JetBlue Transatlantic – Will They Make Full-Service Carriers Sweat?

LONDON – JetBlue has launched transatlantic flights, but the watchword of the U.S. low-cost airline seems to be caution.

In August, the airline inaugurated the long-awaited flight from New York-JFK to London Heathrow (LHR). Remaining on track to add additional service between the U.S. and the UK, JetBlue will also begin flights to London Gatwick (LGW) on 29 September.

The JFK-LHR route is one of the busiest in the world. In September, Cirium shows, there are five airlines contending the market: British Airways, Virgin Atlantic, American Airlines, Delta, and the new entry JetBlue.

Capacity Offerings

The total number of seats available is 171,000 and the ASKs are 950 million (!). British Airways ranks first with 248 flights and 67,134 seats in September alone, JetBlue is at the bottom with 35 flights and 6,300 seats available.

To these figures, there should be added flights to New York-Newark (EWR) operated by United Airlines and British Airways, which are however only 1/10 of the total capacity on JFK (Cirium, 2021).

Instead, it will be interesting to find out how customers will react at London Gatwick where JetBlue will be the only airline to fly to New York. London service to Boston is planned to start in summer 2022.

On JFK-LHR, demand is high enough to legitimize harsh competition. It’s clear that JetBlue wants to fish where the fish are.

If the carrier moves away from the competition, which is a strategy embraced by some LCCs, it would increase the risk of ending the transatlantic project due to the lack of passengers. So how does JetBlue stand out from its competitors?

Standout Direction

Standout recognition is the direction taken by the airline.

On one side, there’s the customer’s desire, on the other the business’ unique strength and in the middle the brand strategy. JetBlue is literally in the middle has always implemented a successful hybrid business model, namely low-cost with frills to put emphasis on great service (CAPA, 2012).

JetBlue uses the Airbus A321LR (long-range) of which it has 13 on order.

Another 13 aircraft have been converted to the A321XLR version which will be delivered starting in 2023. The long-range version can travel 4,000 nautical miles (7,400 kilometers) nonstop, while the extra-long-range will have a range of 4,700 nautical miles (8,700 kilometers).

They aren’t huge numbers, considering JetBlue’s fleet counts 280 units with other 128 on order.

Taking Approach with Caution

But the airline hasn’t taken a risk and prefers to assess the situation little by little. In fact, we don’t know if the recipe adopted by JetBlue, a hybrid model on a long-range narrow-body, could be the definitive solution for truly sustainable aviation, although today it appears to be the most advantageous solution for optimizing costs.

The airline’s caution is also proved by the announced step backward for the retirement of the Embraer E190s. JetBlue justified the choice citing an increase in demand from the Northeast Alliance with American Airlines.

But the underlying reason is that the E190 only has 100 seats. The latest surge of Covid-19 cases in the United States (300,000 on 7 September), which causes great uncertainty in demand, forces a re-evaluation of regional aircraft useful for flights that would be inconvenient with the A320.

Big Fleet Plans

In any case, JetBlue is already receiving the Airbus A220-300s and it will move ahead with retiring its 30 leased E190s between 2023 and 2026 (Silk, 2021).

JetBlue’s A321LR has an Airbus Cabin Flex configuration with 138 seats. The new Mint business class features 24 fully lie-flat private suites, including two Mint Studios ™. All suites have aisle access, a sliding door for privacy, a fully lie-flat seat, a large 17” TV.

The front-row 2 Mint Studio suites feature a large bed and a 22” TV. The economy class is configured with 114 core seats, including 24 Even More® Space Seats, outfitted with a 10.1” HD touchscreen TV. The aircraft also has a free inflight snack bar, called The Pantry, and free unlimited high-speed wi-fi (JetBlue, 2021).

Will Stronger Products Compete Against JetBlue?

However, other airlines are also moving towards strong product distinction. This is the case of Virgin Atlantic which has added in the Upper-Class of some Airbus A350s a new social space, known as ‘The Booth’, with two 27″ touch screen monitors for an immersive experience (Clarkson, 2021).

The price proposed by Virgin Atlantic in Upper Class for an LHR-JFK flight on 23 October is £3,767 while for the same day JetBlue’s Mint class is £1,689. If JetBlue gets positive results on transatlantic flights, too early to tell, the price gap should prompt full-service carriers to a deep reflection on their model.

Other players have entered the ‘transatlantic narrow-body’ market, such as France’s boutique airline La Compagnie that flies the A321LR from Paris Orly to New York-JFK, and Portugal’s flag carrier TAP that deploys the same plane from Porto and Lisbon to several destinations in the United States and Brazil.

It should be noted that the airlines mentioned above operate a homogeneous fleet.

La Compagnie flies only 2 A321LRs, TAP has an all-Airbus fleet, and JetBlue practically operates a single-type fleet (A320 family), excluding aircraft intended for the regional market, the Airbus A220 and Embraer E190 which, however, can be used as faithful substitutes for the A320.

Is Low Economics The Right Game, Currently?

On the other hand, the economics of flying routes longer than 7 hours are different from short-haul ones and FSCs are usually better at managing volatile fuel costs. Nonetheless, the simple add-on philosophy of (ultra) low-cost carriers is dissimilar from the hybrid model of JetBlue.

It’s also arguable that many airlines today seem able to squeeze costs on long-haul flights. An example is French Bee which operates as an ultra-low-cost carrier, the same goes for AirAsiaX and Scoot.

Norse Atlantic Airways, born from the ashes of Norwegian, aims to launch its transatlantic flights next year. Also, the newest Lufthansa’s budget subsidiary Eurowings Discover is positioned as a leisure airline, but with full-service features, and it operates a mixed fleet of A330s and A320s.

Photo Credit: JetBlue, Aircraft Parked at Gate Tails

“The long-haul part of Eurowings’ network has caused greater challenges than the short-haul,” explains CAPA, which provides market intelligence to the aviation industry.

“Firstly, cost advantage is harder to achieve on the long haul, where passengers need a greater level of service and where premium travel is needed to cross-subsidize cheap ‘no frills’ fares. Secondly, the need for feed makes a pure point-to-point operation more challenging” (CAPA, 2021).

Overall

Indeed, JetBlue’s routing system combines elements of Hub & Spoke, point-to-point and linear (Cook & Goodwin, 2008). Also, if a requirement for a point-to-point to work properly is a high-density market, JetBlue has chosen prime locations.

London, New York, and Boston are among the areas with the highest GDP per capita in the world.

Here some might argue that it’s precisely where GDP is high that FSCs thrive with their purely H&S system. However, when the service of a ‘hybrid low cost’ procures a standout recognition and the price is relatively low, the choice is hard.

Finally, bearing in mind that New York is one of JetBlue’s focus cities where the airline holds almost 41% market share at JFK airport followed by Delta at 34% (DOT, 2021), thus the feed is ensured by hundreds of daily flights, although JetBlue doesn’t have to fill giant widebodies.

At least one thing is clear: if low-cost airlines gain a foothold in the market, FSCs will be forced to shift progressively into the low-cost sector.

References: