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 
weighing 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.
49 comments on “Why Isn’t JetBlue Using All Its Slots in Long Beach? (Ask Cranky)”
Nobody wants those slots, not even B6 apparently. LGB is a bit like a slotted ONT–for a number of reasons, people only fly out of those airports at a steep discount to LAX and even other airports in the area. Until that changes, LGB slots are going to continue to be as valuable as Beanie Babies.
I don’t think that’s entirely true, ONT would cut off their right arm for 200 flights per week from any carrier, much less an airline like B6. Not sure they have 200 flights per week total these days.
Southwest flies 235 of the 434 weekly departures at ONT, according to the DOT for July
Thanks, obviously that’s more than I thought WN had in place there.
Why is the use-it-or-lose-it level set at only 50% of slot usage ? City statute, state law or Federal rule ?
If there is genuine demand for those unused slots, how difficult would it be to raise the threshold from 50% to 80% ?
CF said above that its a city ordinance that sets up the slots.
I’ve always found it odd that slots are set up with a perpetual lease. I’m surprised that there isn’t some sort of auction system, but I guess that’d raise the price of tickets too much..
Annual auctions may make planning difficult and add uncertainty to consumers, but from a macro-economic perspective, it allows the most people to be served at the best prices by allocating slots to the highest need cities. Though it makes a hub operation difficult.
If nothing else, the leases should not be perpetuities, 3-5 years would be good.
To nit pick, this is an issue of microeconomics, not macroeconomics, but otherwise I agree with you entirely. Make the slots fully tradeable, remove the arbitrary weight limit, and the amount of inefficiencies will vastly diminish.
Not really on point but I can’t believe there was never a customs station at SNA until a year ago?!?!?!
Also, what is the slot usage requirement when the slots are controlled federally? I thought the DCA slots, for example, had to be used a very high proportion of times or else they would revert back to DOT for re-bid. Long Beach could change this portion of their law although it might not be able to make it retroactive.
Bill – I don’t think there is a set rule on how slots work. They can be set up differently for each place.
Another thing – why does B6 care about getting the 190s into the “commuter” slots when they aren’t using all of the regular slots to begin with? Obviously, they could want this for future growth but it doesn’t seem they are growing there and maybe they are just throwing this out as a negotiating tool to get what it seems they really want, a customs station.
I was thinking the same thing. Use up all the slots, then stick your hand out and ask for more. I wish JetBlue would add more west coast cities that don’t have a LA connection, but I understand that’s not what they are about.
the 190’s only hold 100 passengers, if you fly a 190 75% full it is 75 passengers, If you fly a 320 with 75 passengers you lose money…less flights mean fuller aircraft
Look at MEM for what happens when a hub does not have the right frequency and aircraft sizes…If the e190 were allowed as commuter, B6 could more profitably fly to new destinations at higher frequency, allowing more connecting traffic and lower costs and creating a virtuous cycle of growth.
They dont use 190s now and fill slots likely because there is no e190 Pilot base at LGB (IIRC) and no cheap/efficient way to route enough planes there to overcome the costs of having a 2nd fleet type out west. To get more spare parts, MX training, towbars, deadheading pilots, etc. all for 2-3 a/c makes no sense. The original plan was to use AUS to connect the e190s out west. When the 190s had MX issues, AUS didnt really take hold, and the commuter slots weren’t granted, Jetblue changed strategy in LA and entered LAX as well as focused growth in other parts of the network.
The current weight limit for a noise ordinance is stupid. I would think B6 still has plans in mind for LGB (especially after the rennovation), but if there is always a government or community challenge, they can easily deploy assets to some other carribbean island with full flights and marketing incentives.
but what’s stopping them from using E190s in slots they currently have but are not using?
Bill – Nothing is stopping JetBlue from using those slots in the existing slots today. They used to have E 190s out this way, but they pulled them all out of here. I believe the biggest driver was the pretty terrible reliability of those airplanes. Not doing much maintenance out this way made it tough, so they put them all in the east to try to improve reliability.
I think the idea with the commuter slots and the FIS is that then they can serve more cities and build more of a hub-ish structure in Long Beach. They don’t have enough slots to really try that today, but with 20 more flights, it could be different.
I’m starting to fly JetBlue and their E 190s. Should I be worried that they are not well maintained??
MarylandDavid – It’s not that they aren’t well-maintained. They just had a lot of teething issues early on. So they’re maintaining them well, it’s just that they needed a lot of maintenance.
White Plains NY has similar restrictions, although HPN is a tiny airport compared to LGB. Both airports abut residential neighborhoods rather tightly & in HPN’s case, a small area of Greenwich CT has some degree of influance on what happens there.
As for slots, remember B6 at one time had it’s transcan flights in LGB & OAK as to avoid SFO & LAX. Over time B6 diverted a portion of those flights to serve the larger airports & moved away from the bracketing stratigy.
Per the SJC website, “in October 2003, Mineta San José International Airport (SJC), with the approval of the Federal Aviation Administration (FAA), revised the curfew portion of its noise control program from a weight-based curfew to a noise-based curfew. The revised noise control program also included enforcement provisions where operators are fined $2,500 for every curfew intrusion.
Noise-Based Curfew
FAR 36 Stage II aircraft may not operate between the hours of 11:00 p.m. and 7:00 a.m.
FAR 36 Stage III aircraft at or below 89.0 EPNdB per FAR AC 36-1H average of takeoff/sideline/approach noise levels, or any other ?grandfathered? Stage 3 Jet Aircraft can operate between the hours of 11:30 p.m. to 6:30 a.m.”
I ask, how come LGB is still getting away with a weight-based restriction?
They “get away” with it because their noise statutes are grandfathered in under the Airport Noise and Capacity Act (ANCA) of 1990. They could make changes to their noise rules to allow for easier access (such as what SJC did) but can’t restrict operations any further than they already do. But it’s the airport’s call to make the change, at which point the FAA can approve or reject it.
Bill Hough, I think the fear in the city is that since the noise ordinance is grandfathered, then any change (however minor) could trigger a series of lawsuits that might end up removing the noise ordinance altogether. I don’t know if this fear is grounded in reality, but my understanding is that this is why the city is unwilling to consider changes even if those make sense.
I think Ron is right. There is this fear that if they change the noise ordinance, the whole thing will fall apart. I have no idea if that’s reality or just paranoia and excuse.
Thanks for clarifying. Obviously someone with deep pockets needs to sue Long Beach like Larry Ellison sued SJC:
http://www.thefreelibrary.com/Oracle+Corp+CEO+to+sue+San+Jose+International+Airport+over+heavy…-a058514434
And where do you live Mr. Hough? Most likely not under a flight path. Long Beach is fortunate to have the power / influence of our noise ordinance to protect the neighborhoods as well as ensuring property tax dollars remain stable for the city.
Welcome to the conversation, Rae Gabelich. For those who are unaware, Rae is my former Long Beach city councilwoman in district 8, on the northwest side of the airport. She was one of the staunchest opponents of the airport for years, but softened her tone and joined in supporting the current plan over time.
While I can’t speak for Bill Hough, I can speak for myself. I live in your former district under the flight path. The airport has been here for about 85 years longer than I, and I knew what was here when I moved in. I fully support that economic engine that is Long Beach airport and that means more flights during the day, that’s great. I have no problem with the overnight noise ordinance since demand is pretty light at those times anyway. But there’s no good reason to avoid having more flights during the day when it could mean so much to the local economy. You get used to the noise.
Again, I state the fact that JB has a “niche” market in LGB. The problems is, and I cannot emphasize this enough, that their “change fee” program really hurts their ability to service their California intrastate marketplace. I would love to use JB more, but their “restrictive” change fee, as opposed to Southwest, kills my ability to use JB from LGB to Oakland. I have written to JB, and asked [at least for their “commuter” flights] to consider a lower change fee out of LGB to California destinations. Would I love to dump the “cattle call” that is Southwest – you bet. I “have to use” Southwest 60-70 times a year because of my schedule that requires flexibility to change my flights. I’m afraid that JB’s rationale of using a national fee mentality for the California commuter market is hurting them badly. When AA and USAir merge, do you will see LGB to SJC/OAK/SFO, further eroding JB’s niche position? Does anyone at JB read these blogs? They should.
AA and USAir both bought California-based airlines back in the ’80’s- AirCal and PSA respectively. Both airlines dismantled their acquired California “commuter” ops over time. It’s highly unlikely you’ll see the new AA pick that flying back up again, especially out of LGB.
AA and USAir bought California-based airlines back in the ’80’s (AirCal and PSA respectively) and ended up abandoning their acquired “commuter” operations a few years later. It’s highly unlikely you’ll see the new AA pick up that kind of intrastate flying. Especially not out of LGB.
Also I’m skeptical that JetBlue’s change fees are hindering their LGB operation that much. US Airways and Delta both apply their now $200 change fee policy(or $50 same day change fee) on their east coast Shuttle flights. Granted not everyone has to pay those depending on the fare purchased/FF status but it hasn’t stopped them from keeping the policy in place for those flights.
Aside from AYCJ/Go Packs and free changes for Mosaic members.
Jetblue offers a free same day standby 1 flight earlier and small fee same day confirmed changes. Southwest may offer no fees, but the fare differences if your on a Want to Get Away fare can be more than Jetblue’s fee. I love WN and their customer friendly policies, but don’t kid yourself, you pay for it up front rather than on an ancillary basis.
There you go. If you fly that much, you should sign up to be a Mosaic member at which point the change fee is irrelevant.
JetBlue is not a low fare carrier, sometimes I have found cheaper flights on AA, Business class from JFJ-LAX than i can get on jetblue, and true, the change fees are nuts. I used points for a flight, cancelled and was charged the $100 change fees to get my poitns back.
JetBlue only flies a handful of flights between JFK-LAX on A320s. Once the low-fare seats sell out you’re looking at far higher airfares, at which point the fares on legacy carriers can be slightly lower in some cases. It’s not that uncommon. Also pretty much every airline (except Southwest) will slap you with a cancellation fee.
B6 has the lowest average fare on most (all?) transcons by a mile so I don’t know how that would be possible on any regular basis.
wow i have flown jetblue to long beach a few times and it seems every flight i was on was 95% full or more…i even sat waiting for my flight to depart and counted pax coming off the planes……FULL…..clearly they can use all there slots and make money…or give them up…..let someone else fly to LGB
I do think the airline will get a FIS in LGB. It makes sense for the city and starts to make LGB look like a small but competitive airport. Plus this airport really does coddle to b6. When the airline says build a new parking structure and build us a new facility those things went up (in my opinion very fast). I couldn’t believe my eyes when I stepped into the new place. Not sure about those E190 commuter slots. I don’t think that will ever happen. However, I am seeing LAX get more transcons than LGB. It is starting to concern me. If they build up LAX they might shrink LGB. And I can’t stand LAX. I’d even take BUR over LAX (I know that will NEVER happen, since they shrunk that operation as did all the other carriers). Look what happened at SFO and OAK. B6 moved most flights to SFO. Even with the other airport being less crowded and having less competition b6 gave most stuff to SFO. And now OAK may never see what it had once before.
I think the LAX buildup was partly a competitive stance, but partly a snub to LGB for taking so long to build the new terminal and not moving on the commuter slots or FIS. Just as MCO buildup was a reaction to FLL not adding another runway.
In time, everything happens, but I don’t think this was as friendly as you make it seem. LGB does try to accomodate B6, but they should given the massive increase in Pax traffic, jobs, and economic activity (cargo shipment, etc.) that B6 has brought, they should. LGB is consistently ranked as one of the best airports in the country, and a large reason is its main tenant.
Why not use those slots to serve Canadian destinations where pax are pre cleared through customs? That would significantly open the market and eliminate the need for FIS at LGB.
AFAIK they still have to fly to a location that has FIS services available..
Cranky, you don’t think that the demand for slots is there right now. However, on several recent itinerary searches I found that fares on Delta and Alaska were consistently higher from LGB than from LAX. Wouldn’t this suggest there’s some pent-up demand for seats on those routes?
Ron – I wouldn’t be able to really comment on that without looking at the actual data. Just a few searches are not enough to show whether or not Alaska and Delta are actually getting higher fares on the airplane or not. But remember, Alaska had slots and gave the up so it can now only fly CRJ-700s in commuter slots. It clearly didn’t think it worked last time on a bigger airplane.
The latest DOT data shows that both AS and DL get significantly lower fares out of LGB than out of LAX. Just on the LGB locals AS fares are 26% lower to SEA and 29% lower to PDX while DL is 23% lower to SLC. Most of the connecting fares are similar or worse (not to mention that most have a non-stop option out of LAX). B6 gets about the same fare from LGB as from LAX on their two duplicative services (JFK & BOS).
Good point on if the aircraft is quiet why should the size of the aircraft matter.
Can’t they lease the slots to another airline? They could require that the other airline only fly to destinations they don’t serve from LGB.
And I agree that getting FIS at Long Beach is probably not going to happen. There is no need for another international airport in SoCal.
Jim – No. You either use the slots or you lose them.
Or you don’t use them and don’t lose them, as appears to be the case here! :-)
The only way it gives up those slots is if it pulls out of the market completely. I wouldn’t count on it. This is big business and once your in the market, you hope to stay. But why not ‘grow’? Use those slots to Canadians like myself. I believe there is a market