60 responses to “JetBlue Leaves a Bad Situation in Long Beach for Something Worse at LAX”

1. 

   FC

   Jul 13, 2020 at 4:34 am

   To me, the rationale for this and the EWR/JFK moves are quite straight forward. JetBlue is growing up to become a legacy lite.

   If we go back 6 months ago, JetBlue was basically cornered in Northeast facing pressure in both BOS and JFK. While the product is good, they had (and still have) some serious network deficiencies which leaves them as more of a luxury leisure carrier rather than someone that can compete for top business dollars. The top issues facing them in getting really high valued corporate dollar in Boston (but especially New York were)
   – No options to fly to Europe, which makes them unappealing to a lot of firms with London and New York as their largest office (basically all the major banks)
   – Irrelevance in west coast, which makes them unappealing to a lot of firms with coastal offices
   – No presence in middle of country, which makes them unappealing to anyone that needs to fly to places outside of coasts.
   – Horrible IRROPS handling when weather wreaks havoc in northeast.

   So step forward 6 months, we find JFK slots widely available (AA gave up a bunch), EWR gate spaces widely available(UA is flying very little). No more pressure from DL for the next year in JFK and BOS, since they are bringing back JFK/LGA/BOS slower than all of their other hubs. LGA slots will probably become available. WN is no where to be found around major JetBlue initiatives. So now, they actually have room to add enough flights in jFK/EWR to cover all the major domestic markets and do the same for BOS. Slots in Europe suddenly opened up, so they are planning to fly to London by next summer. Things have got so good in NY/NJ that they managed to add 30 routes without one at BOS.

   Basically, BOS and Florida will be sacrificed for a while until they finish building out in NY/NJ. The shift has shifted to challenge UA/DL for crown in NY/NJ area. Instead of just entering middle of the country markets from BOS, now they have reasons to also add them for NY. Think of a place like IND for example. Now they can at BOS to it to support its BOS operation. It can more easily enter the market from JFK with AA likely to exit the market and DL likely to shrink as long as TATL is down. They can even add it from EWR since only UA is in the market. You connect all these middle of the country dots and now they national network from both NY and Boston.

   Before, when you have a long delay of cancellation out of BOS to DFW/MSP, you can get there. Now, there is an additional option to connect at JFK. The type of strategy they can run in Northeast, especially between MA and Eastern PA, becomes quite different when you go from 230 flights in NY/NJ area to 350 flights. Now, you fly more passengers than UA and almost as many as DL.

   The only shoe left in that is west coast presence. And now, it looks like they have found enough space at LAX to have a west coast hub. This allows them to have a 3 corner strategy of northeast, Florida and southern California. Keep in mind a lot of the big firms basically have offices in these 3 areas and Europe. So by having a reasonable sized operation in both, they can get a slice of the corporate pie that have eluded them so far. So building a presence in LAX is very much a network oriented move that should help their performance in NYC/Boston and Florida. Again, most of these moves won’t start until 2023. The focus in the next couple of years are JFK, EWR and Europe. Keep in mind, that adding stuff like LAX-BDL/HPN/CHS/JAX/PBI will also help their presence for east coast cities where they have good brand recognition.

   Are they going to lose money out of LAX for those 9 west coast flights? Of course. But I see that as a small sacrifice for a few years until they start building things in 2023. There are also cost savings from not splitting stuff between LGB and LAX. Despite being the only carrier between LGB and places like SMF/SFO/AUS, they really never enjoyed any kind of fare premium for that. JetBlue is simply going where the money is.

   Reply
2. 

   Oliver

   Jul 13, 2020 at 5:59 am

   As a west coast leisure traveler, I have never really had the opportunity to fly B6. I have a bunch of points in their loyalty program from Amazon purchases, but really no good way to use them. I might have given them a try on PDX-Long Beach one of these years for the convenience of avoiding LAX and to see Cranky’s favorite airport in person… but that’s toast now. I don’t see who would really consider them for short haul on the west coast unless they are significantly cheaper than the alternatives to overcome the scheduling and loyalty disadvantages.

   Reply
   1. 

      SEAN

      Jul 13, 2020 at 8:59 am

      Before long you will see AS & B6 join forces. It will be a merger of necessity.

      Reply
      1. 

         Eric

         Jul 13, 2020 at 9:30 am

         Or Southwest. This would give Southwest a footprint into Northeast markets and eliminates a Florida competitor. Southwest needs to take a step forward at some point. How much more domestic share can they possibly gain? I think their next growth phase needs to be increasing international via the model JetBlue is going to use (single aisle aircraft from the northeast).

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         1. 

            SEAN

            Jul 13, 2020 at 10:37 am

            I don’t see it as WN uses only B737’s & I cant see them attempting fleet complexity. Also they tried EWR & it didn’t work for them & they are just holding on at PHL.

            Reply
         2. 

            Brian W Gasser

            Jul 14, 2020 at 7:40 pm

            The govt is not going to allow any of the Big 4 which control 80% of the market to merge with B6.

            Reply
3. 

   Jason H

   Jul 13, 2020 at 6:10 am

   Just because JetBlue says it has all these plans for LAX in the next 1, 3, or 5 years doesn’t mean that their plans can’t change. If they see that flights to (say) Seattle are half empty and never profitable, they can easily drop those with a month or two notice and move things around; in fact I’d be pretty shocked if in a years time they keep flying all the destinations listed with no changes. And if none of the new flights from LAX ever make money, there’s very little stopping JetBlue from reverting LAX to its current state and finding other cities to focus on.

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4. 

   Tim Dunn

   Jul 13, 2020 at 6:20 am

   I largely agree with FC other than that JBLU is doing what it is now other than
   1. It needs a larger relevance on the west coast and did it basically by flying to secondary cities from JFK and BOS that are not sustainable in a reduced demand environment – as well as LGB
   2. B6 burned its bridges at LGB and vice versa. WN will add enough service to dominate the LGB market but there is enough capacity at LAX for everyone to grow and LAX is a far richer market even if it is more competitive and more costly.
   3. B6 won’t dominate either JFK or BOS right now because traffic there will be depressed; you can’t stimulate traffic that doesn’t exist. DL and maybe AA will add back capacity where it makes sense but looking at how much capacity any airline has in any market right now is not a measure of success but rather a willingness to defend or grow one’s turf.
   4. B6’s move at LAX has to be seen alongside its moves at EWR and PHL – adding capacity across the NE to build its brand and diversifying its network away from JFK and BOS
   5. As is typical for B6, they announce grand plans far in advance of when they can achieve them so give competitors ample opportunity to come up w/ competitive strategies.
   6. B6 will have a minimal presence from LAX other than to NYC and BOS – but those are large, valuable markets and there is a high chance they will push AS out of the transcons. Absent the transcons and given that AA’s A321T strategy is losing far more money than other airlines right now (it was even before), AA and AS look less compelling even as joined forces – which is good for B6 and for DL; don’t forget that DL has grown in both BOS and NYC alongside B6 and will likely do the same in LAX.
   7. UA doesn’t have the cash to fight aggressively. They will fly what they otherwise would have but B6 will gain a significant share at EWR – giving B6 a decent presence at JFK.
   From a larger picture, what B6 is doing does make sense. It is a risky strategy that will require lots of financial strength – but B6 has that to a greater degree than AA and UA right now.
   I don’t think we will see any real growth in the airline industry until the virus is contained but B6 is rearranging the industry and setting out its strategy for the next several years and they will probably grow because of it, not because of a few one-off markets within the west but because of a larger transcon presence where they have proven they can do well.

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5. 

   Jason

   Jul 13, 2020 at 6:25 am

   This move to LAX with it’s Spin as a west coast focus city is just a Crew morale and local PR fluff. With this covid environment they finally found the opportunity to kill LGB without upsetting it’s staff and being looked on as failure in the local SoCal news.
   No matter what the spin It’s still going to sting for the staff. They are going from a easy 10 minute park and walk from the employee lot at LGB to work. To a chaotic 30 mins at minimum On the horrible LAX employee Bus. Add the 405 traffic which can quadruple at peak hours just getting to and from work. I feel for them. Someone may say take the Metro Blue line to the green line but those are ten times worse for the worker bees.
   Back to the airport switch.
   Once the PR fluff dies down JetBlue will silently drop the west coast short hops in favor of more longer mint flights to east coast 2nd tier markets like BDL,CHS,JAX,PBI this will utilize the gates better. SLC will probably be one of the few short hops the remains.
   With JetBlue’s less than daily schedule as of now And horrible loads on what they are planning to fly August-October 6. I wouldn’t be surprised if they cut everything but a few weekly flights to SLC until the end of days at LGB. But I think that Cares Act Loans tied their hands from chopping LGB before OCT.

   Who will fill the void in LGB?
   It’s quite possible Southwest will jump on all the slots but even I’m skeptical of that happening.
   But industry speculation So far now have Amazon Prime,Spirit,Frontier,Sun Country and Breeze making bids in the upcoming lottery.
   Will Delta or Hawaiian grab additional slots? PreCovid maybe post Covid probably not.

   I’m sure with the upcoming A220 SNA on the JetBlue short list.
   SNA would gladly hold seats back to welcome JetBlue if it means adding JFK and BOS non stops to it’s Airport profile.

   Reply
6. 

   Eastern 727 Whisperjet

   Jul 13, 2020 at 6:56 am

   I am curious what Cranky and the commenters think this move out of Long Beach might mean regarding the following:

   1) Will United try to get back into JFK at some point? With jetBlue offering service between LAX and both EWR and JFK with the “Mint” product, I think it puts United (and, to a lesser extent, Delta and American) in a bit of a “situation”. To remain competitive, in my opinion, United will need to get back in to Kennedy, as serving both sides of the Hudson is key (as EWR and JFK truly serve entirely different suburban markets, unlike LAX and Long Beach, I feel). United will be at a very significant competititve disadvantage if it doesn’t get back into JFK, unless…

   2) The perimeter rule at LGA is (finally) rescinded. With jetBlue ramping up service at Newark, does it mean that United will push for the often-mentioned removal of LGA’s perimeter, allowing for transcon service from LGA? (As far as I understand it – and please correct me if I am wrong – there are essentially no technical limitations at this point for transcon service at LGA). Even jetBlue might be willing at this point, as its setup at the Marine Air terminal at LGA is quite nice, although it may need some work (more carousels, etc.) to accommodate transcons.

   Many thanks!

   Reply
   1. 

      Tim Dunn

      Jul 13, 2020 at 9:40 am

      I don’t believe that UA will succeed at getting back to JFK not because it couldn’t get gates or slots but because it can’t break into a market that it left and do so on a niche basis. It would still be a distant #3 to DL and B6 at JFK, even if AA sticks around – and it will be a cold, hard day (not impossible) if AA drops JFK-LAX/SFO which is where UA would likely try to restart. Further, UA restarting JFK transcons would certainly lead to DL adding EWR transcons.

      Further, AS has flown JFK and EWR to the west coast for years, whether successful or not. The chances are high that B6 just replaces AS in serving both EWR and JFK w/ transcon service. The bigger issue is B6′ buildup of EWR to non-transcon markets.

      You are correct that UA will undoubtedly push for more access to LGA – but it isn’t a given that DL and AA, the two largest LGA slot holders, are going to walk away from much in the way of slots when they are pushed to use them or lose them.

      As for removing the perimeter restriction, that will be a death sentence for AA’s remaining presence at JFK as well as eliminate the need for UA to get into JFK. It is very unlikely to happen given that no NYC airport will be operating anywhere near capacity for quite some time, not just due to covid but because of a certain accelerated migration out of NYC for many reasons.

      Reply
      1. 

         Eastern 727 Whisperjet

         Jul 13, 2020 at 10:28 am

         Tim – Agreed, if the perimeter restriction is lifted at LGA, then American would also likely shrink further at JFK in favor of both LGA and PHL. But JFK still would be the main entry point for any non-precleared international services, for freight, for Delta and jetBlue, et cetera. And I think United would take advantage of its existing LGA slots and likely just shift some of them to LAX and/or SFO – it wouldn’t necessarily need new ones, although of course that would help.

         As to “a certain accelerated migration out of NYC for many reasons” – what, exactly, do you mean? I would remind all that New York’s obituary has been written several million times already (every generation at some point seem to wax nostalgic for the “New York I grew up in”…), and it typically manages to – in some manner or another – reinvent and renew itself sufficiently to survive and even prosper. Although I can’t predict the future (no one can), I would not be at all surprised that all NYC area airports are back “at capacity” within 2 years of the introduction of a safe and effective vaccine.

         Reply
         1. 

            SEAN

            Jul 13, 2020 at 11:06 am

            “As to “a certain accelerated migration out of NYC for many reasons” – what, exactly, do you mean? I would remind all that New York’s obituary has been written several million times already (every generation at some point seem to wax nostalgic for the “New York I grew up in”…), and it typically manages to – in some manner or another – reinvent and renew itself sufficiently to survive and even prosper. ”

            He’s falling for the trope that since NYC is so dense, that must be the primary reason Covid spread so quickly. So therefore, we must move to spralling metro areas like Miami, Phoenix or DFW where one must more or less drive everywhere. Oh, wait! Also as older generations leave NYC, younger generations replace them & that won’t change.

            Reply
            1. 

               Tim Dunn

               Jul 13, 2020 at 12:00 pm

               I don’t want to turn this into a political or disease conversation but remote working tremendously diminishes the value of NYC as a headquarters city for doing business. There are tens of thousands of people that live in the South and commute to NYC and that trend will accelerate as people are allowed to work further from their company’s headquarters. The work at home movement will accelerate and NYC is most at risk of being negatively impacted.
               As for the political aspect, I don’t want to go too far down that road but people will leave cities where there is an increased risk to public safety. Again, I don’t want to argue the point but high crime rates have had a negative impact on urban areas for years. If crime rates in NYC continue to rise as has happened in the last few weeks, there will be people that will choose to relocate.

               And let’s also not forget that taxes will go up in cities that have lost the most tax revenue. Like it or not but purely from an economic perspective, cities that have locked down the longest have lost the most revenue.

               I love NYC and hope I am wrong but everyone should be prepared for a significant resphaping of economics there. and airline service will follow.

               Yes, JFK will remain an important airport but let’s remember that all 3 airports have been bursting at capacity for years. A few years of slower growth might restore some reliability and allow more time for more measured improvements.

               Reply
               1. 

                  Eastern 727 Whisperjet

                  Jul 13, 2020 at 1:10 pm

                  Tim – I see where you are coming from, but (respetfully) disagree. I feel that all cities – and not just New York City – have (for several decades) been dealing with suburbanization and telecommuting. In fact, in cities such as New York and others, transit riderhsip pre-COVID was (generally) on a multi-year upswing, as many people value walkable, urban communities and use the city not solely as a place of employment.

                  Manhattan – and certainly the City of New York as a whole – is not solely a “business” location, and as the virus wanes (they always do, eventually) people will return to the city not just for business, but for various other activities, as well as just to live there! Unlike (unfortunately) too many other U.S. cities, New York (and Chicago, Boston, Philadelphia and San Francisco) are lucky enough to have central districts that are not solely a monculture of offices, but rather vibrant locales with many amenities to offer.

                  Yes, of course the economics will change to some degree, and taxes (commercial vs. residential vs. income vs. sales, etc.) will shift over time, but humanity’s greatest invention is the city, and global cities such as New York are nonetheless well-positioned to continue – eventually – to prosper in some regard, even if “offices” themselves change in some ways. People still like – and need for economic creativity, if you study agglomeration effects – to be near each other, and I feel that New York, or London, or Tokyo will land on their feet. (Who doesn’t visit London or Paris because of a cholera outbreak decades ago?) Already most of my Zoom calls have a majority of people being “done with work from home”.

                  As to public safety – again, I see what you are trying to say, but must respectfully disagree. New York is (still) the safest large city in the U.S., and – honestly – if the public safety issue sin the late 1970s and early 1980s didn’t mortally wound her, the current situation will not either. (Thiose were interesting times, I must say!) Yes, crime waxes and wanes at times, but I think the “long arc” of the public safety spectrum is on the plus side, thankfully.

                  Nonetheless, I feel that I must say that the main concern for any large city in the U.S. has – and continues to be – education. Our children need the best education they can have, and we all too often fail to do that in many places (although New York does relatively well, to be frank – and I say that as a product of its public school system).

                  The recent outbreaks of COVID in the southern and western U.S. (and the commensurate decline in New York, or the low relative rates in Tokyo and Paris) show that density is in-and-of-itself not the main vector. Of course, like many issues, it is one of several factos to consider, but – like commerical aviation and its aluminum tubes – the most recent data show that riding a subway need not be the guaranteed way to contract COVID should you take proper precautions in these pre-vaccine times (wear a mask, wash your hands, limit time exposure, et cetera).

                  The significant reshaping of economics will, of course, happen everywhere, and not just in New York City should the virus persist. Remember – it’s “work from anywhere”, not just “work from home”, and that will reshape the economics of the airline industry even more than those of any single city in America. Even more impactful than (perhaps) fewer offices in Manhattan is the fact that business travel may be more mortally wounded than the general economy of any single U.S. city. In fact, leisure travel to places like New York or Las Vegas may be a safer bet! Should the virus persist and that happens, the airline industry will be more fundamentally altered than even passenger rail after the Interstates, and so I would posit that the subsequent potential “creative destruction” will be more about the airlines and travel businesses than the overall aggregate health of any large global city. And – if that happens – the NYC airports may never need to expand again! (But – if a safe and effective vaccine or therapeutics are developed in the next couple of years – then people will once again complain about ATC delays…)

                  It is a pleasure commenting with you and others here, as I learn much and I appreciate the civility (and ability to respectfully “agree to disagree”, as Ron Burgundy would say) that Cranky fosters on this forum!

               2. 

                  Tim Dunn

                  Jul 13, 2020 at 4:16 pm

                  Whisperjet (I loved that marketing)
                  Never before has teleworking been mandatory so that businesses have to do it or shut down in many locations.
                  There will never be a replacement for face to face interactions and there just simply are things that can’t be done by a remote call. That said, the amount of business travel will fall dramatically. Despite what some might believe, all of the low cost and legacies chase a certain amount of business travel; the ultra low cost carriers even carry some independent/small business travel but very little large business travel. ALK, LUV and JBLU all carry significant amounts of business travel just like AA DL and UA

                  I know that America’s great urban areas have become more of a complete place to live and Manhattan was always the “most complete” city. But older cities will become more expensive and people that can leave high tax areas will do so. People simply vote with their wallet. And companies will save money by not having to maintain as much expensive office space for as many people but also can pay people less if they live in lower cost places. As for crime, no one rests on their reputation. While cities turned crime again in the past, the cost to business and the economy as well as everyday people was enormous. Given that the telework and higher taxes/crime issues are happening at the same time, the compounding effect will be more than if either one happened in isolation.

               3. 

                  SEAN

                  Jul 13, 2020 at 4:37 pm

                  Tim,

                  Lets say as you note that crime & Covid cause an exitus out of cities like NY & therefore most people end up working from home in the burbs. Then why would anyone short of necessity ever go to visit one as everything that makes cities great would be dead. I’m talking about theatre, street life, unique restaurants not found in suburbia, interesting museums & on & on. I think you get my point.

               4. 

                  Tim Dunn

                  Jul 13, 2020 at 5:31 pm

                  It’s a lot different living in an urban area and going into town to visit them even for cultural events (most of which are not happening this year anyway)
                  Opera by zoom just doesn’t work.

               5. 

                  Brian Gasser

                  Jul 14, 2020 at 7:53 pm

                  NYC has been in the process of re-imaging itself from a Wall Street financial capital, to a more balanced tech centric metropolis. There is a reason Amazon wanted to locate one of its East Coast headquarters to the area and Google has such a large presence.

                  Like Austin, Boston, SF, and DC, NYC has a highly skilled workforce that fortune 500 companies crave. It has world class restaurants, entertainment, and travel link to other global centers. The NYC metro area is going to continue to thrive and be a source of paxs that have disposable income airlines want.

   2. 

      CF

      Jul 13, 2020 at 3:46 pm

      Eastern – I do think United wants back into JFK and this might be an opportunity to do it. Or it may decide the world has changed and it doesn’t need it anymore. But barring the ability to fly from LaGuardia, I think United would still have interest.

      As for the perimeter rule, there was always that issue that the holdrooms weren’t big enough to handle larger aircraft. That has been fixed now at LGA, almost entirely though construction is still going on. So maybe they can get it done. I’m sure United would like that… except it would hate it if it happened in DC.

      Reply
7. 

   FC

   Jul 13, 2020 at 7:21 am

   Keep in mind you also have to put missing out to AS on the VX deal into this context. AS spent $2.6 billion for 7 gates at SFO, 4 gates at LAX and 20 slots at JFK/LGA/DCA. That means JetBlue was willing to pay close to that much money for those same assets. In order to run a 70 flight operation, they will need at least 5 or 6 more preferential gates at LAX (they had 2 + CUTE access for 4). And at JFK/LGA, they can probably get additional slots from AA as soon as they start running close to a full schedule.

   Opportunities like this don’t come around everyday. Legacy airlines don’t chose to shrink at an airport like LAX everyday. AA is cutting over 800 FAs from LAX and even more than that from PHX (which apparently staff some of the LAX flights). LAX for AA is going to shrink big time. How do you get additional gates at a constrained airport like LAX and kick other ULCCs out without putting some kind of commitment right now? Sure, they will lose money on the short haul stuff.

   What is the value of each gate at LAX? How much value are they gaining by grabbing these gates? Would it be reasonable to believe that this level of gate access would be available 3 or 4 years down the road? Even if it were available for just the cost of lease, would it be at a prime location like T5 or a remote terminal like MSC? Remember, AA was willing to pay $1.6 billion to develop T4 + 5 in order to counter DL’s T2/3 move. Now, AA doesn’t have the money for that anymore. If JetBlue doesn’t make this commitment now, maybe AA will have money in 3 years to get all of T4 + 5 again. And then, JetBlue would be forced to move to MSC or hope to fight for some space at new T0 with WN. That would be disastrous for it’s profitable mint franchise.

   Another point worth mentioning is what this means for the re-alignment of LAX. The 2 largest carriers emerging from COVID at LAX will be DL and WN. AA likely will be relying on AS to do a lot of the short haul west coast markets that it was getting killed on before. UA is likely to continue to fade at LAX and consolidate in SFO. The assumption pre-COVID was that AA will move out of Eagle’s nest and claim all of T4/5 + kick all the cats & dogs to MSC. Now that Jetblue is expecting to take most of ULCC gates, AA is down to probably 16 gates at T-4, 4 gates at TBIT and maybe 5 to 7 at T-5? That’s plenty to run the 150 flight schedule that I anticipate they will max out on in the next couple of years. The combined AA/AS operation will still be larger than DL, but AA by itself will be smaller. UA’s T9 expansion won’t happen. DL’s T2/3 work will likely finish ahead of time. The end product will probably mean DL will become the most dominant carrier at LAX. I don’t see large firms moving their money to WN when WN doesn’t fly transcon let along international stuff at LAX. And by the time AA is ready for more flights, those gates are going to be occupied by JetBlue.

   Reply
8. 

   Eric

   Jul 13, 2020 at 7:56 am

   JetBlue has to expand outside its Florida / Northeast stronghold. I’m not sure if LAX is the right decision or not, but what are the alternatives? Expanding in a fortress hub is almost always a recipe for disaster, so what does that leave for JetBlue?

   SFO? Can they compete profitably against UA?
   DEN? Gates would be an issue there, also a very competitive market
   AUS? Smaller sized population, but massive growth. Long term investment that could pay off nicely in 5 to 10 years, but low brand recognition.
   PHX? Perhaps at some point if AA adjusts the market

   Given the alternatives, LAX almost seems like the best option since it is so fragmented, with some brand recognition in the area.

   Reply
   1. 

      SEAN

      Jul 13, 2020 at 8:55 am

      Eric, you forgot LAS in your calculation. Now to be fair that is a growing market, but it’s one with extremely low yields. Also you have G4 & WN based there & that maybe a more difficult situation than even LAX. To balance out the various airlines & operations throughout the west, it might be best if AA moved it’s west coast operations to PHX & therefore allow B6 to slide in to the LAX market.

      AA’s international operations at LAX are being hammered in every wich way & it maybe time for them to admit to themselves it’s time to move to greener pastures.

      Reply
9. 

   Os

   Jul 13, 2020 at 8:41 am

   Potential for a United/JetBlue merger sometime in the future? Seems like the network has good synergy now for that to potentially happen. (United gains Boston, FLL, access to JFK again, and a combined/premium operation at LAX).

   Reply
   1. 

      SEAN

      Jul 13, 2020 at 9:11 am

      You forgot that EWR is UA’s primary east coast hub & therefore JFK isn’t as important to them. In addition UA use to have a sizable hub in LAX, but gave it up to focus on SFO.

      Reply
      1. 

         Eastern 727 Whisperjet

         Jul 13, 2020 at 9:22 am

         Sean – I would agree that with the hub at EWR an operation at JFK isn’t “as important” to United in the aggregate.

         But in light of the fact that jetBlue will now have nonstops to LAX from both JFK and EWR, United may need to rethink leaving JFK entirely at some point post-COVID, as I feel it definitely puts them at a competitive disadvantage. (I’m pretty certain I have read that they already acknowledge leaving JFK was a mistake.)

         Although they are both well-located relative to Manhattan, Newark Liberty and JFK serve two entirely different suburban catchment areas, and for busines travelers from Connecticut, Westchester and Long Island, getting to Newark is difficult, to say the least. In addition, the further southeast into New Jersey you go in Newark’s catchment area, the closer you get to PHL and the potential for it to siphon away traffic at American’s hub. (As it stands, some relatives of mine in the Princeton area don’t feel they must fly United out of Newark if there are competitive American fares at PHL, which American is building into a hub worthy of the name…)

         United has mitigated this somewhat with the operation at LaGuardia, but that is limited by the perimeter rule there. If that rule were to be lifted, then I see no reason why United would ever need to return to Kennedy International.

         Reply
         1. 

            SEAN

            Jul 13, 2020 at 10:46 am

            As a CT resident, ditto on EWR in that regard Now that Covid has changed everything, perhaps it’s time to revisit the perimeter rule at both DCA & LGA.

            Reply
10. 

    Richard

    Jul 13, 2020 at 9:08 am

    Great article! One minor thing:

    “Those all end on October 6. Boston, New York, and Portland go away completely. The rest move to LAX, though some at a reduced frequency.”

    The way you phrased this is a bit confusing (when reading what comes after), unless you are quoting directly from the source.

    Perhaps, “those were all supposed to end.”

    Richard

    Reply
11. 

    Pilotaaron1

    Jul 13, 2020 at 9:38 am

    It makes you wonder how different things would be at JetBlue if they had a hub in the middle of the country.

    Reply
    1. 

       SEAN

       Jul 13, 2020 at 10:06 am

       They could do that, but where is the question. Perhaps AUS might be a good start as it is a growing business & tech hub with a certain cool factor that could draw them.

       Reply
       1. 

          Kilroy

          Jul 13, 2020 at 12:09 pm

          Exactly. I’m not sure that the population or O&D traffic at AUS is quite big enough for B6, and its geographic location isn’t necessarily ideal, but it certainly has the “cool” factor. Tech companies, big college campuses in the area, etc etc.

          I got curious and looked up the Austin metro area population… It’s around 2.0-2.2 million, depending on the source used, putting it in the same ballpark as Kansas City, MO, Columbus, OH, Cleveland, and Indianapolis. However, San Antonio’s metro area actually has a bigger popular than Austin’s, and SAT and AUS are only ~75 miles (about an hour or so) apart, so AUS may draw some pax from the San Antonio area, especially if prices and nonstop routes are right.

          Reply
    2. 

       Kilroy

       Jul 13, 2020 at 10:15 am

       Agreed, but where could B6 have a hub with a sizable population where it wouldn’t be clawing at other carriers? AUS probably hits a lot of JetBlue’s demographics, but is awfully south and doesn’t have the biggest population. DFW, Houston, Minneapolis, St Louis, Kansas City, Memphis, and Cincy all have some presence left from carriers with past hubs and/or (especially in the case of KC) a big WN presence. What else is left? MKE?

       My rule of thumb has always been that if your route doesn’t begin and end within an hour’s drive from the ocean, B6 doesn’t serve it. There are certainly exceptions, but that still remains mostly true.

       Reply
       1. 

          SEAN

          Jul 13, 2020 at 10:32 am

          I thought about STL myself as much of that airport has become abandoned after AA departed. MKE could work as it is in effect a third airport for Chicago. Some along the north shore drive to MKE rather than ORD for obvious reasons. Although MDW appears to be an option, driving there from north of the city isn’t as easy as one might think, so MKE just might be something worth looking at.

          Reply
          1. 

             Eric

             Jul 13, 2020 at 11:04 am

             While MKE and STL are central, I don’t think they will work as hubs anymore. Population migration is happening to the south and to the west, and this is where airlines are building hubs. The growing population base helps support these hubs which are long term commitments.

             I don’t think you will see any NEW hubs in the great plains, great lakes, rust belt region…..hasn’t been the case in over 20 years.

             Reply
12. 

    jerry noel

    Jul 13, 2020 at 11:45 am

    I am wondering how B6 is going to configure the A220-300.
    Will they have a “mini Mint” cabin or would they consider configuring a few aircraft in a complete Mint cabin for LAX-JFK/BOS?
    could the last option be profitable?

    Reply
    1. 

       Keith

       Jul 13, 2020 at 12:44 pm

       I don’t think a “mini” Mint cabin would work seeing that it be few seats but take a significant amount of real estate on an A220. Now for an all Mint cabin on an A220, that could generate alot of revenue premium. If B6 can advertise to the corporate client of a more private and personalized experience, its possible people would pay more just to get that experience.

       All business class airlines have failed before, mainly due to being unable to compete with the larger carriers on the loyalty and frequency side + inefficiencies of having a low density 767/757. B6 could probably change that for a few reasons:

       1) It has brand recognition and loyalty in the transcon market. This not just for the BOS/NYC business traveler but also for the SFO/LAX and to some extent SEA traveler.

       2) Economics of the A220 make operating costs lower vs larger 757/767 and 737/A320.

       3) Mint is already a well known and highly regarded product – so enhancing the product would generate interest.

       All MINT A220s would probably be put on existing BOS / NYC – SFO /LAX routes as this is where a large number of B6s corporate clients come from. However, most likely for NYC these A220s will probably head towards HPN / EWR since this is where more of the high value clientele live in the tri state area. I dont see JFK seeing this service since it could be seen as wasting a slot – B6 would most likely run the A321neo with Mint 2.0 to keep the product competitive.

       An all MINT A220 could also work for the premium leisure traveler – think transcon out of SNA or PBI, and also seasonal Caribbean markets where the rich from the Northeast would head down to.

       However, keep in mind that aircraft are expensive assets – and B6 still has some work to do building its network relevance (especially in BOS and FLL) and focusing on its strengths (which is transcon, VFR to Latin America and the Caribbean, and the east coast). B6 will need all the A220s it has ordered in an all core configuration to build up long and thin transcon routes and possible routes to the midwest. If B6 were to order more A220s then yes, a possibility. However, there are currently bigger things on B6s plate that it needs to take care of.

       Reply
       1. 

          Kilroy

          Jul 16, 2020 at 4:06 am

          The A220-300s that B6 has on order require 6,200 feet for takeoff. HPN’s runway is listed at only 6,549 feet. I’m not an expert on the nuances of required runway length and the factors that play into it (winds, temps, weather, snow/ice on the runway), nor do I know how realistic the runway figures given by Airbus and Boeing are (as opposed to the range numbers, which seem to usually be “best case”). Presumably an all business class plane would have a somewhat lighter weight and runway requirement than a plane configured normally, but the point is that it could potentially be a little tight trying to take off an A220-300 from HPN, especially in bad conditions and at close to max weight.

          I think it goes without saying that trying to lengthen HPN’s runways would be a losing battle, not so much for environmental concerns but because people living in 7- or 8-figure mansions (which are plentiful in the area immediately surrounding HPN) aren’t fond of having their lives interrupted by the noise of low-flying aircraft, and are often successful in fighting against said noise.

          Reply
13. 

    FC

    Jul 13, 2020 at 12:11 pm

    JetBlue will not have a hub in the middle of the country anytime soon. The reason is that demand from New York/Boston to middle of the country is not that much compared to coastal states, Europe and Caribbeans.

    LAX won’t be a new market for them. The combined operation of LGB/LAS was 40 just a year ago. It’s not crazy for them to add 30 flights on top of that in 5 years. It was always the most logical market for them to add to. To support their mint franchise, help them with corporate contracts and make them more relevant to ff.

    The only other non-east coast market that makes sense for them to add to is SFO. However, that’s dominated by UA and also gate constrained. I do see them adding some more flights there too.

    There really is no point for them to go beyond their existing projects. Filling out JFK, EWR, BOS, LAX and FLL will keep them very busy the next 5 years.

    Reply
14. 

    Bill from DC (aka Cranky Gazelle?)

    Jul 13, 2020 at 12:16 pm

    Love the analysis of B6 West coast strategy going forward but also interested in a part 2 (?) that would deal primarily with the effects of B6’s departure on LGB and maybe a post mortem of how this relationship frayed so badly.

    Because it’s hard not to think that LGB will be singing the JetBlues before too long. IMO airport administration, NIMBYs (who were apparently unaware of the airport down the street when they purchased their houses) and WN all contributed to the B6 demise.

    As for WN, their job is done at LGB. They’ll keep their basic presence to their key west coast stops but that’s it. They won’t grow there because of low fares at LGB relative to the rest of SoCal. Basic WN West coast service plus minimal hub service from the legacies (connection to only one hub).

    It actually sounds like LGB business as usual except replacing B6 with WN. The major difference is B6 tried fervently for 20 years to maintain anLGB presence whereas, if the economics decline, WN will have no qualms about leaving. Which means they would be left with America(n) West flights to Phoenix and not much else. Just like the pre-B6 days. Be careful what you wish for, huh?

    Reply
    1. 

       Bill from DC (aka Cranky Gazelle?)

       Jul 13, 2020 at 1:04 pm

       Addendum – I should have said “business as usual minus the transcons” as there is no chance WN will add those to LGB.

       Reply
    2. 

       CF

       Jul 13, 2020 at 3:46 pm

       Bill – Part 2 will come when they announce who is taking the slots, if anyone!

       Reply
       1. 

          Bill from DC (aka Cranky Gazelle?)

          Jul 13, 2020 at 5:02 pm

          Bummer, I think we’ll be waiting a while then! ;-)

          Reply
15. 

    MarylandDavid

    Jul 13, 2020 at 12:35 pm

    I think airlines need to come to terms with a world in which business travel will be a shadow of its former self. That will significantly affect profitability. As pointed out, we are now in a remote working world for white collar professionals, and Zoom, Slack, etc are replacing in person meetings. Any forward looking strategy, I believe, will be focused just as much on squeezing profits out of leisure travelers as business.

    Reply
16. 

    Keith

    Jul 13, 2020 at 1:22 pm

    Darn! I was 1 year off from my 2019 Predictions!

    Heres what I see B6 will probably work on getting up to 70 flights by 2025. It will probably be a majority of transcon routes, adding frequency to FLL, BOS, MCO (Mint will be added once it has the aircraft for it), JFK; A220 transcons to smaller markets; Hawaii after it gets Europe up and running, and experimenting with VFR.

    If the opportunity is there for a perimeter exemption, I think B6 would add a SFO / LAX – DCA in a Mint configuration, being that DL is the only other carrier that offers a lie-flat business class product. Most likely this would could come from AS or AA.

    Hawaii in Mint would also attract a huge following and revenue premium – being that there would be huge demand, the possibilities of codesharing and connecting customers with HA. Mint in leisure markets have already proven successful with the seasonal Caribbean from JFK/BOS, LAS – JFK/BOS, SAN – JFK/BOS, and FLL – SFO/LAX flights.

    Once the A220 arrives, its possible B6 will add BDL, PBI, CHS – along with other smaller East Coast cities that it has brand recognition in.

    As for international possibilities, B6 could replicate the VFR success it had in the Northeast and Florida in LA as well as adding Central American resort towns.

    B6 plans at LA are more to build a niche of premium transcon routes and premium leisure traffic where other carriers dont serve or charge a high fare. This will definitely be the prime Mint base. As for the VFR stuff, its hard to tell since theres already a competitive market to Mexico and Central America with the Latin ULCCs.

    I agree that B6’s short haul additions make no sense. It’s leadership team is probably smart enough to realize that its West Coast short haul never worked and entering into a fare war with WN in their turf is a recipe for disaster. Everyone in the industry saw how bad things got with the AS/WN fare war after the VX aquisition. They would be smart not to make the same mistake. B6’s short haul is probably there because it needs them as a placeholder for the gates it got under LAWA’s terms until it gets a significant number of A220s /A321neos to start working on its real strategy. It will probably only keep / add some short hauls if the money is there, but it won’t their prime target.

    On a side note: could a LAX-SJU flight work on a neo? If so, how profitable would it be?

    Reply
    1. 

       Tim Dunn

       Jul 13, 2020 at 4:28 pm

       Keith,
       I agree that a bunch of intra-west markets with one or two flights/day will not work. Those are all high frequency markets and no one will choose B6 for anything other than low fares if they aren’t close to being competitive.

       As for the A220, this is another example where B6 is probably tipping its hand early. DL will receive far more A220-300s before B6 in addition to the A220-100s that they are still receiving. It is certain that DL will use the A220-300 to soak up any markets that it can possibly see B6 as being interested in.

       Yes, the NEO could work for LAX-SJU; as you probably know, AA flew it and I believe DL has as well – and perhaps other carriers too

       Reply
       1. 

          FC

          Jul 13, 2020 at 7:51 pm

          What B6 should do is so obvious that I don’t think keep silence really helps them. A JetBlue operated A220-300 (with 140 seats) is likely to not have higher total operating cost than a Delta operated A220-100 since you have same number of pilots/FAs (and delta pays them more). It’s about the most economical aircraft you can operate on these short haul markets that requires frequency.

          Also, keep in mind that JetBlue has been able to operating 2 flights a day on a lot of JFK markets against much higher frequencies from DL/AA and did well on them. People might just chose JetBlue because they want to fly A220-300 with 32 inch pitch and modern IFE. Fewer flights is fine as long as the flights are timed well.

          Reply
    2. 

       FC

       Jul 13, 2020 at 4:30 pm

       They don’t have beyond perimeter slot needed to fly DCA-LAX.

       They have to fly some short haul additions for network reasons. If they have a station of 70 flights, they can’t possibly stay away from west coast stuff. They probably have to do SFO 6 to 8 flights a day and fly to LAS/SEA/SMF/PHX/SLC 2 to 3 flights a day. A 20 to 25 flight short haul operation is reasonable and helps them bring passengers from JFK/BOS to places like SMF/RNO/PHX if the direct flight cancels. More importantly, a minimal west coast short haul operation is needed to help them capture the corporate pie of companies with large bases on both side of the coast. You can’t only do flights of 4+ hours if you want to retain ff in LA area. It just doesn’t work.

       LAX-SJU probably can work. I don’t think the demand is too high though. Probably all easily captured by LAX-FLL-SJU.

       Reply
17. 

    Patrick Lundy

    Jul 13, 2020 at 3:00 pm

    I wonder at what point a legacy carrier ditches lax for ONT if ever?

    I had checked in on Jet Blue load factors to ONT on a semi regular basis to my disappointment they never filled it to the level I would expect as an outperform.

    With 6 majors dose someone finally take a Newark style plunge?

    Dose the new ONT transportation tunnel help?

    Reply
    1. 

       Keith

       Jul 13, 2020 at 4:17 pm

       The Ontario Airport Loop could help add more convenience to those who live close to the airport rather than going to LAX, as it provides public transportation from the Rancho Cucamonga Metrolink to the airport. It would attract more people who live in the Inland empire rather than attract people from LA or even Orange County.

       Keep in mind LA Union Station has the Flyaway bus to LAX non-stop and that LAX will have its own Metro station with people mover in the next few years, adding more convenience to those who live in LA, therefore making ONT a less likely option.

       The Inland Empire (mostly in part due to its cheaper housing) has seen a population increase and therefore will naturally see demand over time to those who want to use their local airport. Carriers will probably add service here and there, but to move an entire operation out of LAX to ONT is highly unlikely. LAX is close to places like Santa Monica, Beverly Hills, and DTLA where people with higher incomes live – this makes LAX valuable because these people will often spend more on airfare (especially first class
       / business class) and often travel more for business or leisure. No airline would sacrifice to go towards a farther / less convenient airport from where the wealthy live. More likely is carriers adding more service and frequency to stimulate demand from the growing population of the IE.

       As a personal opinion, I would like to see B6 grow more in ONT – part of its success was that it was able to stimulate demand in places like JFK and FLL. Adding a 2nd JFK and possibly a MCO and FLL would make sense. The short haul flying it did would have made more sense here as theres very few competition, ONT seems willing to give B6 anything it wants, and a growing population to not only stimulate demand but also gain a loyal following.

       Reply
       1. 

          SEAN

          Jul 13, 2020 at 4:48 pm

          What about BUR. How could that factor in to all of this. After all you aren’t all that far many of the locations you sighted.

          Reply
          1. 

             Patrick Lundy

             Jul 13, 2020 at 5:12 pm

             BUR has a short runway and is all domestic.
             Not great economic’s for a hub or Focus city.

             Reply
             1. 

                Keith

                Jul 14, 2020 at 7:09 am

                Interesting point there. An A220 could probably help with the economics of short haul, being that it would have the lowest CASM, as well as being the product differentiator. So its possible B6 could most likely attract customers based on its product. However, will it be enough value for someone to choose B6 over other carriers on a 1-1.5 hr flight (If we talk about LAX-SMF/PHX/LAS/SFO/RNO). It will be interesting to see what customers value more:

                a) product and service from B6 at lower frequency

                b) 2 free checked bags and no change fees, also with higher frequency from WN

                Keeping in mind that WN already has strong brand recognition on the West Coast, so will B6 be able to have someone choose them over WN for more legroom and TVs?

                Personally, B6 would fare better in markets that are 2 hours or more – thats where customers really get to enjoy the product and see the value. SEA / SLC would work well here were saying that customers would choose B6 over other carriers on product and service. Once the A220 comes in, I wonder if PDX will be reintroduced.

                SFO could work being that the existing LGB route was popular. Operationally, 6-8 flights could work if B6 were to get an additional gate at SFO. Right now I believe they have 2 preferential gates with access to 2 CUTE gates. However, would it be able to compete with all the carriers on this route? It could steal market share from AS assuming it can attract the former VX loyalists.

                It also begs the question how would B6 be able to handle IROPS in this situation if there were an SFO GDP? When the LGB-SFO was at 5x daily the operation was a mess due to B6 being in the International Terminal and not having gates readily available. Also remember B6 used to divert flights to OAK to mitigate delays to/from SFO. OAK is gone now and yields for LAX-SJC dont look good to justify adding this route. LGB-SJC was probably B6’s worst performing route before it got the chop. Could B6 fare better in an IROP with preferential gates at SFO? Possibly. But if things got bad with a GDP B6 would have to cancel flights. Unless it decides to base some 200 seater A321s there (can upgauge the equipment to reacommodate customers), B6 will have less options to reprotect vs AS, UA, WN, AA, and DL who either serve all Bay Area airports or have larger spare aircraft.

                I agree that B6 will need a minimal short haul operation to capture market share, particularly with companies that already have contracts with B6. If B6 can appeal to what its clients want at a minimum level, then it wont have to worry about its clients going to another carrier with an establishes west coast hub. It will probably be strengthening the partnerships it has with the corporste clientele in the east coast that has west cosst offices, rather than try to look for new ones.

                Its really up to what B6 wants to do here. B6 tried to be everything and anything at LGB with a business oriented schedule and the whole operation was unsustainable. It was able to get back to some profits (yet underperforming) when it reduced its flights from 35 to 23 on a more leisure focused schedule. Excluding the TCON market, I dont think LAX will be catered towards the business traveler in the way it does in BOS. It will more focus on leisure traffic, primarily on premium leisure west coast markets where B6 can make profit. Its going to follow where the money is.

                I expect Hawaii is going to be the top of their list in Mint once London is up and running. Alot of seasonals will also most likely happen at LAX, places like BZN, HDN, EGE, and ANC come to mind. Finally, flights down to Mexican and Central american resort cities and VFR markets will also be added.

                So B6’s at LAX is not going to try to be a hub serving everything for everyone. Its going to attracting the leisure and VFR traveler (similar to how it caters at JFK) and focus on doing that well.

                Glad to know that LAX-SJU can work on a NEO. I think a seasonal 2x weekly flight might fare better at attracting demand. What makes this different now (vs DL and AA who used to serve it) is that B6 has the right size aircraft (both DL and AA used 767s) for the task at hand. Not to mention lower operating costs.

                Reply
             2. 

                stogieguy7

                Jul 14, 2020 at 8:18 am

                But, BUR is super convenient for a large population base, much of which is high income. Time is money and there’s a lot of value to be had in flying from BUR.

                Reply
       2. 

          Patrick Lundy

          Jul 13, 2020 at 7:51 pm

          Unfortunately I think the lowish load factor scared off JetBlue, it’s a shame because I’ve kind of grown to be a fan of the pool lucky little airport that could at ONT. lol

          Reply
    2. 

       Brian Gasser

       Jul 14, 2020 at 8:03 pm

       The single/return JFK ONT flight is at a horrible time. No reason it should command any premium.

       Reply
18. 

    Patrick Lundy

    Jul 13, 2020 at 7:48 pm

    Hey I did a quick search today and saw that JetBlue did roughly 1.9 million passengers In both LAX and LBG in 2019, how much dose that consolidate to at LAX?
    Also if LAX was doing almost the same number of passengers on a smaller foot print isn’t that a good sigh?
    (I am not sure about pre-pandemic flight numbers from LAX by JetBlue)

    Please let me know if I get these statistics wrong, it was a quick check.

    Also Spirit had ~2.5 million passengers in 2019 at LAX.
    Hawaiian had 1 million passengers at LAX in 2019

    Dose any consolidation may help?

    I’ve almost convinced myself that they could do it on there own or much faster with consolidation.

    Reply
    1. 

       CF

       Jul 14, 2020 at 12:18 pm

       Patrick – For 2019, JetBlue had 976,798 passengers depart LAX on 6,919 flights and 949,603 depart LGB on 7,903 flights, so if you’re including both directions, your number sounds right. The reason for the difference is two-fold. First, nearly all of JetBlue’s LAX flights are on A321s while LGB is solely on A320s, so while there were 14.2% more flights at LGB, there were only 8.5% more seats. Second, LAX filled its airplanes better.
       It had an 89.13% load factor while LGB had 83.82%. That might sound good, but it’s because of the makeup of destinations. If you just look at the key markets of JFK and Boston, for example, then the load factor difference was less than 1.5 points. So I would expect loads to be lighter from LAX going forward on smaller airplanes. The question is, will there be enough fare premium to justify the move? I’ll be no.

       Reply
19. 

    Ken

    Jul 14, 2020 at 11:41 am

    Myself and many others in Long Beach, Huntington Beach, and Costa Mesa are beyond ecstatic to have Jet Blue leave Long Beach. We won’t miss those screaming airbus jets flying over our homes at 1500 feet. It sounded like a incoming missile that would awake the dead. At one time we had them coming over at 7am that made it impossible to sleep in. Many times they even came in past 11pm at night screaming over our neighborhoods. I have lived here since 1987; before jet blue started operations , we never had any low altitude Long Beach air traffic. GOOD RIDDANCE !

    Reply
    1. 

       David M

       Jul 14, 2020 at 10:00 pm

       Hope you enjoy the sound of 737s screaming overhead instead, because that’s what you’re going to get. Probably not as many curfew-busting 11pm flights though. FAA dictates the arrival routes, not the airline.

       Reply
       1. 

          ken

          Jul 15, 2020 at 8:23 am

          I’ll take a 737 any day over the screaming airbus. Jet Blue was the primary source of complaints at Long Beach airport.

          Reply

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