JetBlue Supersizes Itself With A220 Order, A321 Upgauge

It wasn’t long ago that Airbus finalized its deal to take control of Bombardier’s CSeries aircraft program, so to celebrate, the aircraft has been renamed in the Airbus naming convention. Say hello to the A220. (No, it most certainly does not rattle off the tongue easily.) In what appears to have been a well-choreographed effort, Airbus quickly unveiled its first big order for the newest baby bus soon after the rebranding. JetBlue will take 60 of the -300 (formerly CS300) series with options for more. At the same time, JetBlue is converting 25 A320neos into the larger A321neo. Like most airlines, JetBlue has found magic in the ability to upgauge. This particular move seems like a huge win for the airline and for travelers.

Today, JetBlue operates the Embraer 190 with 100 seats. When JetBlue ordered that airplane 15 years ago, it knew it needed to get into a smaller aircraft than the A320 to grow its focus cities to their full potential. The 100-seat Embraer was the best option available at the time, and JetBlue today has 60 in operation. But it’s long been known that JetBlue wasn’t happy with the airplane. The Embraer had reliability issues, and it wasn’t as efficient as hoped. JetBlue put out a great stat saying that though the Embraer is only responsible for 11 percent of the airline’s available seat miles, it’s responsible for 20 percent of expenses. Yet JetBlue relied on that airplane to really build the backbone of its Boston focus city. Some of the destinations from Boston just couldn’t be served profitability with a bigger airplane. So we should salute the Embraer even though it’s had one foot out the door for years.

JetBlue had already deferred 24 orders out into the end of time, and it had publicly stated it was looking at its options. Now, it’s the A220 that’s the big winner. The aircraft will be delivered between 2020 and 2025 (weighted heavily into the 2023/2024 timeframe) and the Embraers will be phased out at the same time. The remaining 24 Embraers on order have been canceled.

What’s so great about the A220? Pretty much everything. In an investor presentation, it’s shown that the A220 has direct costs per seat 25 to 30 percent lower than the Embraer including ownership. So let’s do a little math. The Embraer has 100 seats, but we don’t know how many the A220 will have. SWISS has what would be 145 in an all-coach configuration, but JetBlue is more generous with legroom. Let’s say it’s 140 just for argument’s sake. If that’s true, then JetBlue can effectively fly an A220 with 35 percent more seats for about the same trip cost as it can fly an Embraer today.

That’s pretty remarkable, but won’t that be a lot of seats? Yes indeed. I’m sure some are surprised that JetBlue didn’t go for the A220-100 (formerly CS100) with fewer seats onboard. It can convert orders into the -100 if it wants, but it makes sense to go for the -300. Think about it this way. If there are smaller markets where JetBlue thinks a 100-seat airplane is good today, then the -300 can fly those just as profitably as the Embraer can even with a bunch of empty seats. But if those markets can generate a little more traffic at lower fares, then that’ll all be gravy. The economics should improve.

More importantly, this airplane now has some serious versatility. JetBlue showed the map of Boston with the A220’s range in its investor slides.

As you can see, the -300 can cover all of North America, Northern South America, and yes, it can push into the British Isles. Throw Mint on there with a less dense configuration and maybe it can do more than that. The airplane has great short-field performance. I imagine Boston and JFK will get flights to Orange County in California pretty quickly. Having those extra seats and the extra range can make a big difference in letting this airplane do a lot. (Moxy may be unhappy about this.)

It can also step in and fill in some of the thinner A320 markets with ease. Remember, JetBlue has had the A320 with 150 seats but it recently started its upgrade program which will convert them to having 162 seats. But JetBlue wants to go bigger than that. As mentioned, as part of this order, JetBlue agreed to upgauge its 25 A320neo orders into A321neos. Here’s a delivery schedule comparison from before versus today.

Those A321s in an all-coach configuration will have 200 seats, though some will likely be delivered in the 159-seat Mint configuration.

In short, JetBlue is upgauging everything. In markets like New York to Florida, that A321 will be a rock star. It’s a bottomless pit of demand in there, and the unit costs are just so low on that airplane. But on the lower end, the A220 should be a perfect fit for the airline as well. It can handle some lighter A320 markets that are too far for the Embraer to handle today. It will also provide more seats in smaller markets that could use them. Even in those markets that don’t need more seats, JetBlue can operate the larger airplane for the same cost as the Embraer. Sounds like a great strategy to me.

Other than Embraer (and those who keep typing A320 instead of A220 every…single…time, grrr), everybody wins in this deal.

(Visited 4,574 times, 1 visits today)

Get Posts via Email When They Go Live or in a Weekly Digest

33
Leave a Reply

avatar
11 Comment threads
22 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
21 Comment authors
Mark SkinnerNoahCFJonathanBetter By Design Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

newest oldest most voted
Itami
Guest

Good writeup Cranky. From where you’re writing, do you think the improved economics of the A220 bring any implications for JetBlue’s LGB operation?

noahkimmel
Member
noahkimmel

Jetblue has always had the trouble of scale. Tons of profitable opportunities, but they can only acquire aircraft so quickly and maintain a reasonable balance sheet. It is why so much of the middle of the country sits unserved, and good served markets don’t grow. (How JB couldn’t make Austin a focus back in the day is a real shame) LGBs problems seem to be less of slots and more of revenue premium. Jetblue can’t seem to generate high enough fares to justify deploying limited assets there vs. Boston. The e190 not being commuter, FIS failure, NIMBYs, and now Southwest… Read more »

Tim Dunn
Member

Perhaps the most significant part of the JetBlue announcement is that it will not begin to receive its A220s in significant amounts until 2023. They get on average less than 6 aircraft per day for 3 years and then things ramp up. So, yes, the potential for the A220s to dramatically alter B6′ network is large but it is quite a bit down the road. Part of that is because B6 said that its E190 leases will continue until the 2020s.

Chris Lobdell
Guest

What’s the ETOPS rating on the A220? BOS>RKV anyone? To your point, Cranky, this seems like a no-brainer. I’m still shocked that more US carriers haven’t embraced the newly christened A220 series. I have yet to meet a passenger who has flown on one and not raved about the roominess.

David SF eastbay
Member
David SF eastbay

I’m sure Airbus said hey buy our “new” airplane and will give you a great deal on our planes had nothing to do with this. Can’t have B6 keeping the “new” Boeing small plane in the fleet, can we Airbus.

Patrick Lundy
Guest

Is it just me or does it feel like the A220 may replace all the A320 routs that don’t need the A321?
Yes, I am asking if the A220 will end up repacleing the A320 (after the E190’s are gone) because they have none on order now.

Wes
Member
Wes

I like where you are going with this, Patrick. My first impression as well was that this order looks more like at least a partial but substantial replacement of the A320 fleet than a 1:1 replacement of the E190 fleet. I have trouble accepting that B6 views the prospect of flying A220’s with 100/140 seats sold the same as it views flying an E190 with 100/100 seats sold, even if the fuel cost will be the same in either case. From what I understand, the bulk of the efficiency gains of pretty much any new aircraft comes at cruise altitude.… Read more »

Jonathan
Member

You say “Moxy may be unhappy about this”. Do you mean Southwest?

Manu
Guest

Great read. You briefly mentioned the possibility of an A220 with Mint onboard. What do you think the odds are of that actually happening? And realistically, if JetBlue goes transatlantic, do you think the 220s may get any share of that work, or will it all go to the 321s?

Bill from DC
Guest

I’m pretty sure Airbus will never sell another A319 again.

Mark Skinner
Guest
Mark Skinner

Perhaps that’s the point. If Boeing had acquired Bombardier, then Airbus would be struggling to sell another A319, so either way, it’s a goner.

iahphx
Member

Thanks for the insight. It would seem like the A220 would cement Jetblue’s status as Boston’s airline. That’s great, but not much of a business in the grand scheme of things. What else could this airplane do for Jetblue? From a consumer standpoint, it would seem like JetBlue would be America’s Greatest Hope for a decent domestic airline. It’s services tend to be extremely humane, and good value. But they don’t tend to be terribly profitable. Rather, what seems to actually make money is Cattle Car Service (aka Spirit and Frontier) and Mega Airline Service (the legacies and Southwest). I… Read more »

Jonathan
Member

Would SNA-Hawaii nonstops be a potential with the A220-300?

Jack R
Guest
Jack R

Cranky- The A220 is a brilliant aircraft and my new favorite. However I cannot understand why they didn’t choose the A319NEO, which seats the exact same amount. The cost savings for having a single aircraft type is huge. And given JetBlue’s propensity for irregular operations, the flexibility with crew scheduling & aircraft swaps would be immeasurable. JetBlue makes a lot of questionable decisions and to me this is just one more.

noahkimmel
Member
noahkimmel

The cost savings can quickly be overblown but to you point, the e190 likely cost Jetblue more than it saved. Yes, synergy in pilots and airport equipment is nice, but a lot of maintenance is provided as a service (i.e. power by hour engines) where carriers don’t directly pay for parts and perhaps people. While single fleet is fewer pilots to train and keep on reserve, it also means all pilots on same higher pay scale. As for routes, Jetblue is growing airline which means new markets that benefit from smaller capacity. The a220 offers ability to do that and… Read more »

Mike
Guest
Mike

My 2 cents to a lot of these questions here: I think you’ll eventually see the 220 on the west coast. Particularly in the winter. Currently B6 has to use the 190s to fill the NE to FL demand in the winter because they don’t have to legs to get to the west coast. I promise that you’ll see 220s doing trans cons in the winter on the thinner routes in order to free up 320’s and 321s for the Florida flying. LGB will also get plenty of 220s since they’ll be able to fly around fewer empty seats. ETOPS… Read more »