Jet Blue to partner with Norwegian?

JetBlue has yet to decide which London airport it will serve once it launches highly anticipated long haul trans Atlantic flights in 2021, but it is laying the groundwork for an extended network in Continental Europe through a proposed new interline agreement with Norwegian. Such partnership begs an obvious question – will they deepen their commitment to a codeshare once JetBlue makes its trans Atlantic debut?

Norwegian and JetBlue have signed a letter of intent for an interline agreement and plan to launch that partnership in the summer of 2020. Customers can book connecting flights on each airline’s website under a single booking and JetBlue’s three largest bases – New York JFK, Boston and Fort Lauderdale – feature prominently in the partnership. The airline has connections to more than 60 US and 40 destinations in the Caribbean, and Norwegian serves more than 20 nonstop routes to Europe from those three airports. From JFK and Boston, Norwegian Air UK operates services with Boeing 787s and Airbus A33s to London Gatwick, a potential airport for JetBlue, and Norwegian Air Shuttle operates to numerous destinations from those airports with widebodies.

It is an interesting proposition for the customer, connecting from JetBlue’s narrowbody flights onto Norwegian’s widebody aircraft, and creates the possibility of significantly expanding customer pools for each airline.

It could also be very beneficial for Norwegian, giving the carrier access to JetBlue’s sizeable network, and gives JetBlue a major European partner ahead of its debut to London and as Norwegian points out, it is the third largest operator at London Gatwick.

JetBlue’s dominant position in JFK, Boston and Fort Lauderdale has created numerous opportunities for interline and codeshare agreements. JetBlue’s codeshare partnership portfolio features a lot of full service airlines, so having a low cost codeshare operator to partner with on flights to Europe is important for the low fare proposition that both JetBlue and Norwegian wish to promote to customers.

It is as yet uncertain whether JetBlue and Norwegian will transition their interline agreement into a full blown codeshare, but that could make sense once JetBlue launches service. The benefits of codesharing would provide formidable competition to their full service competitors in terms of seamless service for a presumably lower fare.

Even if Norwegian and JetBlue don’t take their relationship further than a codeshare, their proposed interline is setting the stage for intriguing market dynamics in the US-Europe trans Atlantic market.

Competition at Boston for JetBlue

JetBlue Airways is not relenting in its belief that it can compete vigorously in its Boston focus city now that Delta Air Lines has elevated Logan International into a hub. During the past couple of years Delta has been increasingly building Boston up, first identifying the market as a focus city, and then declaring the airport as a hub earlier in 2019.

Delta CEO Ed Bastian said: 'To the extent that we’re beginning to connect more and more traffic over Boston, we would consider it a hub', said. He remarked that during 2019 Delta is connecting approximately 1,000 passengers per day from the US to Europe through Boston.

Delta has also said that Boston led the company’s system revenue performance in the second quarter of 2019, with growth of 25% year-on-year and a 10% improvement in unit revenues.

Throughout during Delta’s recent expansion at Boston, JetBlue has been answering questions about the increasing competition but has publicly downplayed the changing dynamics. Instead the airline has continually remarked upon its strength there and is sticking to that message now that Delta has identified Logan as a hub.

'We are very profitable in Boston. We are committed to winning in Boston. We’ve built the network in Boston based on carrying customers where they want to go. We are focused on local customers where we see a very clear first choice preference for JetBlue', the New York-based airline's president Joanna Geraghty recently told analysts and investors.

Ahead of JetBlue’s announcement that it would launch trans-Atlantic services to London from its second largest base in Boston sometime in 2021, Delta and partner airline Virgin Atlantic declared plans to launch flights from Boston to London Gatwick in the summer of 2020.

JetBlue has not stated which London area airport it intends to serve, but when their the new Gatwick service starts, Delta and Virgin Atlantic will serve London’s two largest airports.

Delta’s other services to Europe from Boston includes flights to Paris alongside its joint venture (JV) partner Air France, service to Amsterdam (a hub for partner KLM), and a codeshare on Alitalia’s flights to Rome. Delta also operates seasonal service from Boston to Edinburgh and Lisbon.

Data from CAPA – Centre for Aviation and OAG from mid-Jul-2019 show that Delta and its partners have a combined 34.6% seat share from Boston to Western Europe.

Earlier in 2019 Delta stated that it was planning to offer more than 150 daily departures from Boston by Mar-2020, which would be a 25% increase year-on-year.

During a discussion about the airline’s 2Q2019 earnings performance Delta’s executive singled out Boston, noting that the airport led its system revenue performance, with growth of 25% year-on-year and a 10% improvement in unit revenues.

Delta president Glen Hauenstein remarked that the airline was planning to bolster its daily departures from Boston to 200 during the next 18 to 24 months. That level of service will result in a 'very sustainable and very profitable franchise for us', he said.

JetBlue also has a goal of reaching 200 daily departures from Boston, and with Delta’s declaration of reaching the same level of operations, the growing competition between the two airlines will only intensify. It will be interesting to see how this unfolds - both Delta and JetBlue are strong brands within the US airline industry and are generally well regarded by customers.

Obviously JetBlue has no intention of backing down from the growing competition in Boston, especially given the investments it has made in building up its corporate base in the market. But Delta brings considerable clout to the market, and will use its scale to ramp up the competition to secure corporate contracts.

Images and source: Blue Swan Daily