles is a spot on…don’t forget that BWI and IAD are both equidistant to downtown DC. I think a ‘discount’ operation to South and Central America out of BWI makes perfect sense. If Spirit can fill that niche, great, however, I’d rather see JetBlue.

          • Noah says:

            Jetblue tried a lot of service at IAD, including SJU, CUN, and others…The yields never materialized. Maybe NK can figure something out that B6 hasnt…

          • Sanjeev M says:

            Well B6 and Independence Air kinda failed at IAD cause all of us in DC are trapped in Mileage Plus. United domestic at IAD (esp. short haul east coast) survives on the power of the Star Alliance international connections at IAD (LH, OS, SK, TK, some QR, ET, SAA, and of course UA’s massive network over the oceans).

            BWI is convenient for MoCo people like myself. But seeing as we’re spoiled by tons of service on WN (with bags free and all), Spirit may find it hard to gain long term loyalty. Then again if they’re just looking for the really cheap seats to Florida and Central America (esp. El Salvador) then I’m sure the traffic is there for everyone.

          • MDDavid – ICC definitely a boon for BWI w/r/t MoCo traffic.

            Sanjeev – I agree re: MP hostages, especially in Virginia and IAD. The nice thing about BWI is that it doesn’t have this dynamic. While there are plenty of WN loyalists, it won’t matter if NK finds intl destinations that WN can’t fly to. However, I would argue that B6 failed at IAD moreso due to Independence Air and their raft of zillions of cheap, unsustainable flights that launched shortly after B6’s IAD launch IIRC. Remember, IAD was supposed to be B6’s Boston before BOS became their #2 east coast hub. I still haven’t forgiven I-Air (and Dennis Miller) for screwing that up for us!

          • MDDavid part 2 – You are absolutely correct about people in parts of DC that are closer to BWI than IAD. Especially most of downtown DC, Capitol Hill and the eastern quadrants. Also, anyplace with access to Metro because of the mass transit access to BWI via Union Station and Amtrak. There is also a handy and cheap express bus from the Greenbelt metro station to BWI.

            After DCA, BWI is definitely my preferred airport but I often find myself at IAD because WN’s service at IAD is so underutilized their flights to MDW are a lot cheaper at IAD than BWI!

    • CP says:

      I read (cannot remember where) that the Spirit slots were purchased by Southwest, who will use them to serve DCA-STL. (And this makes me wonder how long AA will stay in that market.)

      • CP – You are right about that. I must have blocked that from my memory because I was stunned and sickened by the fact WN got more DCA slots and STILL hasn’t figured out how to serve MDW from DCA! I agree, WN is definitely going for the death blow to AA at STL; I would think DCA-STL was one of AA’s few remaining STL routes where they were actually making money as they got rid of all the rest of STL’s non-hub destinations.

  9. So if Jetblue were to start flying every market Spirit does out of FLL Spirit would just abandon the airport? Sounds like Spirit needs to find a way to fight Jetblue and not just run away, or they will be doing that in every market another airlines competes with them.

  10. Mark says:

    Unrelated comment re Spirit: I read today that Spirit is applying to Los Cabos from SAN and DFW. I found this interesting. Spirit really seems to be trying to grow SAN.

  11. phllax says:

    While I know that both are aiming for the local market share, what’s interesting if you do a side-by-side comparison of their operations is that B6 has no multi segement flights, where as NK has 9 that either originate, terminate or intermediately stop in FLL. The thing is that both of them could do a better job offering direct flights. For example, B6 could easily have the RIC, SWF, or RDU flights continue on to NAS or SJU, but they don’t. All of NK’s international ops are single-segment flight numbers.

  12. Scott says:

    All of the previous comments here ignore the oddity that, while NK has suffered in markets where it goes up against B6, it HASN’T met a similar fate up against WN. That’s the weird thing, to me anyway. While I understand WN is no longer the low-fare carrier it once was, B6 is hardly any more “rock bottom” when it comes to price. And, like B6, WN offers a significantly better on board product than NK.

    So, the real question left unanswered: what does B6 have on NK that WN doesn’t? Could it be the power of the B6 brand?

  13. I wonder how much of this is Spirit’s willingness to be in the media in a negative light, simply because its being in the media, but JetBlue always doing their best to try to look good in the media.

    Sure, media is media, until people think of your airline as crass and rude and not worth their attention or money.

  14. Harrison says:

    JetBlue is just way better than Spirit, on all fronts.

    If JetBlue keeps up with their great services, I’m all Blue for life.

  15. Ron says:

    Just one tiny data point: last year, a friend from abroad who was planning a trip to the U.S. asked me for advice on getting from New York or Boston to southern Florida. I warmly recommended JetBlue and strongly cautioned against Spirit, based on seat pitch alone (my friend is a fairly big guy). My friend took my advice and flew JetBlue, and even booked a hotel through the JetBlue web site. If a lot of people act this way, then I see how Sprit may have a problem.

  16. Zack Rules says:

    Ultimately, Spirit has a huge problem with repeat customers. Even before JetBlue’s arrival, Spirit tried and failed at Port of Spain, Grand Cayman and Providenciales among others. And after initial success in Port Au Prince and Lima where they added a second daily flight, they ended up cutting back soon after. And it seems to be the same problem in the DFW-BOS.

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