JetBlue’s London Flights Still on Track for This Fall
JetBlue Airways is pressing ahead with its planned London launch in the third quarter, despite uncertainty over the trajectory of the pandemic and whether travel restrictions between the U.S. and the UK will remain in force.
The UK has been hit hard by new variants of the coronavirus and is set to announce mandatory hotel-based quarantines for incoming passengers. But JetBlue, like most airlines, is betting that the pace of vaccine administration will pick up over the course of the year, releasing what its executives say is “pent-up demand” for leisure travel.
The New York-based airline has not disclosed where it will fly to in the greater London area. “We have paths to more than one London airport,” CEO Robin Hayes told analysts on the company’s fourth-quarter and full-year 2020 earnings call on Thursday. The carrier last year won slots at both Gatwick and Stansted — although not as many as it requested. It recently filed a complaint with the U.S. Transportation Department that it had been shut out of Heathrow.
Heathrow access, perennially a problem for airlines, has been complicated by the UK government’s slot waiver extension. Airlines are subject to a minimum-use requirement for slots at Heathrow, a requirement that has been waived due to the pandemic. This has choked off the secondary market for slots, so JetBlue couldn’t buy slots even if it wanted to.
Since it first announced plans to fly to London, JetBlue has said it would fly from Boston and New York’s John F. Kennedy International Airport. But Scott Laurence, head of revenue management and planning, suggested the airline could fly to the UK capital from South Florida. The airline could consider flying from its Fort Lauderdale focus city when it takes delivery of Airbus A321 XLRs, he said. In the meantime, JetBlue is pursuing a pair of slots awarded to an undisclosed carrier that are not being used, he said.
London is planned for the third quarter. The present is a different picture altogether. JetBlue’s fourth-quarter flown capacity was down 47 percent from 2019’s fourth quarter. After bookings started to recover in the autumn, the company saw demand plunge in December as Covid-19 cases spiked around the U.S. and state governments, particularly in the Northeast and California, urged residents not to travel. JetBlue expects first-quarter capacity to be 40 percent of 2019 levels.
But the airline expects demand will rise as vaccines take hold. JetBlue now is planning to end the year flying between 70-75 percent of 2019 capacity, with the expectation that the first quarter of 2022 will see capacity restored to 2019 levels.
The carrier said it has seen demand to its Latin American and Caribbean markets remain strong, driven by visiting friends and relatives (VFR) traffic. As international restrictions change, domestic demand has shifted to Florida, it said. JetBlue believes its leisure-heavy network will stand it in good stead when demand begins to return more meaningfully.
Key to its recovery plan is its recently approved partnership with American Airlines, dubbed the “Northeast Alliance.” This will give JetBlue greater reach in the Midwest and the Southeast, routes that often are served by one carrier from New York. The partnership also will give JetBlue more access to international flights via codeshare, something it is keen to sell to its corporate customers, Laurence said.
Also key to JetBlue’s future is its changing fleet mix. The airline last month took delivery of the first of eight Airbus A220s it plans to add this year. It plans to retire one Embraer E190 aircraft for each A220 it takes, Hayes said. In addition to the A220, JetBlue took delivery of two Airbus A321 NEOs in the fourth quarter and plans to add three more in the first quarter of this year. JetBlue plans to end the year with 282 aircraft in its fleet, up from 267 at the end of last year.
JetBlue reported fourth-quarter 2020 loss of $454 million, resulting in a negative 69 percent operating margin. Full-year losses were $1.7 billion, generating a negative 58 percent operating margin. Revenues fell by 67 percent in the fourth quarter to $661 million, and by 64 percent for the full year, to almost $3 billion. The carrier’s daily cash burn for the fourth quarter was $6.7 million, or at the lower end of a forecast $6-8 million range.
Note: This post has been corrected to say JetBlue took delivery of its first Airbus A220 in December, not January.Subscribe Now to Airline Weekly