I did not see that coming. Back in December, it was revealed that noise levels had dropped so low that Long Beach Airport would add another 9 daily slots to the 41 that already existed. At the time, I wondered if there would be enough interest to fill those slots. Now we know the answer is yes.
The deadline has passed and three airlines have applied for slots. The least surprising is incumbent Delta which asked for and was given (preliminarily) two slots. More surprising was largest current slot-holder JetBlue which wanted all nine but only got three. But the biggest surprise? Southwest wants to start service at the airport. It asked for nine but only got four. Will that be enough for Southwest to start flying? It appears that way. There’s a lot of underlying strategy going on here.
Delta is No Surprise
I saw it as a given that Delta would be interested. Delta has two big jet slots today which allow it to fly CRJ-900s to Salt Lake. But it also has three commuter slots (the only 3 out of 25 at the airport which are used) which it uses to fly CRJ-700s to Salt Lake. By applying for two big jet slots this time around, Delta will have the option to standardize on larger aircraft with fewer flights. Unless Delta surprises and uses those to fly to another hub, this will just replace existing flights with bigger airplanes, leaving the commuter slots completely unused.
JetBlue Tries to Prevent Competition
Then there’s JetBlue. JetBlue has the lion’s share of slots today with 32 and it severely under-utilizes them. In the winter, it runs somewhere around 20 flights a day. That’s allowed since the rules effectively only require an airline to use slots half the time or risk losing them. But it also means that JetBlue is the one airline that could have flown to Long Beach more even before the new slots were available. And it didn’t.
So when JetBlue applies for all 9 new slots, it seems that what I said back in December is reality. “JetBlue might like to try to prevent competition by squatting on more slots.” I asked JetBlue for comment on this move.
JetBlue applied for the one-year temporary slots to enhance our 15-year history of bringing low fares and award-winning service to the Long Beach community.
We continue to be interested in offering flights to international destinations from Long Beach if and when the City requests the approval of a new Customs facility from the Federal Government.
It’s no secret that Long Beach is JetBlue’s worst performing focus city. With fuel as cheap as it is now, it probably makes money. But that hasn’t always been the case. Were I at JetBlue and I couldn’t justify utilizing all my slots, I’d be pretty scared about competition coming in and making my remaining flights perform even worse. So this has to be a defensive move. Sure, a customs facility would be great, but that’s not happening for several years, if it happens at all.
Also notice the use of the term “one-year temporary slots.” It’s true in the sense that if noise goes through the roof, then these slots would be rolled back. But that’s highly unlikely, and it’s strange to refer to the slots this way. It makes it seem like any new entrants won’t be able to maintain their service. At least, that’s how JetBlue wants it to sound.
In the preliminary award, JetBlue walked away with 3 slots. Those are 3 slots that will probably do nothing but collect dust. But it’s also 3 slots that Southwest can’t get. This is not going to curry any favor within the community. And for an airline trying to sway support for a customs facility, this is not a good move.
What is Southwest Thinking?
Now let’s get to Southwest. I’ll let my quote from back in December explain why I thought Southwest was highly unlikely to come to Long Beach.
Southwest has a very large presence at LAX (which is soon to grow when terminal work is done) and at Orange County. It would be hard to imagine Southwest showing much interest in the 9 slots at Long Beach. I’m sure it’ll take a look, but that would be a real surprise.
With a large presence at both LAX and Orange County, that leaves a pretty small catchment area around Long Beach for the airline. So why bother? There are a few possibilities here.
First, this could be the Delta strategy of wanting to blanket the metro area. Southwest is big at LAX, but it’s the biggest at Burbank, Ontario, and Orange County by far. It wants to cover the LA Basin, and Long Beach, despite not serving that unique of a market for the airline, is just another dot on the map to serve the locals.
Southwest may have tried for all 9 slots, but the preliminary award gives the airline only 4. That’s one of the smallest stations in the Southwest network and it means Southwest can’t do much. What do you do with 4 slots? My thoughts immediately wandered toward the Bay Area, Vegas, Phoenix, and Denver. Phoenix is unlikely with American already flying it up to 5 times a day. Denver is the only route with no competition on it today, but it’s also probably the weakest. Maybe it’s Oakland 4 times a day. Maybe it gets split between two markets. We’ll see.
This also could have been more of a strategic play. Does Southwest see JetBlue’s weakness as an opportunity to eliminate a player in the LA area? (LAX is a spoke; not much more.) This could be Southwest staking a claim in Long Beach as it did in Orange County. Southwest will be ready to pounce if anyone (read: JetBlue) flinches. In the meantime, it can put a little (very little) pressure on JetBlue in the market.
It’s surprising to think Southwest would even start service with just 4 slots unless it had designs on something bigger. And while Southwest can still back out, it made a big deal about this yesterday with a press release and employee town hall. It would sound pretty odd if Southwest backed away now even though it only has 4 slots.
This makes Long Beach an interesting battleground. American and Delta are happy serving their hubs and nothing more. But JetBlue has made no secret that it’ll only be happy in Long Beach if it can fly internationally. That’s an uphill battle that JetBlue probably just made tougher with this slot grab.
Meanwhile, for Southwest, this feels like the camel’s nose under the tent. But it seems to be a binary move. Either JetBlue pulls back or Southwest can’t grow. I’m sure I’ll have more to say when Southwest announces its schedule (assuming that actually happens). This is way more interesting than I thought it was going to be.
[Original camel photo via Shutterstock]
