JetBlue Faces Strong Competition on Routes to London

Apr 11, 2019

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When JetBlue starts flying in 2021 from both New York and Boston to London, it will enter a market dominated by a few entrenched competitors with more than a century of transatlantic flying experience between them. It’s also a market that has seen countless other players try and fail, from Laker Airways and PEOPLExpress in the 1970s and 1980s to Zoom and Primera in the 2000s and 2010s.

What are JetBlue’s chances of someday being a well-established competitor rather than another MAXjet or Eos, to name two others that failed? JetBlue, after all, will likely be the smallest US-to-London player when it launches, behind British Airways/American and Virgin Atlantic/Delta in both New York and Boston, United in New York and even low-fare Norwegian in both markets.

JetBlue hasn’t announced its schedules, plane layouts or even which London airport it will serve, but it likely would need to run twice as many flights as Norwegian to match Norwegian’s number of seats. That’s because its A321neo LRs will almost certainly have less than half as many seats as Norwegian’s Boeing 787 Dreamliners.

 

Three daily flights between New York and London could give JetBlue 5 percent of that huge but highly competitive market, based on an analysis of Diio Mi schedule data. Two daily flights between Boston and London could give JetBlue 12 percent of that smaller but less competitive market.

Unlike the airlines that failed, whose business depended either entirely or mostly on transatlantic service, disappointing results to London wouldn’t sink JetBlue.

Remember when ultra-low-cost Allegiant, then one of the world’s most profitable airlines, bought five Boeing 757s and started flying to Hawaii? The experiment ended in tears, leaving Allegiant in the position of being… still one of the world’s most profitable airlines. That’s because Hawaii was a manageable risk for Allegiant. The 13 A321 LRs JetBlue has ordered will make up even a small percentage of its overall fleet than Allegiant’s Hawaii offering.

Of course, JetBlue wants to succeed and perhaps pave the way for more transatlantic trips (Amsterdam seems to be of interest, based on regulatory filings).

The pessimist’s case is straightforward: Broadly speaking, this kind of flying rarely seems to work for low-cost carriers. Once they start crossing oceans, their formidable business models become vulnerable.

The optimist’s case is more nuanced. First, JetBlue has already held its own against the same US competitors in domestic transcontinental markets. The debut of its lie-flat Mint product forced those competitors to improve their own premium products, drop their premium fares and offer big frequent-flier bonuses — and consumers would be delighted to see similar defensive moves on London routes.

Second, JetBlue doesn’t have to convince skeptical travelers to fly it. To the contrary, it has a ready-made market in Boston, where it’s the top airline (although it should expect a fierce fight there from No. 2 Delta). New York is more competitive — JetBlue is a distant No. 3 there behind Delta and United — but a high-quality, low-fare premium offering (i.e. an updated version of Mint) could help it make a dent in the London corporate travel market, just as it did in the US transcontinental market.

Third, maybe the problem isn’t low-cost long-haul flying per se but the expensive twin-aisle aircraft often required to accomplish it, which have often (although not always) been used in failed low-cost, long-haul flying experiments. If so, JetBlue has mitigated its risk by choosing a longer-range version of a single-aisle plane.

And fourth, although JetBlue says it’s not counting on connecting traffic to fill its London flights, it sure won’t have to depend solely on the local New York and Boston markets, since it has daily or near-daily flights coming into JFK, Boston or both from 80 other cities, according to Diio Mi schedule data. The equivalent figure for Norwegian at London Gatwick, where its flights to New York and Boston depart, is just 12.

None of that is any guarantee of success. But looking at those third and fourth points, maybe it’s already-unprofitable Norwegian, not the established carriers, that has to worry most about JetBlue’s entry into the transatlantic market. As for the legacy incumbents, if transcontinental history is any guide, they will be fine—just less fine than they were without JetBlue as their newest competitor.

Featured image of a JetBlue Airbus A321 at JFK by Alberto Riva/TPG. Graphics by Abbie Winters.

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