Blue Skies? JetBlue’s revenue trends are among the industry’s best. Can that last?

During the first half of 2015, no U.S. airline enjoyed stronger y/y RASM trends than JetBlue. And sure enough again last week, the New York-based LCC reported a 1% rise in passenger unit revenue for the month of September despite 13% ASM capacity growth and even as rival carriers report rather sharp RASM declines on less capacity growth. Also last month, JetBlue said to expect PRASM for the full third quarter to be more or less flat y/y, a forecast even more bullish than that of Southwest, whose own expectation of a 1% Q3 RASM decline was itself rather cheerful—Delta last week reported a 5% Q3 PRASM decline.

Revenue trends in September were, to be clear, boosted by a later Labor Day holiday this year—some of last year’s busy holiday traffic came in August. But Labor Day was late for all airlines. And that doesn’t explain JetBlue’s outperformance all year, which stems from a host of more substantive tailwinds, some of its own making and some the consequence of good fortune.

JetBlue is certainly lucky to have less new competitive capacity in its home markets than most other carriers. As Wolfe Research (citing OAG data) recently noted, Delta—with which JetBlue overlaps most—is growing fairly quickly in JetBlue markets. But American isn’t growing at all and United is actually shrinking. Spirit, meanwhile, a major competitor in the Fort Lauderdale-to-Caribbean market, is refocusing away from those markets to seize domestic opportunities, mostly where JetBlue doesn’t fly. Delta itself dropped several overlapping Boston routes including Las Vegas, Jacksonville and Charleston, S.C. Overall industry capacity growth in JetBlue’s New York and Boston to Florida and the Caribbean markets has been modest all year, with American actually shrinking its presence. Caribbean and Latin American markets, indeed, propelled by strong demand as well as these benign competitive trends, were “extremely strong” for JetBlue this spring.

But strength in Florida and the Caribbean really isn’t all that new for JetBlue. What is new this year, and a key reason for rising unit revenues, is a turnaround in transcontinental fortunes. For much of its existence, routes between the east and west coasts were JetBlue’s Achilles heel, its major area of network weakness. But this year, transcon demand is strong, as Delta testified again last week, buoyed by economic strength in the U.S. northeast and California, most notably. But at least as importantly, JetBlue’s overall benign competitive capacity trends are most pronounced coast to coast, with American, United and Virgin America all downsizing significantly. In the peak third…

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