New Issue Sneak Peek: JetBlue Enters Europe
JetBlue will begin flying from New York City and Boston, MA to London in 2021. Here is a quick review of the pluses and minuses. We’ll have a closer look in Monday’s new issue.
- JetBlue is flying transatlantically in about the lowest-risk way possible: without buying expensive new widebodies. It will use narrowbody A321-NEOs with extra range capability, merely exercising order options it already holds with Airbus. The risk is so low in fact, that if JetBlue fails to gain traction on the route, it can redeploy the planes domestically or from Florida to South America.
- JetBlue won’t be relying on business generated in Europe, which would be an expensive marketing endeavor (because it currently has no brand presence or established sales relationships there). Instead, it will rely on Boston and New York business travelers already loyal to JetBlue, and Boston and New York corporations more likely to give their business to an airline that can take them to London, the single most important business market abroad.
- The carrier’s premium Mint product is ideal for longhaul journeys across the Atlantic, just as it has been on longhaul transcontinental routes. With lower costs than the market’s legacy players, it can provide a top-notch experience at a lower price point, at a time when transatlantic premium airfares are rather high.
- Sure, the A321-NEO LRs are a much less expensive option than buying new widebodies. But they also have considerably higher unit costs than twin-aisle jets they’ll compete against.
- The competitive response will be harsh. In fact, it’s already starting, with Delta and Virgin Atlantic firing a preemptive strike with new Boston and New York flights to London Gatwick of their own next summer. Even if Delta, Virgin Atlantic, American and British Airways do nothing more, they’ll have their powerful joint ventures as a competitive weapon. And they’ll have massive schedule superiority. And much larger loyalty plans. And lounge facilities on both sides of the Atlantic. And so on.
- The airline cemetery is filled with low-cost airlines that tried to go longhaul. Primera? Gone. Wow Air? Gone. Air Berlin was sort of a low-cost carrier. Norwegian? It’s surviving by a thread. Can JetBlue really succeed where other LCCs have failed?
— Jay Shabat, Senior Analyst