Maybe I just need to take some LSD to become more of a visionary, but I don’t get it. I’m struggling to understand why JetBlue’s purchase of a stake in JetSuite is being hailed as a big part of its future plans for the West Coast. It just doesn’t make much sense to me.
For those not familiar, JetSuite is a private jet operator that buzzes around the West. You might remember when I took a short hop from Long Beach to Orange County on a JetSuite plane several years ago. But more recently, it launched an airline hybrid called JetSuiteX. JetSuiteX takes Embraer 135s and puts them into scheduled charter service with fewer seats on board and a private jet feel. I tried to do a media flight, but the plane broke. Then I booked another flight for myself on my own, and it was cancelled during a schedule change. So I still haven’t tried it out.
Presumably JetSuiteX is where JetBlue’s bigger interests lie since it’s closer to a commercial operation, and there’s already been cooperation there. When JetSuiteX launched, fliers could already earn TrueBlue points in JetBlue’s frequent flyer program. The founder of JetSuite, Alex Wilcox, is a former JetBlue exec, so none of this is a surprise. But can any further cooperation really be helpful enough to JetBlue to justify the investment?
It’s no secret that JetBlue is trying to figure out how it wants to serve the West Coast. It had plans to buy Virgin America, but Alaska thwarted that with a monstrous bid of its own. That leaves JetBlue with… not much. Of course it has its Long Beach focus city, but that can’t grow (not that JetBlue would likely grow it even if it could). Other than that, the West Coast is just a bunch of spokes being connected to the airline’s East Coast focus cities.
So, what does JetSuite bring to JetBlue that makes it worth the investment? Here’s how JetBlue CEO Robin Hayes put it.
JetBlue and JetSuite share a passion for delivering a high-quality customer experience at a competitive price point in underserved markets. Our investment in JetSuite makes sense as we continue to execute on our west coast plan and invest in innovative ideas that reflect the disruptive spirit of JetBlue.
Yeah, yeah, disruption, innovation, blah blah blah. But how do these pieces really fit together?
It could be about connections, but that’s hard to imagine at present. JetSuiteX has expanded and most recently announced flights from Burbank to Mammoth, a big ski resort for Southern Californians. Here’s the current route map:
As of today, San Jose, Burbank, and Las Vegas are the only cities that overlap between JetSuiteX and JetBlue. They don’t create any compelling connecting opportunities, unlike other JetBlue partner airlines. JetSuiteX’s strategy also doesn’t lend itself well to connecting partners anyway. It uses fixed base operators instead of the terminals at these airports. So while there is that possibility of doing a car service from a JetBlue aircraft to a JetSuiteX aircraft, that all seems kind of silly and expensive. It also doesn’t scale.
Another option is that this is just a way for JetBlue to be more useful to Californians who travel in general. In other words, those Californians who fly JetBlue to New York and Boston today could also think of JetBlue and their new pals at JetSuiteX when they need to do some regional flying. I’m not sure how that really benefits JetBlue all that much, especially more than the TrueBlue partnership already does today. But there could be deeper ties and marketing opportunities. It gives JetBlue the option of saying to those in North San Diego County or closer to Concord in the Bay Area: “Hey, think JetBlue and our partners from your hometown airport instead of driving to the big city.”
In a sense, that’s similar to what Southwest has said about Long Beach. If someone from Long Beach is flying to the Bay Area, people may think Southwest over the Big 3 which don’t fly there from Long Beach. But if they’re flying anyone else and have to drive to LAX, then maybe the loyalty those Long Beach flights generate will encourage them to pick Southwest over other options. JetBlue could be doing the same thing… except it has an incredibly limited number of destinations to offer West Coast travelers. That strategy doesn’t really work well. (It’s not clear that strategy will work for Southwest either, but there’s a much better chance of that.)
For these airlines to have more meaningful cooperation, JetSuiteX would have to change its model and change its route map. Maybe that’s a possibility, at least partially. After all, Long Beach has 25 open commuter slots that JetSuiteX could use. But where would those airplanes fly? Concord? Bozeman? It just seems like the markets are likely to be too thin there, even for a small regional jet. I just don’t see a whole lot of Long Beach-based opportunities. But you know, there’s that whole “disruption” thing again.
On the surface, JetSuiteX can take this money to fund expansion, something it has had on its road map already. And JetBlue can… well, I still don’t know. To me, this almost feels like JetBlue is just taking a swing in the dark, hoping to find something on the West Coast that will make it more relevant. We don’t know how much of a stake JetBlue took, so it could be so insignificant that JetBlue just thought it had nothing to lose.
You visionaries out there may see some amazing opportunity here. I’m still having trouble seeing it.
I agree, Brett. There have to be bigger plans (for better integration between the two, or an expansion, or SOMETHING) coming soon, else this just doesn’t make sense.
A few crazy ideas…
* Could this be merely the former JetBlue execs calling in favors from their people (the ones they hired and/or promoted) at JetBlue?
* Could this be the first step from JetBlue as it moves to start a quasi-independent relationship with a potential RJ carrier? Might be a decent threat or negotiating tactic to distract JetBlue’s pilots from more important issues, at the very least.
From a routes perspective, I am surprised that JetSuite doesn’t offer flights to, say, the Seattle or Portland areas from Silicon Valley or the Bay Area. Between the tech communities in those locations and the convenience of using FBOs and avoiding airport security, that might be an option to explore.
Kilroy -On the former, I think most of the execs that Alex worked with have moved on. He was one of Neeleman’s guys. Actually, Neeleman sits on the JetSuite board.
On the latter, it’s possible but there are so many issues with the model and with labor that it doesn’t seem like a smart plan.
Is it a coincidence JB reduced employee profit sharing by 5%, and then at the same time invested in JetSuite? Many, many people are baffled by this strange move…
Confused. I’m going to go out on a limb and say yes, one would certainly have nothing to do with the other.
why mention the 5% profit sharing decrease while failing to mention the 8% salary increase?
Thanks Trump with the “many, many people” comment. You MUST be confused, and not read down to the 8% salary increase.
A bunch of former JetBlue execs are over at Jet Suite. There are long ties between them and JetBlue. It’s that simple. Seems anything but “disruptive” to me. Especially since making the move from 135 commuter to a full 121 certificate would be incredibly challenging for JS.
I agree that, as of now, the investment is a little odd. All I can think of in terms of why this might make sense in the short term is that JetBlue is hoping that a) JetSuiteX customers fly Mint when they go to New York/Boston, and b) that an investment might help JetSuiteX grow (and thus grow demand for Mint in places other than Los Angeles/San Francisco). But there’s no way this becomes a keystone in JetBlue’s long term west coast growth strategy.
But, in general I don’t think it’s impossible that a big airline/little-but-premium airline partnership could be fruitful for both carriers. For example, a large carrier such as American (which last year cut some of its Pittsburgh non-hub flying) might plausibly be interested in partnering with a premium carrier such as OneJet (which now operates some of the non-hub routes from Pittsburgh that American cut, using much smaller airplanes that won’t poach many passengers from remaining AA flights). To apply this to JetBlue, maybe the long term plan is to bring JetSuiteX east to serve New York and Boston from regional destinations too small for B6 jets.
JBR – Yeah so it’s the whole “give me a bigger presence” game. If this moves over to the east coast then it seems more plausible. But JetBlue has such a tiny presence on the west coast that this isn’t going to really help. But you’d think that to force a major geography change, this would require much greater level of influence than this “non-material” stake would give.
if it were about the east and some of these smaller feeds, would it not be easier to influence Cape Air?
I haven’t seen any of this in the news, and come to think of it haven’t seen a JetSuiteX ad in the newspaper in awhile either.
Just because JetBlue gets a stake in JetSuiteX doesn’t mean they would want the same JetSuiteX routes that are currently flown. They could just have JetSuiteX change their business model to just feed JetBlue at either SFO/OAK/SJC to other cities.
Should be interesting to watch.
While its an odd choice, since this is a non-controlling interest it could be jetblue just making a financial and non-operational investment in a tiny carrier operated by friends of the B6 management. Like Cranky hard to see rhe airline case for the investment.
Simple economics …less expensive capitol assets and support systems with existing routes to handle the short hauls / overflow…leave the larger more expensive assets for the long hauls. Anytime you can expand your base and handle nit noid overflow and 50cents on the dollar compared to what it would cost to stage from scratch is the way to go…not to mention the dollar for dollar write off for several years…
Fixed-base operators, service contractors, charter line operators, whatever they are called.
If you watch Flightaware much and check out all the little jets flying hither and yon, you’ve got to wonder who all these companies really are. Who are they? Are they all on the up and up? Does FAA really have oversight over them? Organization structures that you can never quire figure out. Aircraft registered to this company or is that company.
And then there are the pilots, who if you ever had the chance to be around them, you know they are more often crazy than not! [Just me, dear souls!]
A not too local Altoona, Pa. newspaper not too long ago wrote about one pilot–arrested, sentenced, lost his appeal–yet, never seemed stopped from plying his trade. All I know is what I read in the papers–a Benjamin Frank Gottshall, working for a fixed-base Bun Air Corp (not sure if that is still its name). Might google it when you have nothing better to do. Funny, or is it tragic?
Just wondering if the all these little jet (propeller, whatever) operators around the country really are what they would want you to believe they are. [Not saying at all JetSuiteX is anyone but a perfectly good company. I presume it is.]
Maybe jetBlue is just making a financial investment. Sell a stake for higher, later.
I’m curious if B6 will use this stake to actually downguage aircraft and bring large airline branding and frequent flier benefits to California markets served by the likes of Surf Air (which isn’t in a number of these markets, but is in other similar CA markets).
With so many airlines going after conventional travelers on intra-California routes these days, B6 may figure that the best way to grow intra-California traffic is to go after the high end traffic that is looking for the convenience of an FBO type experience. Surf Air in particular does seems to be demonstrating that there’s a market for this kind of service in high end areas of the state.
Concord is located adjacent to some relatively well off areas (Walnut Creek, Brentwood etc). And there are other airports in the Bay Area in particular that could fit the bill including Novato up in Marin, not to mention Palo Alto, Moffett Field and San Carlos (where Surf Air has been building its Bay Area operation). Most of those airports are also airfield constrained, and those runway lengths are numbers you have to love if you’re one of the only kids on the block operating the kinds of aircraft that can fly from them.
I’m not sure how long the tech boom driving much of this traffic will continue, but as long as it is, there could be a place for the kind of operation mentioned above. Let’s see what happens.
There is another possibility — JetBlue sees this as a good business investment. Period. Things don’t always need to perfectly link up.
25 open commuter slots. Soon to be US Customs facility. Hiring 40ish new employees. Hmmm…
(I lucked out and didn’t have to travel there a few weeks ago, not an easy place to get to in a hurry)