Issue No. 715

JetBlue Is Crossing the Atlantic. What's Next?

The first hint came as early as 2011. JetBlue had just placed an order for A320-NEOs. And responding to an analyst question about potentially flying to longer-haul international markets like Europe, the carrier’s then-chief commercial officer didn’t deny the possibility: “Certainly with the winglets and then later the NEO, then some of those markets that we can't serve today are absolutely destinations that we can consider.”

Today, that same executive, Robin Hayes, is JetBlue’s CEO. And last week he finally announced what he’s teased for the past eight years: Yes, JetBlue is going to Europe. More specifically, it will fly to London, from both New York JFK and Boston, though not for another two years.

The first hint of interest in London surfaced at the LCC’s 2014 investor day event in November that year. A route-planning executive, responding to speculation, admitted: “There seems to be some interest in London from my boss.” By early 2016, that boss—i.e. Hayes—removed any doubt that he was at least considering the idea. At a JP Morgan investor event in March, he spoke openly about evaluating a new long-range variant of the A321-NEO Airbus was marketing, presenting a new set of market opportunities. “Could Europe be part of that, then? Yes, absolutely.” In July, JetBlue indeed amended its A320-NEO order with Airbus to include options for the new A321-NEO LR.

By that time—around mid-2016—Hayes and his lieutenants were speaking freely about the transatlantic opportunity and why it was so attractive. While stressing that they hadn’t made a final decision, the executives called attention to the high fares and limited competition on transatlantic routes, a situation not unlike the domestic transcontinental market before JetBlue entered. Key to success there were low fares, well-liked service, a loyal customer base in New York and Boston, and a premium product called Mint that was every bit as good as the top-end products offered by the Big Three legacy carriers. During its Q2 2016 earnings call, JetBlue said transatlantic fares were high because 87% of the market’s capacity was flown by four giant joint-venture groupings, each with immunity to cooperate on pricing. It was referring, of course, to the Delta-Air France/KLM-Alitalia JV, the Delta-Virgin Atlantic JV, the American-IAG-Finnair JV and the United-Lufthansa-Air Canada JV.

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