Long Beach May Lose in the Brewing Southwest vs JetBlue War

It’s amazing how much news such a little airport like Long Beach can generate. Now of course, since I live in the shadows of the airport, it’s amplified for me. But watching JetBlue and Southwest duke it out over access is something usually reserved for a large, constrained, and desirable airport. JetBlue, the longstanding majority slot-holder, is facing a real challenge here. Most recently Southwest has added pressure by temporarily using JetBlue’s slots that go under-used today. This might sound like a great thing for competition, but it could end badly for Long Beach. It certainly puts a whole lot more pressure on JetBlue, an airline that has stuck with Long Beach despite the airport’s revenue under-performance.

JetBlue and Juice in the LBC

Long Beach Airport is fantastic for travelers, but for airlines not so much. See, being wedged in between LAX and Orange County means that it has a small catchment area. Further while convenience is great, when LAX has nonstops to every destination, it makes it even harder for Long Beach to attract people. And that’s one of the reasons that Long Beach consistently has some of the lowest fares in the nation. Travelers love that, but airlines don’t.

Over the years, JetBlue has tried several different strategies to make the airport more profitable. First it ran up to 8 daily flights to New York, focusing on long-haul. Then it shifted to a short-haul strategy around the west. Finally, it opted to just use slots less and reduce capacity. That balance created a decently profitable operation in Long Beach but one that lagged behind the rest of the airline’s system. Still, it seemed as if JetBlue thought it was good enough. Then all hell broke loose.

One of the unique features in Long Beach is that it has a noise ordinance which had kept big commercial jets operating only 41 flights out every day. But the complex formula for calculating the noise limit meant that as aircraft became quieter, more slots would be added to keep the noise near constant. As MD-80s have disappeared over the years, noise has plummeted. And with noise levels down, the airport just added 9 more slots.

This is when Southwest decided to surprise everyone and launch service in Long Beach. Southwest was able to nab four of the new slots and started flying to Oakland. This service sat right on top of JetBlue, undoubtedly hurting the performance of that route and further weakening JetBlue’s already mild performance in Long Beach.

But Southwest wasn’t done. There is a rule at the airport that airlines have to file their proposed schedules each month looking forward 180 days. That allows the airport to find if there’s going to be slack, and it can let other airlines use those slots on a temporary basis. This has been commonly used in Long Beach for a long time, primarily during the holidays when UPS and FedEx ramp up to meet demand. (Yes, cargo carriers use the same pool of slots.)

After JetBlue gave the airport its schedules through the end of the year, Southwest came in and decided it wanted in on some of the slack. So the airport announced Southwest would get 3 slots to use from October through December. Southwest will use these to fly to Vegas 3 times a day, another JetBlue route.

This sounds great for travelers, but that’s short-term thinking. While we don’t know JetBlue’s attitude toward the long-term future of Long Beach, we do know that Long Beach has under-performed other markets in JetBlue’s system. Piling on this service from Southwest into Oakland and Vegas adds further pressure. And Southwest’s decision to use temporary slots ratchets up the pressure even more.

JetBlue has two options at this point.

  1. Start better utilizing its slots, further hurting profitability, to prevent Southwest from being able to temporarily use those slots.
  2. Let Southwest continue to use those slots, further hurting JetBlue’s performance in its markets.

Either way, JetBlue’s performance is going to get worse in an airport where it was never really all that great. Now, JetBlue may decide it’s worth sticking around until it can finish its effort to get a customs facility at the airport. If that succeeds, then JetBlue will have the ability to shift capacity and better utilize its slots heading south of the border.

It has said it thinks this strategy will work in Long Beach, but this isn’t something that’s going to happen soon. Some of the locals are rising up, treating this as if JetBlue has threatened to murder their children. The city is being very cautious as it approaches this idea. If it does happen, it’s still several years away. Will JetBlue be willing to wait it out for several more years? It seems that JetBlue was happy to do that before Southwest entered the market. But with the additional capacity and fare pressure, I wonder if that changes things. Or maybe it forces JetBlue to pursue a new strategy in Long Beach. That might be the best possible outcome.

What about Southwest? Why is it doing this? Well, Southwest wants to cement its status as California’s airline in the face of American and Delta adding service while Alaska/Virgin America combine forces. Southwest thinks that serving all these secondary airports adds to its utility. In other words, if someone in Long Beach needs to go to Oakland, then Southwest is going to have a leg up on that passenger when he flies elsewhere in the country from LAX or Orange County. It helps with loyalty. And because of its presence in secondary markets within California, Southwest thinks it can do better than JetBlue can in Long Beach.

Whether any of this is true remains to be seen, but Southwest appears determined to push forward. If JetBlue were to walk away, then what would that mean? I imagine Southwest would try to make Long Beach look more like Ontario or Burbank. Those airports have plentiful flights to the Bay Area, Sacramento, Vegas, and Phoenix with a sprinkling of Denver, Dallas, and Chicago. Southwest could try that, but it’s likely to find that the catchment areas in Burbank and Ontario are larger than in Long Beach and have less overlap. If it doesn’t work, Southwest might walk away. Who knows?

Maybe I’m wrong, and Southwest proves that its strategy in Long Beach is much more sustainable. But if it’s not, then Long Beach could be left without much of anything in the long run. Or maybe this pushes JetBlue to really examine its strategy in Long Beach and come up with something that works better. This is one big question mark, but Southwest is clearly trying to force JetBlue’s hand to get to an answer.

Update 7/26: Talk about coincidental timing. JetBlue announced this morning it will add 9 flights in Long Beach, details to come soon. That means it has chosen option #1 and will fight. Those Southwest Vegas flights will be short-lived, it seems.

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67 Comments on "Long Beach May Lose in the Brewing Southwest vs JetBlue War"

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Kilroy
Guest

How does the car (parking lot) to gate travel time at LGB compare to that of LAX and other area airports? That plus the time to drive to the airport become much more important on the more local/regional flights, like Oakland and Vegas.

Also, your editing is usually spot on, but you might want to check the second sentence of this article, the one beginning with “Now…”.

Ryan K
Member

At LGB, you can park and be through security within 5-6 minutes. At LAX, unless you are parking at the short-term lots, it is at least 20-30 minutes. For those of us who live in LB and the surrounding area it is fantastic. I will say I do 90% of my flying out of LAX/SNA but when business calls in Phoenix I jump at the chance to use LGB. So due to loyalty and lack of available destinations, I feel like I am part of the problem in under utilizing the airport.

Kilroy
Guest

On a completely unrelated note, today’s LA Times reports that one group of Southern California pilots earn an average of $450k a year, with some topping $600k a year… Probably safe to say that they are among the highest paid (if not THE highest paid) group of pilots in the country.

That group? Pilots of the Port of Los Angeles (ships, not planes).

davidp627
Member
The Southern California airport situation is very interesting. There are these bygone era airports that in most other regions have been redeveloped into something else. Think about it this way – if where Long Beach airport is was nothing more than an empty field, would it be developed as an airport today? Highly unlikely. That of course begs the question: in the long run is it a better economically to close the airport and redevelop the land ? I would never want that to happen because I find these airports to be quite charming and useful. However, when you add… Read more »
noahkimmel
Member
Southwest is certainly going on the offensive. They could enter markets JetBlue doesn’t serve, like Denver, Dallas, Chicago, but instead are choosing to deliberately pressure JetBlue. I agree this does not bode well for travelers as the long run likely scenario is reduced capacity by everyone and the short term fare war may not be worth it given the already low prices. Southwest tends to price very high when they have no competition. So if Southwest stays and JetBlue leaves, fares may rise. Additionally, Southwest may realize they cannibalize other airports and reduce service. JetBlue could always go to an… Read more »
Ted
Guest

Buried in JetBlue’s A321 announcement today is a statement that they’re going to add 9 flights a day to LGB starting late this year. So I guess they’re going to double down on it.

noahkimmel
Member

these are from the previous slot allocation. Jetblue did ask for more. I guess they believe that more frequencies make the airport more attractive, as well as keeping out competitors given their history of sitting on / underutilizing slots

stuartborden
Member

Jetblue is apparently just utilizing the slots that have already been allocated to them. Before SW came along, Jetblue was reducing and reducing service, and sitting on the slots they already had. Personally, I’m glad that SW is forcing competition at LGB.

Ron
Guest

I don’t get why Southwest chose Vegas as their next destination from Long Beach, I would think another California market would be better (SFO?). Fares to Vegas are dirt cheap ($39). My first thought was connections further east, but then I noticed several cases where a LGB–LAS–East Coast connection on Southwest is priced higher than the same two flights on separate tickets. Go figure.

Also, I’m not sure what data say that Long Beach is cheap; my personal experience is that I usually pay a premium for using Long Beach over LAX.

SEAN
Guest

New York has something similar in that you pay a premium if you fly out of HPN or ISP vs the big three NYC airports. That said, Southwest does have a good number of flights to/from Islip.

Kilroy
Guest

For the NYC area, there is definitely a premium for HPN and ISO, but it comes with the benefit of convenience and lower home-to-gate time for most pax who take those flights.

Spirit FF
Member

Ron, I think you are right! With OAK and LAS, I believe WN may offer more domestic city pairs than AA or DL! WN has been reluctant to admit it, but places like OAK, PHX, LAS, etc are a hub! Think of all the new destinations offered by WN now…ABQ, DEN, DAL, HOU, SAT, MCI, MDW, BNA, MKE, EWR, DSM, ETC…

Mark
Guest

JetBlue announced today that they’ll fly a full 35 flights a day out of LGB starting this winter.

mike
Guest

I just received my SWA companion pass yesterday. In August I can fly my wife and I to Oakland from Long Beach for 1666 points.

hoorae1
Member
Your update on our LGB scenario is accurate, but a bit dramatic with the comment about “locals uprising “as if their first born is being threatened. The truth is any city that hosts an airport within their city’s boundaries ( especially one that sits directly in the middle of that city) causes concern to those who are impacted by noise and pollution affecting their families each and every day. They should be on alert and let their elected officials know how they feel about any future development affecting, literally, their own backyards. Jet Blue has been appreciated by many Long… Read more »
Michael
Guest

I never understood noise complaints, especially in circumstances where the airport was there before housing was. Um…you live by an airport, of course there will be noise. And coming from someone who has lived in Howard Beach, NY (which is a stone’s throw away from JFK’s longer runways), you get used to it.

Spirit FF
Member

Howard Beach….New Park Pizza, my favorite!

SEAN
Guest

Visiting my GF’s aunt in Long Beach a decade ago, I remember the occasional jet noise over the neighborhood & realizing that if this noise was constant, it would be unbearable. The house was one of those cute bungalows not far from Carson Street, on the east side of the city not far from Lakewood.

Nick Barnard
Member

It seems like the real loser in this is UPS and FedEx. Were they thinking about using those slots during December? If Southwest has them, I’m guessing they’ll deal and just move to an alternate airport and eat the trucking time and cost?

David SF eastbay
Member

LGB has always been a nice little airport for quick trips up the coast or to LAS/PHX. It will never be able to get people to all points in the U.S. with nonstop flights, so maybe the airport shouldn’t be expected to do that.

Spirit FF
Member
CF, Let’s be logical! I know you worked for an airline, let me ask you this. Do you think any airline would add 3 flights at a station for just over 90 days? Think of all the logistics involved from crews, aircraft rotation, maintenance, etc. Except for seasonal flights (and I’m not sure WN has any with their mickey mouse computer system), no airline would go through the expense for three months of service. My guess is, in October, 3 permanent slots will be added. JetBlue is shameful for squatting on slots for so long. Now that American has returned… Read more »
Spirit FF
Member
Agreed! They will definitely push JB in one direction or another. TBH, I’m surprised JB has stuck with LGB with all the management changes they’ve had (although, I’m glad they have stuck with LGB). We’ll see! How do we get United/SkyWest to get into LGB with IAH flights. The CRJ-700 is a perfect airplane, and proven viable for the route! I’ve flown the CR7 several times DFWLAXDFW on UAX/SkyWest, not a bad ride. There are 23 slots available under 75K lbs. Perhaps with WN’s new service at LGB, UA is looking at LGB options…that would be nice!
John
Guest

Why not just wait until October when the new noise calcs are run? If there are additional slots added, then force the issue. Why make JetBlue add 9 flights to protect the airport when in October they might need to have to decide to add 12 or 15 flights to defend it?

stewart.smith
Member

Gee, who would want to try to (profitably) run an airline?

So complex, so many variables, so much outside of one’s control.

SSmith3104

noahkimmel
Member

those of us up for a challenge!

d'Artagnan79
Guest
In the last few years, JB management says lgb is making money for them finally. Give JB as much pouting yot want,but as lgb struggled,they figure stop growth there by sitting in slots,and let the routes mature to profitability. Well,today and last several quarterly updates they said lgb is profitable, it took years of work, but the idea og them losing money as of now is no longer true, and hasn’t been for a few years now that lgb station for jb is profitable, they are ready to give it a healthy expansion of new routes which explains the bullish… Read more »
Spirit FF
Member

There is no doubt JetBlue has changed the face of this airport – for the better. They have a very loyal customer base, and that has certainly helped them as well as LGB.

The only info about an announcement regarding flights at LGB, was JB would be adding 9 flights – it did not specify where. And it was unclear, but it appeared that Mint would start out of LGB!

noahkimmel
Member

dont confuse profitable with profit-maximizing…hypothetically, Jetblue could make $1 per pax flying LGB-SFO, but $5 JFK-SDQ. Where do you allocate capacity?

Basically, is there better opportunity to make more money elsewhere? JetBlue is profitable at LGB, but that doesnt justify its growth or even existence. Given their size relative to other carriers – their decisions may not mirror Southwest, for instance, who flies to more places and has fewer ripe opportunities.

Mike
Member
Fares will rise in LGB to make it more profitable if JB is unable togointernational. If after driving out SW by utilizing those routes and adding 9 flights, JB will raise rates to stay as close to profitable as possible. E190 is a strong possibility to return to LGB as it’s under the noise variance levels and it brings the profit fee seat miles closer to profitable. It lowers overall capacity, but extra frequencies an be added. A little under two years ago this was discussed in a local newspaper. A repair facility was unavailable before, but with the exodus… Read more »
hoorae1
Member
Mike, You are inaccurate when you insinuate that JB may bring the E190 to LGB unless of course you are suggesting that they will use that aircraft to fill the slots they have sat on for the past several years. The E190 does not qualify for commuter slots because of its weight. According to our noise ordinance commuter planes must be under 75K pounds. Jet Blue did attempt to get the city council to adjust those numbers to accommodate the aircraft when they first purchased them. It was clearly explained to JB by our city attorney that this was not… Read more »
Spirit FF
Member
Rae, I would like to add to your comments. While airport revenues cannot be used for the general fund, concessions, car rentals, hotels, all contribute to the general fund. Just to give you an idea, Southwest, with their new service has one aircraft/crew that remains overnight. A standard crew of 5 generates approximately $183,000 in annual revenue for the hotel and tax for the city (based on $100/night). That’s virtually guaranteed and only 5 people. Now, let’s add all the passengers that come into LGB. While I no longer live in LB, I fly into LGB all the time. My… Read more »
Jaymanlb
Member
I live in/own a business in Long Beach. I LOVE LGB and I see it as a huge quality of life for me and my employees as we are a consulting firm and travel 80% of the time. What jetBlue hasn’t understood is that although Cranky keeps on saying that LGB doesn’t have a large cachement area (we sit midway between LAX and SNA), the fact is that we are MIDWAY between LAX and SNA (which means our cachement area is actually a big swath of Southern California), and there are many business travelers here who would happily and gladly… Read more »
Mike
Member

Agreed. If 19 is brought back, those mid range destinations will be serviced easier.

hoorae1
Member
Most locals I know that are NOT supportive of our council allowing international flying our of LGB are concerned about the value of their homes and the quality of life impacts that would result if LB were to lose our coveted noise ordinance. Sorry about the inconvenience that you experience from having to make that difficult drive to LAX. You could try John Wayne, twenty minutes in the opposite direction. Just sayin’………………..there are no guarantees that this protection can withstand corporate challenges as they battle each other for the privilege of flying out of our boutique airport.
Mike
Member

Not an option as John Wayne is slotted and no available. Noise level of those domestic planes are the same ones flying international. Your point has no credibility or common sense. Again 190 would be used on those routes, more than likely. Also Bombardier CS 100 is a possibility as Jet Blue is talks to be a launch airline. Their power plant would also fall under the noise restrictions.

hoorae1
Member

The Bombardier CS100 weighs 134,000 lbs. That is 59,000 lbs over the allowable weight for commuter planes. They are welcome to use any aircraft that is over 75,000 lbs. for their commercial flight slots.

And the point is not what the airline destination may be – it is the opening of Pandora’s Box by adding another enticement to LGB that outside carriers may desire. We’ll all know more when the FIS study is released within the next month. Until then, I recommend erring on the side of caution in all decisions!

Mike
Member

The range of the CS100 will keep it as well as the 190 extended version out of commuter classification.

hoorae1
Member

Read the LB noise ordinance……weight is what identifies commuter versus commercial aircraft.

Stay tuned…….

Mike
Member

They will be able to handle transcoms

Spirit FF
Member

No where does anyone say bringing back the E-190 B6 will want to use the commuter slots! It’s a matter of matching frequency with capacity. With B6s A320s seating 150, and the added flights, that’s a lot of extra seats they will have to fill. Replacing the A320 with the E-190, that would reduce capacity by about 30% per flight (the E-190 seats 100).

Mike
Member

Which would allow them to use all allotted slots without a multitude of open seats. Seasonally they can switch back to A320 for greater capacity when needed. This would free up A320’s for more profitable and higher capacity flights.

hoorae1
Member

Again…….it is not about what best serves the bottom line for the airline, it is about the definition of commercial versus commuter aircraft within our noise ordinance.

Mike
Member

What, you think it’s a philanthropist organization ?? Seems that it’s more of a win for both sides. There are drawbacks in any growth or change, but it seems both gain overall. It’s seems it becomes a case of wanting something, but not here !!! The rich areas want to move it elsewhere.

Spirit FF
Member
Rae, please READ CAREFULLY the previous posts. It is about what is best for the airline – they are in business to make money (much to the dismay of politicians like yourself). JetBlue, we predict, will match frequency and capacity. No one has ever been successful offering 4 flight or more to on short haul routes out of LGB. We are simply saying they will be moving to an aircraft with less capacity (E190). NO ONE EVER SAID THEY WANT TO USE COMMUTER SLOTS!!! That issue was addressed. Please refrain from using hasty generalizations when talking about the airport. Most… Read more »
hoorae1
Member
Spirit FF……..sorry if I misunderstood your reference to the E190. I was simply trying to clarify. It appears you are with an airline or other user group at LGB. Also sounds as if you have been around Long Beach for awhile. To be clear, I do want LGB to be a successful municipal airport. I worked hard for many years to realize what we share today. I’ve been involved in the community movement to control growth since 1985 when 8th district councilman Edd Tuttle lead the charge. After 30 years the idea of risking what was so long fought to… Read more »
JJ
Guest

John Wayne also has noise restrictions which impede it from growing. Like one of the FA’s commented as the engines quieted down while we were taking off over Newport Beach, “Shhhhh… we’re flying over rich people.”

Also, the weight classification of airplanes does not reflect how much more quiet planes are nowadays. LGB can handle significantly more flights but the NIMBYS stop it.

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