JetBlue has been hemming and hawing about going to Europe for a long time now, but it was only this month that it was made official…ish. JetBlue will go to Europe in a couple of years, even though details are scarce on what exactly that will entail. I’ve seen many people trash this decision, suggesting that no low-cost carrier can make Transatlantic flying work, but this is different. This is the first Transatlantic low-fare airline in recent memory with an actual feasible strategy, and that strategy has nothing to do with Europe. It has everything to do with Boston and New York.
All we know so far is that JetBlue will convert some of its Airbus A321neo orders into A321LR aircraft, and those airplanes will be used to fly to Europe. This won’t happen until 2021, but that didn’t stop JetBlue from announcing its first routes over the Pond. I was personally hoping for France just for the obvious re-branding opportunities.
But alas, initial service will be the more obvious option from both New York/JFK and Boston over to London. Which airport? No clue. Delta is obviously betting on Gatwick, and that’s probably the most likely outcome unless JetBlue decides to pony up for Heathrow slots.
So far, that’s about all we know which is rather annoying. JetBlue is treating this like Southwest treated Hawai’i. It seems to be stringing people along, teasing for years, before actually flying an airplane. But as with Southwest and Hawai’i, this is a big deal for the employees of JetBlue. JetBlue probably thinks that it should talk it up and rally the troops, but I’d rather just see the team keep their heads down and make sure this works when the routes are finally launched. Making it work won’t be easy.
I’ve long been skeptical of low-cost, long-haul flying. The old model for that just hasn’t worked as we can tell from the graveyard of failures. But this is something completely different for a few reasons, and I’m actually bullish on it.
The problem with low-cost carriers is they try to compete on long-haul flights with coach seats. But for much of the year, the legacy airlines fly their airplanes over the Atlantic with cheap fares in the back just to keep them full. It’s incredibly hard to compete with that, especially when the legacies have a premium cabin with absurdly high fares to pay for the entire flight. Those coach travelers are gravy outside of summer. The low-cost carriers don’t get low-cost fuel, and they just can’t beat the legacies at their own game. That’s the back of the bus problem that has caused problems for everyone who has tried to enter the market. It’s also not where JetBlue’s big opportunity lies.
While coach fares are dirt cheap, business class fares are not. Boston to London is only about 500 miles further than Boston to San Francisco, but the fares in the front cabin are a whole lot higher, and that was the case even before JetBlue entered the transcon market and brought fares down there.
JetBlue will roll out a new Mint configuration for this service, and I imagine it will have a lot of seats. If JetBlue can sell those at a discount over what’s in the market today, it will do just fine. The coach seats in the back will be important and helpful to overall profitability, but that won’t be where the pressure is. If I were the legacies, this would scare me a whole lot more than something like Norwegian and its downmarket options. JetBlue is actually competing for something far more valuable.
An Actual Customer Base
But even just having a premium cabin doesn’t solve the problem. Remember Eos? It flew premium-only aircraft from New York to London/Stansted, but it failed. It offered a great service at a low price, but there was a problem. (Ok, it had several problems, but I’m just focusing on one.) It didn’t have the loyalty or the customer base to help fill those airplanes. The legacies came in and made sure their corporate contracts didn’t defect. Then American added flights into Stansted and made fares cheap. Eos just couldn’t pry people away without an existing, loyal customer base.
That’s something JetBlue already has in both Boston and New York. It’s already making money (not enough, but it is) flying people elsewhere from those cities. So why couldn’t it do the same on flights to London? It can. This has nothing to do with London itself. This has to do with where people want to fly from New York and Boston. I think this quote from CEO Robin Hayes is telling.
London is the largest metro area JetBlue doesn’t yet serve from both Boston and New York…
Look at Boston and New York, and then look where people want to fly. JetBlue should be serving the needs of its customers, and London is just another dot on the map. JetBlue’s network also provides some insurance. While JetBlue hates to rely on connections in general, if the local markets turn to a price war, the airline will be able to survive off connections from all the other cities it serves in the US. While Delta and others might be ok with opening up a war in one city, they aren’t going to want to fight that battle all over the US in the front cabin.
If that’s the case, and there is real opportunity here, then what took JetBlue so long? Well, it was just too focused on Long Beach. Just kidding. It’s really all about the airplane.
The A321 Was Key
JetBlue can’t fly the original generation A320 series or the Embraer 190s across the Pond. It can’t even fly the A321neos reliably, but the A321LR solves that problem and it just went into service for the first time. Things get even more interesting when the A220 arrives on the scene and it can serve even smaller airports. But the narrowbody range was the constraint.
JetBlue didn’t want to branch out into widebodies. That creates a ton of seats to fill, adds complexity, and just generally makes life a whole lot harder. But with this narrowbody, there is very little complexity. Sure there are complexities with flying to Europe, but JetBlue already flies internationally extensively. This shouldn’t be a huge jump operationally.
That’s not to say that a widebody won’t come at some point in the future, but it’s a big risk to take. With the A321LR, JetBlue can go into the market with an excellent product, very low costs, and a strategic advantage in Boston and New York.
JetBlue does a lot of things that confuse me, including continuing to burn money hunting for a West Coast strategy, but this move doesn’t seem like a stretch at all. It’s just another dot on the map to help make sure the people of Boston and New York can get where they need to go. I just wish they would stop talking about it for a couple of years.