After my post on JetBlue’s impressive quarterly results, the Wall Street Journal talks with Ray Neidl about United and JetBlue, as well as some general discussion about the airline sector going forward. Its a worthwhile three minutes.
JetBlue airways had their 3rd quarter conference call this morning and announced a stunning swing back to profits. Not only did they make money, but they almost doubled Wall Street’s estimates. They posted earning of 12 cents a share for the quarter while expectations had them pegged at only 7 cents.
JetBlue also announced they would be dropping service to Columbus, Ohio, and Nashville, Tennessee, as well dropping one daily flight between Oakland, California and Ft. Lauderdale, Florida. I’m not surprised that JetBlue would do this from their smaller hub in Boston, but to see them dropping service from their home airport of JFK piqued my interest. I guess that unlike Delta’sold Song division they are focused on making money and staying efficient. The E190s currently being used on this route look like they will be relocated to serve new routes starting three days later between the Northeast and Southeast and Florida.
One final note, JetBlue also announced they would sell at least two more Airbus A320 in early 2008, and possibly more if market conditions were favorable. They’ve been doing this for a while now as a way to hold down the size of the fleet and slow growth. As the pace of A320’s slows down a little, no announcement was made about E190 deliveries, which shows they continue to be a very efficient plane on which to run an airline.
All in all it was a pretty good quarter for the low cost carrier, which remained bullish and forecasted a strong holiday travel season.
I have to say I didn’t see this one coming. According to the South Florida Sun Sentinal, JetBlue has filed for approval to provide service between Bogota, Colombia and Orlando, FL beginning April 1st, 2008. This service would be followed by seven weekly flights between Bogota and Ft. Lauderdale, FL beginning October 1st, 2008. The new service isn’t a sure thing however, as American Airlines currently holds the authority for the 14 slots JetBlue would like to use.
American has of course not used these 14 slots for more than five years, and why would they? They hold the monopoly on flights between Florida and Colombia, and so it’s in their interests to keep seat inventory low, and prices high. Now that doesn’t seem very fair to me, plus who actually likes flying American anyway? I hope regulators give JetBlue the chance to compete on this route and drive down costs while increasing frequency. International travel, particularly in the less competitive Latin American market, has lagged far behind domestic competition for a while. Its about time it caught up, even just a little bit.
This filing is also an interesting departure in strategy for JetBlue. Their international exposure to date has been restricted to Caribbean islands and holiday destinations. Now I’ve never been to Bogota, but I’m pretty sure its no Aruba. I guess they see a consistent flow of business traffic, which makes sense as Miami is very Latin America focused.
Lastly and certainly least, Spirit Airlinesis also in the running for these flights, and they have a greater preexisting exposure to Central America. I’m not bullish on their chances at all though, what with their internet inept CEO and poor customer experiences. In my opinion having no flights at all would be better than letting Spirit start new service.
I’ll keep an eye on this and see how it plays out.
The St. Maarten Daily Herald is reporting that JetBlueAirways is to begin service from New York to the Carribbean island paradise beginning in January, so long as the current negotiations conclude as planned. According to the Herald, the flights would commence on January 17th, running on a daily basis between the carrier’s New York JFK hub and St. Maarten for a round trip price of around $350. An official announcement could come as early as Thursday.
St. Maarten will pay for some of the marketing costs to fill seats on the new flights, a standard practice when JetBlue enters a new market. Roy Marlin, the head of the St. Maarten Hospitality and Trade Associate (SHTA), said “As the success of low-cost, low-fare carriers expands, and as major airlines continue to both respond to the challenge and operate profitably – as they are doing – St. Maarten-bound travellers will benefit from this competition through increased service and lower fares.” Marlin also pointed to JetBlue’s success in lowering seat prices to Aruba, and suggested St. Maarten would probably see a similar effect.
JetBlue would be the first discount carrier to service St. Maarten from New York.
The Motley Fool just published an excellent and quite comprehensive interview with JetBlue’s new CEO Dave Barger. In it he talks about JetBlue’s ability to compete in an increasingly crowded discount airline market, the airline’s expansions plans and the prospect of increasing government regulation.
Barger actually talked quite a bit about JetBlue’s increasing reliance on the E-190 Embraer 100 seat aircraft it is rapidly adding to its fleet. While the A-320 was once the mainstay of JetBlue’s fleet, the economics of the 190 are even more attractive as it moves into medium and small sized markets. Until now reliability problems have plagued the E190’s on time performance, but these problems seem to have passed judging by Barger’s comments.
