The writing was on the wall when Long Beach changed its slot utilization rules last year. Unless JetBlue ramped up significantly, slots were going to have to be given back to the city. Sure enough, that time has come. JetBlue is giving up 10 of its current 34 slots. It’s expected that this is good news for those who like to fly Southwest, but oddly enough, the opposite may be true. It all hinges on… Delta.
The Slot Math
I don’t need to go into the long history of slots and air service at Long Beach Airport, but you can certainly search the archives here if you’d like. In recent times, Long Beach Airport has had 50 slot pairs per day for use by airplanes larger than a small regional. Until this announcement, those were divvied up as follows:
JetBlue had been as high as 35 slots but it gave one back so that Hawaiian could enter. But JetBlue never actually wanted to use all those slots anyway. It liked to vary by season and use the slots only as much as it had to in order to keep competition out. But once Southwest showed interest, JetBlue had to increase utilization. Why? Because airlines have to publish their schedules a few months in advance, and if they don’t use their slots, other airlines can step in to “temporarily” use them until the slot-holder wants them back.
Nobody wanted to temporarily use slots before, but Southwest did. JetBlue ramped up to prevent that from happening, and it was financially disastrous. Last September, JetBlue put its tail between its legs and went back down to flying 22 to 24 flights a day, where it was before it ramped up.
- Austin – 1x
- Boston – 1x
- Bozeman – 2x/week winter only
- Las Vegas – 3x
- New York/JFK – 2x
- Oakland – 2x
- Portland – 1x
- Reno – 1x
- Sacramento – 2x
- Salt Lake City – 3x
- San Francisco – 2x
- San Jose – 2x
- Seattle – 2x
- Steamboat Springs – 2x/week winter only
That’s obviously far short of the 34 slots that JetBlue controlled, but it wasn’t a problem under the old rules that said an airline could basically use its slots half the time and still keep them. The city didn’t like that, and once it tightened up utilization rules late last year, JetBlue had to either ramp up or give up the excess. It wisely chose the latter, and it will now be giving back 10 slots so it can utilize the 24 that remain as required.
The Delta Wildcard
So now the question is, who will get the slots? Much has been made of Hawaiian being first on the waitlist, but that’s just a technicality. When an airline enters Long Beach, it gets two slot pairs to use. When Hawaiian started, only one was available, so it went on the waitlist for the other one. Hawaiian reiterated to me when asked that it is still focusing on Honolulu. I don’t expect to see it pick up an extra slot.
Also on the waitlist is Delta. Spokesperson Liz Savadelis confirmed to me that “we continue to be interested in acquiring additional slots at Long Beach Airport.” I found that surprising since it already uses four slots a day to fly to Salt Lake. I can’t imagine that Salt Lake needs more service (or even the service it has), so could another hub be in the cards? The airline won’t say, but top candidates would likely be Seattle and Atlanta. I would expect all of these to be poor performers and that’s being kind, but maybe Delta is just playing the foil here. It knows Southwest wants more slots, and it has the unique ability to prevent the airline from getting them.
American remains at 3 daily flights, and I’d imagine it would more likely give up slots before it tried to acquire more.
That leaves us with Southwest, the only airline that has cared to build a non-trivial presence in Long Beach since JetBlue came to town nearly 20 years ago. Today, Southwest is running this daily schedule:
- Denver – Sat/Sun only
- Las Vegas – 3x
- Oakland – 4x
- Sacramento – 4x
- San Jose – 4x
Remember, Southwest only has 6 slots of its own, so how is it running 15 every weekday? It’s already temporarily using all those slots that JetBlue isn’t using. (Weekends are easier with even more pulldown on other airlines, and that’s why Denver can operate.) It will likely continue to do the same as long as Delta doesn’t decide to play spoiler.
If Delta wants to fight Southwest for slots, it can only be to prevent Southwest from getting them and not for actual commercial reasons. The worst case scenario would be that Delta gets 5 and Southwest gets 5, unless a dark horse enters the race. If that were to happen, Southwest would have to actually cut its schedule by 4 flights a day so Delta could operate.
I really can’t imagine this being an issue. Maybe Delta picks up one slot and then it’s not a problem for anyone. But even if Southwest gets them all, it won’t give the airline to ability to expand much beyond what it already has. At best, this will just be status quo for travelers.
The real story is not the JB pulldown or SW or DL ramp up or wildcard Allegiant or Spirit entering Long Beach, it is the progressive, indebted, broken city government that chases away all good things from Disney’s massive water park expansion to Boeing and now JetBlue. Anti-business the, now and always; but ever proud of the hundreds of homeless camped outside the dilapidated City Hall and the new half billion dollar (borrowed money) one being build next door. AOC – your dream has come true; you’re just working on the wrong coast.
this is a comical comment right? you are in fact joking?
If it is less government and more free market competition you want, then the Long Beach government stopping JetBlue from slot squatting to stop competition from running more flights at the airport is something you should be cheering….
I’ve never understood why DL uses all their Long Beach slots for Salt Lake City. The schedules have always made it a non-option for me to do the layover and I’m instead going direct into LAX and driving the 405 south….which is always so pleasant.
Meanwhile SNA has directs from ATL and MSP. If they got the LGB slots why not add directs from their other hubs like ATL, MSP or DTW. Imagine that would be a better option to feed east of the rockies traffic from their network.
This is a wild guess, but with AA’s continued expansion from DFW to smaller west coast markets formerly served only from PHX (YUM, BFL, MRY, STS, BUR, etc) it seems to me that they may be interested in one or two to launch a nonstop DFW-LGB route. May not happen, but certainly wouldn’t surprise me if it does.
I’d love this. Would open up many more possibilities for flying DCA-LGB.
So now what does JetBlue do for growth on the West Coast? My understanding is that they’re pretty limited at LAX at the moment in terms of gate space, and I can’t see them going into SNA. Any expansion potential at BUR outside of the BOS/JFK routes they already have?
Craig, you’re right LAX is limited at the moment but there maybe room for B6 to grow when the Midfield Satellite Concourse opens in fall 2020 with six narrow body gates in addition to the wide body gates.
One airport comes to mind. Jetblue somewhat recently came back to ONT. ONT can certainly handle more flights.
Dont think ONT is doing to hot for JetBlue.
They only restrarted the flight in September, and will be pulling the frequency down from daily to 5x weekly after Labor Day this year.
They cant sustain single daily flight at ONT.
I really don’t think its fair to say ONT is failing for JetBlue. I think Jetblue set themselves up for failure. When you come back to an airport and your only flight is at midnight then I don’t think you are very serious about being successful. If you were serious you would try a couple of different times and destinations (say both BOS and JFK) and see what happens.
JetBlue has actually done well at ONT since their return in August of last year. JFK-ONT flights have been quite full, with an average load factor of 87% for 2018 (quite strong for their initial 5 months of operations). The reduction from daily to 5x a week is only during Sep and Oct, with daily service resuming by the 1st of Nov. JetBlue is known to temporarily trim schedules during the Sep/Oct trough months.
ONT presents a true opportunity for JetBlue. It’s the only unconstrained LA Basin airport. Multiple available gates for an operation of scale and growth potential, unlike LAX or BUR. CBP for Mexico/Latam flights, unlike LGB or BUR. And a strong and growing local catchment area, with 5 million SoCal residents living closer to ONT than any other LA Basin airport.
Yes, ONT is a great airport for them, but the demographics aren’t as favorable as they are in LGB.
Cblock2 – Buy Alaska? Not that I think this is the right answer at this moment, but I do think acquisition is the only smart way to grow in the west. JetBlue isn’t going to come up with a west coast strategy that it grows organically. The best shot is Ontario, but I remain skeptical. And even if it could get more gates at LAX, it shouldn’t use it to develop west coast operations. It will get slaughtered behind everyone else.
Wouldn’t it be the other way around in that AS would be the buyer of B6? ALK has a bigger market cap than JBLU. OTOH, why does B6 need a west coast operation? AS does well for itself without much of an east coast presence. Even if they merged, they have very little operations in the middle of the country and still wouldn’t be able to fully compete with the big 3.
southbay – I have no idea and don’t care to speculate. It was more of a tongue in cheek comment pointing out that there is no organic west coast strategy opportunity.
I thought you were serious in suggesting a merger. Oops.
Brett, I think they are just in a possition for west coast expansion now. The yields on the west coast stuff is far lower than east coast. It simply doesn’t make sense for them to get involved in that massive market share battle around LAX when they got bigger problems in East Coast. Even if they get 5 gates at LAX, the most I can see them doing for the time being is what they do at LGB now (which is 2 flights to SFO/OAK/SMF/SJC/SEA + 3/4 flights to LAS), basically a leisure schedule. I actually can’t see them doing any better at LAX than what they got in Q4 at LGB. West coast will be for a time sometime down the road when they’ve finished with Europe expansion, BOS buildup, FLL buildup and a small MCO buildup.
FC – I think they’d do worse at LAX than they do at LGB because they’d be a number 4 or 5 at best in these markets (except Oakland, where they could be a very, very distant #2 and get slaughtered like anyone else who has tried). But that doesn’t mean LGB is a good idea. It just means it’s less bad than LAX.
If JetBlue wanted to grow on the West Coast, they would have done it at Long Beach, but apparently they couldn’t grow profitably. Yes, there are constraints (early morning, late night, international), but I don’t think that’s what stood between JetBlue and profitability. And while I regret the city’s decision to block the immigration and customs facility (I live right under the approach to runway 30 and have no issue with international flights buzzing over my house), I also don’t buy JetBlue’s story as if international flights alone would have made Long Beach into a great hub. At best, these 2–3 flights to Mexico would’ve allowed JetBlue to squat on the slots for longer while bleeding a little less money.
For whatever reasons, JetBlue couldn’t turn a profit in Long Beach despite having a stranglehold on the airport. I don’t see how they could do better anywhere else in the L.A. basin.
I still think the real story might be that city of Long Beach’s ultimate aim is to close the airport entirely. You have any idea how much that real estate is worth? With MDD and now Boeing long gone, that airport is mostly useless and would be exponentially more valuable (read: economic and tax revenue) being redeveloped as houses, shopping, and business parks.
Are there any issues relating to federal grants?
What’s the timeline to award and start utilizing the slots? If it’s before August, Southwest may not have the equipment to add additional flights.
PF – Southwest wouldn’t have growth opportunities. It is already utilizing the slots that JetBlue is giving back. But the slots should be award relatively quickly.
I am glad the City is enforcing the use it or lose is slot provision.
JetBlue for years has been playing games at LGB and dragging their feet.
Now if only the endless spate of nighttime curfrew violations could be dealt with more seriously with even harsher fines.
B6 has brought LGB services to east coast, austin. All places LGB would not get from any other carrier. And all it got out of it was that FIS fiasco. Don’t worry since they’ve cut down on the number of flights, there are far fewer curfew violations.
The slot swap story is perhaps not unlike what happened at SNA years ago. WN jumped on a bunch of slots at SNA that no one else could use and built an impressive operation using temporary slots – until other carriers wanted a piece of the action.
Even if the economics don’t really work for a lot of expansion, DL and WN are undoubtedly both interested in security a decent enough slot pool in order to have expansion capability in the LA Basin for years to come. As we just discussed on the LAX terminal article, there is very little additional airspace capacity that will be added to S. California for years to come. LGB might not be at the top of the list but it does have value- and there is a slot process, unlike what exists at ONT.
I predict there will be more interest in LGB for long term strategic purposes than because airlines are on the verge of launching a host of very profitable flights which is where new flights at SNA often fall.
B6 simply is facing too many strategic challenges across its network in order to keep flying a bunch of flights that will be valuable at some point in the future.
For a city council to have rejected a FIS facility for fear of more noise, it is baffling that they would change the slot use rules so to force slot holders to make noise or give it back to someone else who will.
Love Field put the same restriction on Southwest.
Even if Southwest wanted the slots how can they use them with the Max’s grounded, they already cancel X number of flights each day so things are tight….Delta could add SEA with the A220 or smaller, Hawaiian could add Another HNL or OGG….American could add another flight from DFW, maybe PHX but DFW is in growth mode at DFW, the most unlikely flt could be CLT, also growing….will be interesting to see how this plays out….
MC – Again, Southwest wouldn’t grow if it got all the slots. It is already flying those slots today. If it doesn’t get all the slots, then it will have to cut back what it is currently flying.
Cranky- it looks like from sept on jetBlue is only using 22 of their 24 slots. Is there any reason Southwest couldn’t continue to temporarily use the 2 additional slots? Or can they not because 22 meets the minimum usuage requirement for 24 slots? I know Delta was only looking for two last time so that leaves 8 slots Southwest could use plus two temporary unused jetBlue slots for a total of 16 daily flights possible, so they could add one more daily flight if they wanted to.
Rudy – Entirely possible. It just depends on how the chips fall. But it seems unlikely Southwest would be able to add much. A good outcome for Southwest would be status quo.
Speaking of Hawaiian, is there a chance they might be interested in an additional frequency to Honolulu? And are they considering connections beyond Hawaii? The reason I’m asking is that I’ve recently been looking for flights for a family member to travel to Seoul, and it turns out that Hawaiian is the only 1-stop option from Long Beach. Unfortunately the return flights don’t connect (too little time on the ground), and anyway, my traveler needs to fly on one of the days that Hawaiian doesn’t serve Seoul (they only fly there 5 days a week). But the concept is interesting: yes, flying to East Asia via Hawaii adds a lot of time in the air, but it turns out that the flights are much cheaper than flying nonstop from LAX, and since Hawaiian is a U.S. carrier it may make sense for those flying on limited Federal dollars. So is Hawaiian actively looking at connections beyond Hawaii, or is that just incidental opportunities to fill a few empty seats?
Ron – They don’t appear interested. Even if they did, they couldn’t push back the arrival later because of the noise curfew.
They could fly overnight if they wanted to, like they do to LAX.
Ron – Not when they’d want to. They wouldn’t be able to land until 7 in the morning. That would require something leaving well after 11 to ensure the approach doesn’t set off the noise sensors. It would also be difficult for aircraft rotations, there would need to be a lot of ground time.
Here is the thing. LGB was profitable for B6 in Q4. I know huge shocker. Their performance was actually pretty good on SFO/OAK/LAS after the cuts and their performance got better on SJC after the cuts. Not surprisinly, the routes that didn’t get trimmed did about the same as Q3. But RNO/SMF/AUS/SEA/PDX were never the problem to begin with. They make decent money to JFK. FLL was a disaster, so they cut it completely. BOS 2x daily was terrible so it’s back down to 1.
So what does WN do now in LGB? B6 is not cutting further if they are profitable there unless they get a lot of gates at LAX. WN is hemorraging money with the schedule they run now.
And if DL/HA grabs a couple of slots, WN won’t even be able to run SJC. Then, it would have no strategy at LGB. Maybe DL will add ATL-LGB as it has done with BUR/ONT. Not a chance they add LGB-SEA. If AS can’t make it work, DL is not going to try make it work and hurt it’s own performance on LAX-SEA. DL could launch SEA-BUR/ONT anyday and it hasn’t done that.
It could entice B6 to move out of LGB by giving them a couple of gates at LAX, but I don’t see WN doing that. That would be very unwise. Imo, WN will be drawing down from LGB in 2 years. Maybe it will keep OAK, but that would be it.
FC – Unless you work for the company, I’m not sure how you can know it was profitable. Revenue, sure, but route profit is not something that’s easy to derive. Still, the point isn’t so much about whether it can eke out a profit but whether it’s a better opportunity than placing those airplanes on the east coast. I would imagine it’s not.
Of course I don’t work for them and have to use publicly available data, but given LGB is mostly an O&D station and has lower cost than most of the airports they operate out of, it’s not too hard to figure out which routes are breakeven or profitable. I keep track of every one of their domestic routes.
I had average fare to OAK/SJC at $116, SFO/SMF at $108 and LAS at $94. They averaged in the $80s for OAK/SJC/SFO in the first 3 quarters and low $80s for LAS in that time frame and had lower LF. In fact, their yield to many of these places were higher than DL mainline out of LAX. If they can get these kind of numbers for the full year, I think it’s sustainable route strategy. Joanna even said in the all hands meeting that they are returning to profitability. Of course, we need an entire year to see this is not just a Q4 aberration.
I would imagine putting the aircraft in BOS/FLL is a better utilization of resource, but they do seem to want to keep a minimal presence in west coast. Maybe they want to keep the possibility of west coast growth alive for some future time. Imo, their dedication to Cuba is a far worse allocation of resource.
FC – The thing that’s never clear to me is just how much additional cost there is because of this operation. They do have a crew base out here, and there is a lot of local investment in everything from sponsorships to community support. I don’t know what else might be buried in there. It’s good to see yields rise, as I’d hope with the capacity cut that went into effect at the end of Q3, but there is no growth potential, so Long Beach can’t fit into a larger west coast strategy. It’s just a little orphan operation. If it’s profitable, great, less pressure to kill it. But is it really the best use of resources? That’s where I really get hung up.
Has Alaska indicated any interest in LGB? That’d play into their lets fly everywhere on the west coast strategy, and would allow them to poke at Delta..
Alaska left LGB several years ago. As an AS exec told me, “we were tired of having to pay people to fly from there.”
LGB is, by far, the lowest airfare market in Southern California, and one of the worst in the country. Southwest and Delta aren’t going to change that…
Nick – Yeah, Alaska was really shocked at how poorly Long Beach performed.
I think they’re snake bitten and aren’t likely to want to come back.
Sorry for the late comment.
Why dose LGB generate such poor yield?
I live near HPN in NY an airport with what look to me like a lot of similarity’s minus the focus city part, but seems to have way fewer demand side problems (although enough to cause fairly large passenger swings).
The three things I can see are,
1.Lack of connections
2. Having an rover supply of service
3. Not having a good anchor pairing, ie a New York to anywhere in Florida
What more important things I’m missing?
HPN is similar to SNA. LGB is similar to SWF. Former is high yielding. Latter is really low yielding
So I think I’m missing something.
SWF is low yielding because it’s kind of in the boondocks (middle of nowhere), despite the fact that it can handle wide bodied.
HPN has Yield because it’s closer to population centers and has some minor slot restrictions.
Is LGB more isolated in terms of traffic or lack of local population density (I don’t know the LA basin pop density well enough to judge)?
I realize that the total passenger totals are way lower for the Hudson Valley airports that for the LA ones so the analogy’s do break down.
Some of this is due to the dearth of premium class (First Class) offerings available from LGB.
But, it’s primarily a function of having had to carve a niche through pricing (fare) actions. LGB is 22 miles south & east of LAX, and 23 miles north & west of SNA (John Wayne). Jetblue attempts to compete in a catchment area that leaks a large percentage of air travellers to the superior air service offerings at either LAX or SNA.
Just a guess on my part – Jetblue likely discounts it’s regularly published tariffs heavily for close in travel dates o attract more passengers to its LGB services vs what would typically be done for close in travel.
Patrick – I think part of the problem is that those who are willing to pay more on the west side of Long Beach would rather drive to LAX to have much better frequency. Those on the east side will drive to Orange County.
It’s a frequency issue but also a loyalty issue. JetBlue can only get people from LGB to a few places while other airlines at other airports can get people anywhere. It’s hard to say for sure.