Jetblue To Lga

[Diesel8]

Operating leases Year (or part of) 2003:19 2004:76 2005:80 2006:83 2007:81 Thereafter:593 total of: 932

Thereafter is quite a few years, total of is total cost paid, in this case almost 1 billion.

JS,

What is wrong with getting slot exemptions. Like all airlines, jetBlue applied for them at JFK and got them. Other airlines can do this, as a matter of fact, it is quite a common occurence. Do you think only jetBlue has requested slots exemptions at LGA?

Well, if LGA is so great, why does Song want to increase presence at JFK? Hmm, might it be about serving the needs and desires of the customer? jetBlue calls JFK a happy home, but realize that some customers may find LGA more convenient.

 

[dgs]

There's no doubt that from an operating standpoint JFK is far superior to LGA. There's also no doubt that jetblue is committed to JFK ops. Despite the benefits of JFK, I think we gain two things from LGA. First, we need elbow room to grow until we can get the new T5 built. T6 is rapidly reaching capacity. Second, for those who seem stuck on LGA, we can give them a taste of blue Kool-aid. Once we have them addicted, they'll come to JFK to get more!

 

[MAH4546]

Not doubting that some of what you say has some merit, but I hate it when people just appear to make up facts to support their desired outcome.

First of all, American's ASM cost during the most recent quarter was 10.25 cents....not 11-point-something as reported.

Next, where are you getting 5.8 for the ASM cost for JetBlue? Last I'd heard it was 6.07 cents...and that was BEFORE they pulled out a row or two of seats to get rid of that wretched 30" pitch they failed to forewarn folks about.

Hehe. I love how you talk about how you "hate it when people just appear to make up facts to support their desired outcome" and then you go ahead and say jetBlue used to have a 30" seat pitch. LOL! Before they pulled out row 27, seat pitch was 32" (which even at that time represented 3rd best average pitch in the industry after AA UA, since DL and the other majors have many of thier planes with 31" pitches).

 

[javaboy]

slots awarded??????

Delta Turns Up the Heat on JetBlue in New York
By Eric Gillin
01/28/2004 11:58

......."
JetBlue's JBLU growth plans appear to include LaGuardia Airport in New York, but rivals have made aggressive moves to compete, causing Goldman Sachs to downgrade the low-cost carrier's shares.

Late Tuesday night, Morgan Stanley told investors that JetBlue has been given the right to fly from LaGuardia Airport in the spring. But because of the increased competition from rivals, especially Delta Air Lines DAL , Goldman Sachs downgraded JetBlue, sending shares down more than 8%.

Morgan Stanley analyst William Greene told investors that sources at the Federal Aviation Administration awarded JetBlue 11 slots at LaGuardia on Friday, following the carrier's application for the slots a week ago. According to Greene, JetBlue will get four morning slots, two afternoon slots and five evening slots, and could be awarded three more late-night slots. The award comes a week after the low-cost carrier submitted its application to start flying from a second New York airport.

"These are very attractive time slots," said Greene. "According to the FAA, it is very rare for slots during the morning and day to become available at LaGuardia. So, JetBlue's application for slots this week may have been opportunistic." (Morgan Stanley does and seeks to do business with the companies mentioned in its research reports.)

............."

 

[BoeingBoy]

Hi guys & gals,

A question from a U person - any info (or speculation) on whether the bid for the shuttle is just to acquire slots or do you folks really want to operate it?

Jim

 

[LiveInAHotel]

Hi guys & gals,

A question from a U person - any info (or speculation) on whether the bid for the shuttle is just to acquire slots or do you folks really want to operate it?

Jim

I think they just want the slots. I highly doubt they will fly the "Shuttle" at all. But if AA gets the slots for Shuttle they plan on flying it. Throw AA's 737-800's on the routes and blow DL out of the water. Delta is now flying their shuttle with old 737-200's and I hear pax hate the planes.

 

[mga707]

Hi guys & gals,

A question from a U person - any info (or speculation) on whether the bid for the shuttle is just to acquire slots or do you folks really want to operate it?

Jim

I think they just want the slots. I highly doubt they will fly the "Shuttle" at all. But if AA gets the slots for Shuttle they plan on flying it. Throw AA's 737-800's on the routes and blow DL out of the water. Delta is now flying their shuttle with old 737-200's and I hear pax hate the planes.

Correction: DL uses 737-300s on their Shuttle, not -200s.
Although the average age of their -300s (mostly ex-WA) is about the same as the average age of their -200s. Both fleets date from the '80s.

 

[funguy2]

10 flights a day by JetBlue wouldn't destroy AA or CO, but it sure would cut into the fares charged.

Keep in mind that B6 fares are not always the lowest. Granted they start fares low but over time they have been raising fares in markets that they dominate. ie JFK-FLL. Fares on the majors at times are lower than B6

The same is often true to Southwest. The difference is that the spread between the highest and lowest fares is less, and the average for the LCC can sometimes be more than the Legacy carrier (remember the JB vs. DL average fare comparisons).

 

[runway4]

Correction: DL uses 737-300s on their Shuttle, not -200s.
Although the average age of their -300s (mostly ex-WA) is about the same as the average age of their -200s. Both fleets date from the '80s.

The one I flew on recently was an old LH a/c (737-330), N241DL, delivered in Sept. '87. Wasn't the cleanest plane...

 

[funguy2]

ELP WN Psgr--good homework--are you an airline analyst? One thing to note is that JBLU began taking out the last row during the 3rd Q so some of that is in the ASM cost (as well as the rev). And Diesel8 is right, pitch was 33", and is now 34" for much of the plane.
I think you are right, JBLU looked vulnerable by dropping ATL and that is one reason AMR is being so aggressive. But if what I read is right, JBLU is making it pretty painful for AMR by dropping 7 day fares down to 21 day, and running transcon sale fares of $79 one way. I think AMR's loadfactor to break even on that would be well into triple digits, if they sold all seats there! But JBLU is still making money, even if less than they could without the heat. How long is AMR (or Song) willing to lose money? Not working for an airline, someone correct me if I'm wrong but I think 10 slots means 5 R/T's. That doesn't seem like enough to do much of anything, except maybe keep Song a bit more honest in pricing from LGA. So I don't get it.

The $80 transcon fare equates to a yield of 3.25 cents. So if JB's cost is 6.07 cents, then JB loses 2.82 cents/mile on every $80 each-way ticket.

If AA's costs are 10.25 cents, then AA loses 7cents/mile on the $80 transcon ticket... or more than double what JB loses on each ticket sold at that fare.

In order for JB to break even by selling two tickets, if they sell one at $80, the other ticket must sell at $218 each way. (6.07cents cost + 2.82cents to subsidize the loss on the $80 ticket multiplied my 2460 miles JFK-LAX).

In order for AA to break even by selling two tickets, if one is sold at $80, the other must sell at $425 to break even (10.25cent cost +7.0cents to subsidize $80 ticket multiplied by milage).

Thus, JB can have a one-way fare range of $80 to $299 (or maybe more to account for Load Factors of less than 100%) each way and revenue manage their way into profits on the JFK-LAX/LGB route. AA needs to have a range of $80 to $499 (or more). The problem for AA is that they have to convince some "high-end" passengers that their product is worth 66% more than JetBlue's comparable product. The problem for AA being that it will be very hard for revenue management to get top end fare to $499 if the competitions top end fare is $299. Thus JetBlue can actually profit when AA cannot.

So, while JB may have made some moves, like dropping ATL, that look vulnerable, the reality is that they can profit where AA cannot, or be much closer to profit than AA. Unless demand dries up, JB should be able to stand on its own vs. AA/DL rather than be hurt by it. In fact, AA/DL moves will likely increase the market size, actually helping JB rather than hurting it (Bigger pie to draw from, everyone gets more passengers, JB more likely to profit from them than AA or DL).

 

[funguy2]

slots awarded??????

In another JB thread, there was mention that Neeleman revealed that 7 slots were awarded to JB during their conference call. I have not personally listened to verify...

 

[mga707]

Correction: DL uses 737-300s on their Shuttle, not -200s.
Although the average age of their -300s (mostly ex-WA) is about the same as the average age of their -200s. Both fleets date from the '80s.

The one I flew on recently was an old LH a/c (737-330), N241DL, delivered in Sept. '87. Wasn't the cleanest plane...

Yes, they have two ex-LH -330s. Upon doing some checking, I realize my statement that DL's 737-300 fleet is mostly ex-Western is incorrect. Only half of it is--13 out of 26.
Interstingly, the aircraft that are Shuttle-configured all come from the non-Western half of the fleet. The Shuttle aircraft all date from 87/88, except for one built in 91.

 

[KCFlyer]

Hey ELP (I thought that was you), check your PM's

 

[dgs]

He said 14 slots were FAA approved, for 7 flights per day, but that there is more to be done (like working gate and counter space with the Port Authority) before it is a done deal.

 

[JS]

The $80 transcon fare equates to a yield of 3.25 cents. So if JB's cost is 6.07 cents, then JB loses 2.82 cents/mile on every $80 each-way ticket.

If AA's costs are 10.25 cents, then AA loses 7cents/mile on the $80 transcon ticket... or more than double what JB loses on each ticket sold at that fare.

In order for JB to break even by selling two tickets, if they sell one at $80, the other ticket must sell at $218 each way. (6.07cents cost + 2.82cents to subsidize the loss on the $80 ticket multiplied my 2460 miles JFK-LAX).

In order for AA to break even by selling two tickets, if one is sold at $80, the other must sell at $425 to break even (10.25cent cost +7.0cents to subsidize $80 ticket multiplied by milage).

Thus, JB can have a one-way fare range of $80 to $299 (or maybe more to account for Load Factors of less than 100%) each way and revenue manage their way into profits on the JFK-LAX/LGB route. AA needs to have a range of $80 to $499 (or more). The problem for AA is that they have to convince some "high-end" passengers that their product is worth 66% more than JetBlue's comparable product. The problem for AA being that it will be very hard for revenue management to get top end fare to $499 if the competitions top end fare is $299. Thus JetBlue can actually profit when AA cannot.

So, while JB may have made some moves, like dropping ATL, that look vulnerable, the reality is that they can profit where AA cannot, or be much closer to profit than AA. Unless demand dries up, JB should be able to stand on its own vs. AA/DL rather than be hurt by it. In fact, AA/DL moves will likely increase the market size, actually helping JB rather than hurting it (Bigger pie to draw from, everyone gets more passengers, JB more likely to profit from them than AA or DL).

The 6.07 cost is systemwide average. This includes fixed costs, and the cost per mile for operating long route such as JFK-LGB is less than systemwide.

For argument's sake, let's say the JFK-LGB route costs 4 cents per mile. If so, the price of a second ticket after selling an $80 ticket needed to break even on average is only $117. I'm sure JetBlue sells a few tickets priced higher than $117 ==> profits.