Aviation: Jetblue transatlantic?

March 5, 2019

The internet has been rife with speculation that US budget carrier jetBlue Airways is about to announce the launch of transatlantic services.  The airline has made no secret of its interest in bridging the Atlantic.  Its executives have gone on record as saying they believe that it could "disrupt" the market. especially with its 'Mint' business class that is already offered between the east and west coasts of the USA.  They also claim the airline could offer "meaning competition" to the incumbents.

 

In connection with serving Europe, JetBlue's CEO Robin Hayes has already said: "we have 85 neos that we can upgrade to long-range versions...  We certainly have things in place when we are ready to push... We haven't taken the final decision yet, but I think I've outlined the opportunity."

 

jetBlue already serves the Caribbean and is considering flights to Europe using its forthcoming Airbus A321neos.  (aceebee)

 

Hayes described the opportunity by explaining that "the transatlantic market comes down to three large carriers with huge amounts of power."

 

Debate has intensified recently because the airline has announced an 'all hands' meeting on April 10, during which it says it will discuss its future direction and strategy.  Adding to the excitement was the manner in which the event was revealed.  The background to the announcement (right) has a reproduction of the seat moquette on London Underground trains as its background - a highly distinctive material that features images of the London Eye, Big Ben and St Pauls Cathedral.

 

A JetBlue spokesperson explained that "potential routes to Europe could provide us an opportunity to grow our focus cities of Boston and New York as we consider the best use of our aircraft from a margin perspective in those cities."

 

Fueling the speculation, jetBlue has commented on Delta Air Lines' recent application for additional slots at Tokyo Haneda.  While the airline has no ambitions to launch services to Japan, its comments point out that Delta's request is based on creating a better balance of competition between the USA and Japan.  jetBlue goes on to claim that there is a similar imbalance between the USA and London and Amsterdam, and on that basis opportunities for new entrants to serve Europe should be made available.

 

Opportunities

With managers at jetBlue openly saying that they are considering European services, its interesting to look at why the carrier might want to expand across the Atlantic:

  • jetBlue currently loses out to the US big three (American, Delta, United) as it does not have reach outside of North and Central America.

  • jetBlue has an domestic extensive network radiating from Boston and New York John F Kennedy airports.  Its own transatlantic services would enable connections across the USA, as well as into the Caribbean.

  • jetBlue already has a respected business class product - Mint - which is a viable alternative to the established players' long-haul premium cabins.

  • jetBlue has 85 Airbus A321neo aircraft on order.  It holds options to convert those into the longer-ranged A321neoLR version which will be capable of flying up to 4,500 miles.

  • jetBlue already partners with airlines such as Aer Lingus, Brussels Airlines, Emirates, Icelandair, LOT Polish, TAP Air Portugal and Thomas Cook.  jetBlue transatlantic services to select European cities could strengthen those ties.

  • jetBlue has called for the US DoT to review the proposed four-way joint venture between Air France-KLM, Delta Air Lines and Virgin Atlantic that it describes as a "conglomerate mega joint venture."  It told regulators that the arrangements could "further restrict jetBlue’s ability to meaningfully serve the United Kingdom and European Union markets."

 

Challenges

So if we accept that jetBlue is seriously considering serving Europe, what might prevent it happening and when might it launch operations?

 

Will jetBlue announce transatlantic services during its April employee meeting?  (BriYYZ)

 

Firstly there is the issue of slots, especially as the initial European targets are rumoured to be London Heathrow, Amsterdam Schiphol and Paris Charles de Gaulle.  The airline could of course chose Stansted or Gatwick as its London gateway, but jetBlue is keen to capture the premium (business) market and it wanting to use the primary airports makes a great deal of sense.  Heathrow slots are available, albeit for anything up to £50m per pair.  Paris slots are also still possible, but there is nothing at all available at Amsterdam.  However, jetBlue has been lobbying the authorities for more transparency of slot allocations at Schiphol, and may be pushing to have the KLM-Delta stronghold reduced.

 

If jetBlue can surmount the slot issues if faces other challenges that rue out an early launch of transatlantic routes:

  • There have been no Heathrow slot trades registered for jetBlue.

  • There are no slots in London allocated to jetBlue for Summer 2019.

  • The IATA slot conference for Winter 2019-2020 does not take place until June, making trades difficult until then.

  • The lead time for converting Airbus A321neo orders into the A321neoLR version is around 12 months.  While standard the standard A321neo, which jetBlue will start to take later this year, can do Boston or New York to the most western parts of Europe the LR offers more certainty that westbound schedules can be completed without a refueling stop when the winds are particularly strong.

  • If the US DoT imposes conditions on the Air France-KLM / Delta / Virgin alliance, it is unlikely that any remedy slots would become available immediately as doing so would disrupt travel for thousands of customers who have already booked for this summer.

  • jetBlue does not currently have ETOPS (Extended-range Twin-engine Operational Performance Standards) clearance, which is almost essential for oceanic flights.  It typically takes 12 months for airlines to get an ETOPS approval from the Federal Aviation Authority.

So?

It seems increasingly likely that jetBlue will launch transatlantic services, probably to London Heathrow and possibly Amsterdam Schiphol initially - if it can obtain slots.  The move would likely be positive for the brand, extending its reach and enabling it to offer premium-cabin fares on a lucrative route that are well below established levels.  However, the challenges it faces are restrictive.  It is already getting rather late to capture a reasonable share of this summer's transatlantic market.  While winter has lower demand which could make the launch simpler, equipment and ETOPS issues are likely to still be limiting factors eight months time.  It is therefore extremely unlikely that he airline could start transatlantic flights this summer, and rather unlikely that they could be launched at the beginning of the Winter 2019-2020 season. 

 

The Aviation Oracle believes jetBlue will throw its hat into the transatlantic ring, but flights won't start until a year from now - at the beginning of the IATA Summer 2020 season.  We might get to know more on April 10.

 

Text © The Aviation Oracle

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