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Why Isn’t JetBlue Using All Its Slots in Long Beach? (Ask Cranky)

I received an email recently that hit close to home, literally. It was more of a plea than a question, but I thought it was still a good fit for an Ask Cranky post. This reader is very concerned about the way JetBlue is using (or not using) its Long Beach slots, and I thought it was worth addressing, particularly in light of a conversation I had with JetBlue CEO Dave Barger last month about changes he’d like to see in Long Beach. Here’s an abridged version of the email.

I (and several others) are hoping you can use your influence with JetBlue to use their remaining slots or give them up. With the new concourse and parking structure, there is enormous pressure to generate revenue. JetBlue, while legally, may not have to fly all their slots (or they may use all the alternating day of week operations per flight), they have a ‘good faith’ obligation, in my mind, to the City of Long Beach and its customers to fly all their slots or give them up.

Best Regards,

Tom

Tom brings up a point that may surprise a lot of you. Did you know that JetBlue wasn’t using all of its slots in Long Beach? Perhaps I should back up a little for those not familiar with the unique arrangement in Long Beach.

Slot Restrictions in Long Beach
Thanks to a lot of court battles over noise, Long Beach Airport is currently heavily slot-restricted with only 41 commercial flights per day permitted on aircraft with a maximum takeoff weight of more than 75,000 pounds. (For reference, a CRJ-700 is under 75,000 pounds, but a CRJ-900 and the Embraer 170/190 family are all over 75,000 pounds.) Of those 41 slots, UPS has one and FedEx has another. US Airways uses 5 to Phoenix and Delta uses 2 to Salt Lake. (The rest of Delta’s flights are on airplanes Ask Crankyweighing less than 75,000 pounds.) That leaves the remaining 32 in JetBlue’s hands. For aircraft under 75,000 pounds, there are an additional 25 slots, and only a handful are taken.

For years, JetBlue was interested in gobbling up any slot it could get so it could grow its operation. Now it looks like that appetite has been diminished. Of those 32 slots, JetBlue was flying far fewer during the winter season. But with the summer coming up, it was expected that JetBlue would operate a full schedule. That’s not happening. Every week, JetBlue could fly as many as 224 flights. This summer, JetBlue will fly just over 200. That means on average it could fly 3 more flights each day if it wanted. (Schedules vary by day of week, so that’s why I look at weekly operations.)

Naturally, the airport would like to see JetBlue use more of its slots – the more people that come through the door, the better – but it is powerless to enforce it. The rule is that airlines only need to use their slots half of the days in each month to keep them. JetBlue is easily exceeding that. But if JetBlue doesn’t want to use its slots, why would it bother holding on to them? Part of the reason is competitive, but part may also lie in what the airline would like to see happen.

Customs and Commuters
When I saw JetBlue’s CEO Dave Barger in Dublin last month, I asked him about Long Beach, as always. He was pretty quick to say that the airline wants a customs and immigration facility (Federal Inspection Services, or FIS for short), and it also would like to be able to use its Embraer 190s under the unused commuter slots that exist today.

That would indeed change things at the airport. An FIS would allow JetBlue to start up Mexico and Latin flying from Long Beach. Those are routes with higher fares and less competition. But it’s not cheap to just add an FIS. It’s also pretty difficult to convince the feds to staff another one when the budgets are tight and it just opened one last year at John Wayne Airport in Orange County. Though, if JetBlue and the airport really want to do this, I would think it would be possible to push through in time.

The second piece of this is opening up the commuter slots to be used by Embraer 190s. That would scale the operation to a point where JetBlue could likely make more money on local traffic and on connections down to Latin destinations with the right mix of airplanes.

That is a lofty goal, however. It is true that having an arbitrary weight limit to determine commuter slots is downright silly. After all, this is a noise ordinance, so it should be based on noise, not weight. And the Embraer 190s are pretty quiet aircraft. But it still requires getting the city to make the change in the noise ordinance, not the airport. If JetBlue really wants to push ahead, I foresee plenty of court battles even though it makes perfect sense.

Competitive Reasons, but Does Anyone Care?
Let’s say that this plan gets shot down, or never even really gets off the ground anyway. Would JetBlue then give up extra slots? No way. Why the heck would the airline do that? It’s using them enough to keep them, so wouldn’t it rather not allow more competition? That’s what I’d do.

Even if JetBlue did give them up, who would want them? In his letter, Tom went on to speculate about American possibly wanting slots to restart Dallas/Ft Worth. I would be very surprised if that happened. American now has the perfect way to serve Long Beach via Phoenix once the merger goes through. There is no need to start Dallas. Maybe Delta would want a couple of slots so it could use larger aircraft on its remaining Salt Lake flights, but that’s about all I could imagine. I just don’t think the demand for slots is there right now.

In the meantime, JetBlue will keep doing what’s best for its business, and that means not operating when flights are losing money. That means having a schedule with more seasonality, more flights in the summer than winter. It also means flying more flights on peak days of week than on off-peak days. If JetBlue can’t make money flying the full complement of slots, then it won’t. But I wouldn’t expect the airline to give up those slots just to be nice. The only way it gives up those slots is if it pulls out of the market completely. Let’s hope that doesn’t happen.

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