Can JetBlue withstand the simultaneous build-up of American Airlines and Delta Air Lines in Boston?
JetBlue Airways Chief Financial Officer Steve Priest bristled at the question, telling a conference in Miami this week:
“Commentators talk about Boston, they talk about Fort Lauderdale. We are 20 years old now. We are very used to competitive incursions.”
And that is a true statement. When Spirit Airlines rapidly built up in Fort Lauderdale, JetBlue was able to withstand the onslaught.
But as Brian Sumers notes, Boston is a different beast. First, Delta announced it was rapidly building up Boston and designating it a hub. It has its sight on lucrative business travel and has added international service ahead of JetBlue’s planned service to London next year.
Now American Airlines has chosen it wants to build up Boston once again. Boston was a strong focus city for US Airways prior to the merger and also offered AA-operated service to London, but after the merger service was cut back. Soon, however, American will launch new service to non-hub cities including Austin, Indianapolis, Raleigh-Durham and Wilmington, N.C. It’s also resuming London flights.
There’s room for debate over whether American is boosting service as a viable path to profit or as a punishment to Delta for poaching away LATAM (I suppose both could be true), but the result is this: huge growth in Boston that threatens the incumbent carrier, JetBlue.
At a time when JetBlue is practicing discipline and focusing on margins, American and Delta are sufficiently large to withstand fare wars as each battle for supremacy. But will JetBlue be willing to lose on the short-term to maintain its long-term position?
JetBlue, at least publicly, is not worried. Priest insists that customers appreciate JetBlue’s nonstop reach and will not abandon the carrier:
“85% of our business is point-to-point. The high-value geography that we have really lends itself to point-to-point business. Think about Boston from a geographical standpoint. It doesn’t really lend itself to a hub-and-spoke city.”
Alaska Airlines has withstood Delta’s onslaught in Seattle (and will now grow stronger with its new alliance with American Airlines). But I am not sure we can make a similar analogy with JetBlue. The next several months will be a key test for the carrier. How loyal are JetBlue’s customers? Will they abandon the “hometown” airline for cheaper prices and larger reach of American and Delta? Only time will tell.
image: Jonas Laurince / Wikimeida Commons