Cranky on the Web: JetBlue in Miami

Cranky on the Web, JetBlue

‘Major Landmark In Airport’s History’: JetBlue Expands Service To Include Miami and Key WestCBS Miami
I went on to talk about JetBlue’s entry into Miami. It’s an interesting move by the airline, considering it is encroaching on its partner’s territory.

13 comments on “Cranky on the Web: JetBlue in Miami

  1. The AA/B6 “partnership” to me anyway, seems less and less likely. If AA needs to fix its NYC problem in terms of scale, then it ought to outright merge with B6, but that’s not something that will happen in the short- or medium-term given the industry’s shaky finances, though a “too big too fail” approach similar to the rushed mergers between financial institutions in 2008 isn’t off the table either, the longer COVID19 drags on. B6 is making some aggressive moves, but its cash burn is rising (as is everyone else’s). Perhaps B6 feels DL will pull the plug on its ill conceived MIA expansion plans, outlined just before COVID when it went after LATAM and is now likely stuck with that partnership. Perhaps it is just the booming demand for NE Corridor to Florida routes given the temporary or permanent migrations to Florida (though one has to wonder what happens the next time a major hurricane blows through South Florida and what impact that will have on the latest fad). Or, B6 sees an AS/AA combination in the future and is trying to go at it alone. B6 is surely stretching its wings. But is it profitable long run? Hmmm…

  2. The most important datapoint is that B6 is burning cash at a faster rate as a percentage of revenue than any other airline in the US because their primary markets in the NE are heavily locked down.

    AA and B6 were supposed to have been moving towards a partnership that would have allowed B6 to feed traffic at JFK to AA and for B6 to potentially take over some of AA’s slots at LGA and to potentially add flights to Florida where AA has not done well. It is hard to believe that this partnership will go forward.

    CF’s own twitter account says that AA is expected to announced FLL to LAX/JFK and BOS.

    B6 also announced new routes from EWR, UA’s largest hub by 2019 revenue, and RDU, DL’s focus city in the Carolinas.
    Some of the routes have fairly small amounts of capacity – less than the competitor is currently offering while others – esp. in MIA – offer comparable levels of capacity or at least flights.

    Florida is one of the few parts of the US that is seeing anywhere close to any leisure demand and yet these type of market brawls between two carriers have created lasting damage to carriers that have engaged in them in the past.

    These moves bode very bad for both AA and B6 financially.

  3. I saw a post last night on Airlines.net quoting a gentleman named Brett Snyder as saying American is increasing its service to Fort Lauderdale. Instead of looking at these moves as encroachment or retaliation, I tend to think they make sense for both airlines.

    I worked in real estate for many years. The “compete yet cooperate” business model is the backbone of that industry. Both airlines will eventually adjust capacity to the right levels to both compete with and feed traffic to each other profitably.

    These moves by jetBlue and American, as well as those of Delta, Southwest, United, Alaska, Hawaiian, etc. during the last few months, are part of long-term business strategies, not simply knee-jerk reactions. That’s one of the more interesting aspects of this whole pandemic crisis, IMHO.

  4. The one to watch in MIA is Southwest. Prior to even beginning service, they very quietly announced additional service to both BNA and DEN. The last city they announced growth in prior to commencing service was DEN.

    The dynamics of the JetBlue/American relationship warrant future monitoring.

  5. I’m guessing there will be a separate post on this particular topic. A few things to think about that got lost in the noise of the MIA announcement.

    1) EWR just added another 10 flights for them. They added 2 major legacy hubs in ATL/MIA, which means they are probably going to add ORD/DEN/SEA at some point. NYC airport dynamic is changing in the next few years. PATH extension will supposedly get built which would make EWR the most convenient airport for a large portion of downtown/midtown Manhattan. EWR could very well be the most important airport in NY area in 10 years. JetBlue made a deal with PANY and UA/AS for additional gates in EWR that allowed UA to enter JFK. They are paying lease for 9 or 10 gates and only doing about 30 flights a day in January. This is a major bet on EWR’s importance in NY area.

    2) Huge move at RDU. DL permanently cut 4 routes there and extended March cuts for all except hub + Florida. Not a great sign for viability of focus city since only a few routes have gotten March cuts. JetBlue is getting ready to move in. Still haven’t declared it a focus city. But now with 15 routes and plenty of additional possibilities, it basically is like that for them.

    3) More adds at LAX, SFO and LAS. They are running the old VX west coast playbook of transcon + tech + leisure. There is a plan there for west coast finally even if you disagree with them.

    4) There is an AIP out there with pilots that would extend no furlough until May of 2022 in exchange for … The AA deal isn’t getting pulled back when this is happening.

    5) JetBlue has been burning more cash not only due to its geography but also its willingness to keep more head count to capture leisure demand recovery. That’s what MIA/EYW/SJD is about. Bookings are finally coming around. This is also a move to boost its cash burn in Q4/Q1. They are getting ready for an aggressive schedule return in May.

    1. I do hope that CF will do an in-depth analysis of what B6 is doing but they are first and foremost looking to redeploy capacity into markets that have some potential of generating revenue and are not afraid to step on any toes they have to in order to generate some cash.

      There is no doubt that B6 is well on track to become a solid #2 at EWR and it is a long-term move.

      CF will certainly weigh in on his thoughts about the AA/B6 partnership but it certainly appears it is dead. It certainly appears that B6 tried to give AA a sense that AA could leave markets and B6 would operate them and, without anything written down (it couldn’t even be discussed), B6 decided to enter MIA. There is clearly more revenue possible for B6 to fly to MIA than for it wait for a codeshare to develop.

      If they had won the ability to swap slots with AA esp. for LGA slots, B6 could have had a solid position at JFK and LGA and potentially at EWR as well.
      I suspect B6 decided the recovery at LGA would be slow, there is more potential at EWR including the abililty to add transcons which they can’t do at LGA – and so B6 is going forward with a EWR/JFK no partnership strategy.

      Everything that B6 is doing from its standpoint including the AIP. I suspect they are pushing both sides hoping AA will stay with the partnership but I can’t possibly see why AA would have a partnership with a carrier that is expanding in MIA. B6 would love to keep the partnership and invade AA’s hubs. It will be AA’s call to put the partnership to an end or slow walk it or kill it ASAP if they are contractually required to go through w/ it at this point.

      As for RDU and MIA, B6 still falls below several other carriers based on current seats – even considering that UA’s schedules for Feb and beyond have not been pulled down. B6 has announced alot of routes that may not even operate on a daily basis or on E190s just once a day. B6 is starging RDU-LAX but that is a route that AA stopped flying so not all is new capacity to the market.

      It is also worth noting that WN is considerably below the average for capacity compared to other carriers not just for S. Florida but for Florida as a whole. On a percentage capacity, NK is most ahead followed by DL among the largest carriers in the state. Even just for N. America, AA’s capacity is below average.

      I think we will get alot of indications about how this will unfold in the next couple weeks.

      There are clearly some major market changes coming as you note. B6 is trying to do more in changing its network in such a short time and doing it in multiple other carriers’ strength markets which makes it highly unlikely they will succeed at all they are attempting – if for no other reason that it is far easier for multiple carriers to fight select battles in a few markets than for B6 to be fighting multiple battles all across the country.

      1. I’m actually saying the AA deal looks like its expanding beyond NYC/BOS. JetBlue expansion into MIA is just a fraction of the moves it has taken. South Florida has always been a market they competed in and nothing changed here. JetBlue isn’t going to create a 30 flight station at MIA. Whether AA has changed its mind in the past week is a different story, but the expectation on JetBlue side has always been that this deal will take until 2022 to reap most of the benefits.

        At present time, EWR gates are worth more than LGA slots to JetBlue. Keep in mind that while they are unlikely to achieve all of their goals, there is no better time than now, when they have faced barely any retaliation for their actions. Every airlines are just looking out for their own cash positions. JetBlue with its geographic disadvantage have to be more aggressive than other airlines.

        WN is done in FLL. NK is winning FLL, but JetBlue is not particulary eager about bolstering its FLL presence. Its Boston operation might not hit 200 flights for 4 or 5 years. Priorities have completely changed for them.

        They have one of the least head count reductions of any airline thus far. Crazy for an airline that has seen its base operation hit so hard by demand drop.

        1. I am in agreement with you about WN at FLL and EWR’s attractiveness.

          However, B6 is doing a Hail Mary in looking for new markets and believes it can invade MIA and AA’s top markets and still keep the codeshare deal. I see little reason why AA would want to keep a deal w/ a company that takes advantage of what AA is willing to let B6 help AA with while also taking what AA wants to keep for itself – even if they can’t tell each other what those two things are.

          UA is not being aggressive in replying because market share battles are brutal and cost money. With little demand, there is little benefit right now for beating up a competitor to keep them away. The real question is the long-term market share in UA’s markets. Remember that WN entered DEN in 2005ish and has never looked back. At DEN, UA now has the lowest market share in a legacy carrier hub. There is a very good chance that UA’s market share at EWR (local O&D, not capacity) will fall by double digits by next year when demand recovers.

          Many of B6′ RDU adds are once per day on E190s and often less than that. What is going on at EWR and now MIA is far more significant.

          I completely agree that there are major market share changes going on… I just don’t think that B6 will succeed at as much as some want to believe.

          1. I would find it very surprising if AA did not catch a sniff of B6’s MIA move either from B6 themselves or from MIA. They went to mostly 777s on MIA-LAX 4 or 5 days before JetBlue made its own announcements. We will see what get announced next, but there is something big going on with JetBlue that should get announced after the pilot deal passes. I would be very surprised this AA deal doesn’t move forward. In fact, I’m under the impression it may even end up being more broad than NYC/Boston.

            JetBlue is doing plenty of hard work for AA right now taking the fight to DL in RDU and UA at EWR/SFO. MIA is a blip in the radar compared to all their other adds. Their focus in south Florida is FLL.

            RDU and SFO are both focus points. I’ve been talking about this for months. What they’ve added thus far at RDU is just a starting point. Given DL’s own actions at RDU and CVG, B6 is waiting in the wings.

            1. Your comment is based on the notion that AA and B6 plan their networks together. They are legally prevented from doing that and AA and B6 will each reap the benefits of what they succeed at and pay the consequences for their strategic and market losses to the exclusion of the other.

              B6 might pick up permanent share in EWR because UA has been slow to respond and because the market is so large and B6 has added so many routes.

              B6 probably will not erode DL’s share in RDU because they have simply not added enough capcacity esp relative to what other carriers have dropped but will add back when demand returns; the markets like AUS-RDU have been dropped (or are not being currently flown) by either DL or WN because there isn’t enough demand and that demand won’t return in a tech to tech market (the last segment to get back on planes) just because B6 adds service.

              The jury is out whether AA or B6 will lose because of the FLL additions by AA and the MIA additions by B6 but no one should logically believe that carriers add parallel routes in each others’ strength markets as part of a partnership.

              and it may well be that B6 is trying to convince its pilots that they will pick up lots of new flying to get concessions when B6 knows full well that their moves into MIA will end the partnership but B6 wants concessions from its pilots so keeps talking about a partnership.

              AA has made some big strategic mistakes but forming a non-immunized codeshare partnership with a carrier that adds flights in AA’s top markets is not going to be one of them… unless AA’s days are very numbered.

              As the two carriers with some of the worst cash burn stats right now, AA and B6 are simply wounding each other which helps other carriers in the medium and long term.

            2. FC – The AA partnership isn’t going to go beyond NYC/BOS, at least not until it’s implemented and they can figure out how to work it all out.
              Ultimately, AA needs more heft in New York and Boston while JetBlue wants a network partner with a global footprint. This partnership can do it, and I agree with you completely that it’s not going away. JetBlue deciding to throw a few airplanes in Miami is not in any way going to make a difference for the future of the partnership. In fact, it might help them in the eyes of the regulators by showing they are still competing vigorously! But there’s a lot more in store for that deal.

              The Newark expansion doesn’t hurt American at all, of course. It just gives the combined airlines a broader footprint with more appeal throughout the region. United won’t like it, but what’s it gonna do? All it can do is lower fares and try to crush JetBlue, but JetBlue already has a strong local following. It is less likely to be hurt by retaliation, though it will certainly feel it.

              I like RDU a lot. This is in today’s Cranky Network Weekly (still offering free access for two more weeks at crankyflier.com/cnw). Delta has really cut back so far on focus cities and tried to maintain price integrity that it’s created a vacuum. JetBlue is a brand that should resonate in RDU. I like it.

              The only thing I don’t like remains the LA stuff. I think it’s a losing strategy.

          1. I happen to agree with BOTH of your statements!
            It is more significant in FLL that NK has passed B6 and that DL and WN are about the same size even though DL still only operates to its hubs and 2 of its focus cities – RDU and CVG.
            WN isn’t going away from S. Florida.
            And, yes, WN will grow at MIA.
            I also believe that DL and WN will both accelerate their growth in markets like MIA that are hotly contested with new capacity but choose other city pairs and price reasonably. AA and UA can only fight so many battles at a time; B6 even fewer.

            Given that DL is showing 10 or more flights/day in many ATL to Florida markets and they are scheduling about as many flights from all of their hubs to Florida, they are planning to compete for the traffic that is out there.
            The chances are high that there will be a noticeable decline in virus deaths by March with lockdowns likely to fall. It makes all the sense in the world to aggressively go after traffic in the late winter/early spring.

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