JetBlue’s expansion has rivals scrambling
Even as rising fuel costs are grounding weaker airlines -- including three this month -- airline competition is heating up for travelers flying the Pacific coast.
On the runway is JetBlue Airways Corp. with new 100-seat jets that will begin flying next month from Long Beach up and down the coast in a move that financial analysts say may be bold but risky.
Next month, the low-fare carrier, popular with Southern California leisure travelers, is adding six flights from Long Beach to San Jose, Seattle and Austin, connecting some of the nation’s top tech-heavy cities. Long Beach passengers can fly one-way to San Jose for $39.
JetBlue rivals aren’t standing around fretting. They are fighting back, increasing flights and cutting fares all along the coast.
“You’ve got a lot of competition out there unlike the East Coast where subpar service allowed JetBlue to make inroads by treating customers well,” said Michael Boyd, an aviation consultant in Evergreen, Colo. “Alaska and Southwest are also known for treating customers well.”
Another West Coast fare war of sorts might be in the works. Last week, Virgin America began service from Los Angeles International Airport to Seattle with $77 one-way fares while Alaska announced that this month it would offer hourly flights from LAX to Seattle. And Southwest added four flights from LAX to San Francisco and was offering $79 one-way fares from LAX to Austin.
“We’ve competed on fares and services with all comers for decades and we’ve always prevailed,” said Steve Jarvis, vice president of marketing for Alaska Airlines. “We’re no stranger to competition but we’re taking this serious. We’re going to fight it toe to toe.”
Virgin, created by British billionaire Richard Branson, began flying last summer starting with service between Los Angeles and San Francisco. “American airlines have never really cared about quality in the sky,” he said at the time.
JetBlue is also expanding to Los Angeles International where it will offer nonstop flights to New York and Boston with fares as low as $129 one-way.
Forest Hills, N.Y.-based JetBlue has typically focused on transcontinental routes flying California passengers across the nation to Eastern seaboard cities including Boston and Fort Lauderdale, Fla.
With transcontinental growth slowing and with new flight restrictions at JFK, its crowded home airport in New York, the airline has been looking for opportunities in the West, particularly the lucrative routes along the coastline from San Diego to Seattle.
Eventually, it wants to offer international flights to Mexico and Canada.
For its part, JetBlue says it is financially healthier than other carriers thanks to a recent $300-million investment by Lufthansa Airlines, which took a minority stake in the airline. JetBlue said it had also fully recovered from its winter debacle last year that grounded planes and cost the carrier $40 million in goodwill payments to its passengers.
“It was a gut-wrenching experience, but we’re a much better airline as a result of it,” said Chief Executive Dave Barger, who replaced the airline’s founder, David Neeleman, ousted shortly after the debacle.
With a fare war that is likely to have bargain hunters shuffling from one airline to another, JetBlue is betting that the new planes will give it an edge. It has ordered 100 of the Embraer planes, which are built in Brazil. JetBlue first began flying the planes last year on its routes along the Eastern seaboard but will start using them on the new West Coast flights as they are delivered by the manufacturer.
Barger, lately its ultimate salesman, stood in the aisle of the new passenger jet recently and began rattling off its features.
The Embraer 190 aircraft burns 40% less fuel than older jets, which can guzzle more than 1,000 gallons in an hour, he said. The leather seats with personal video screens are wider and have more legroom than the competition. Better yet, the plane doesn’t have the dreaded middle seat, he added.
“So, what do you think?” he asked after taking a breath. “I think it’s a huge advantage for us.”
But analysts said the airline is taking a risk because the 100-seat jets have about 50 fewer seats than the Airbus A320s that have been the airline’s mainstay since it started eight years ago.
By operating two different fleets of planes, JetBlue is also bucking a longtime “mantra” of low-fare carriers like Southwest that has touted the operating savings and efficiencies of flying one type of plane. Southwest, for instance, flies Boeing 737s, so it doesn’t have higher costs of maintaining more than one kind of plane as well as hiring and training two sets of pilots. A pilot certified for the 737 would have to undergo extensive training to fly another jet.
The Embraer 190 is a “good plane but you have to be careful” about where you use it because of its size, said Richard Aboulafia, an aerospace analyst with aviation consulting firm Teal Group Corp.
But Barger contends that the added costs of operating two fleets is offset by the fuel savings and the flexibility the smaller jet gives the airline in flying into smaller markets that might not be able to support a larger, 150-seat plane.
“It gives us the ability to open up new markets such as connecting Seattle to Long Beach with less risk,” Barger said. “I like to think of this plane as a pathfinder. It’s a nice way to move into a new market.”
JetBlue acknowledged it also must overcome an image problem with Embraer planes, which prior to the introduction of the larger 190, were mainly known for cramped regional jets with tight seats, narrow aisles and low ceilings. Many airlines fly the smaller Embraers, which typically seat about 50 passengers, on short hops of a couple of hours or less.
The new plane will be in a dogfight with the new Airbus 320s that Branson is introducing with Virgin America. The A320 jets also have personal video screens at each seat as well as mood lights and massage seats in first class.
To tout its new fleet, JetBlue took its Embraer plane on an unusual barnstorming tour last week, starting in Seattle with stopovers in San Francisco and San Jose before ending at Long Beach Airport.
The carrier let a Times reporter fly from San Jose to Long Beach on the plane, which appeared much like its A320 aircraft with JetBlue’s familiar gray leather seats and personal video screens. But there was no middle seat, making the plane seem more spacious even though it was narrower in size than the A320. Instead of six seats in a row, it had four.
“People say ‘I don’t want to fly on a regional jet.’ Well, this isn’t a regional jet,” Barger said, as he returned to his salesman mode. “Once people fly it, they’ll love it.”