sfointern
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JetBlue & How It's Building On Southwest's Success

Mon Oct 15, 2001 8:51 pm

When Neeleman sold his baby Morris Air to Southwest in 1993, WN was shrewd enough to recognize him as a business threat. So it stipulated that he couldn't work in the airline industry for 5 years.

Lo and behold, Neeleman came back --and came back big time-- in 1999, the year after his voluntary exile, to found jetBlue.

Stating the Obvious

In many ways, Neeleman has mimicked the Southwest formula. He's chosen less congested destination airports, a single fleet type to cut costs, you know, the basic southwest fundamentals.

But jetBlue seems to be building on Southwest's successful formula; applying it to a new kind of stylish, value-oriented proposal. As its average stage length increases, jetBlue's lowered costs come in handy.

This tends to make me think some sort of international service is coming up for jB's prospects... I'm thinking the Caribbean, Mexico, or Canada.

WN & B7 -- The Dynamic Duo

In what ways do you see jetBlue applying WN's strategies for its own niche?

Already, jetBlue is advertising itself as the "low-fare, high frills" airline, whereas Southwest prides itself on being the "low-fare, low-frills" airline.

Interesting fact for you

In 1971, Southwest's slogan was:
The Somebody Else Up There Who Loves You

jetBlue recently came out with a slogan:
Somebody Up There Likes You


Hey now!  Big thumbs up
 
Greg
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RE: JetBlue & How It's Building On Southwest's Success

Mon Oct 15, 2001 10:09 pm

It's way too early to be handing accolades out to JB. They have how many planes? 15 or so? Hardly a fleet...more like a handful. And they serve a bunch of low yield tourist destinations. It's impossible to compare them to Southwest.

It'll be interesting to see how well they weather the current situation. They may say they are profitable...but then again, who knows? I don't see an IPO being offered any time soon.
 
DCA-ROCguy
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RE: JetBlue & How It's Building On Southwest's Success

Mon Oct 15, 2001 10:13 pm

Two pages JetBlue seems to be borrowing successfully from WN is flying to less-used airports, and cities who have suffered price abuse from the Cartel.

JetBlue's main hub is the prime example of the underused airport...they are catching the wave of rebuilding at JFK. That's going to be a completely new airport within a few years, and a lot of improvement is already open. For years my parents avoided JFK like the plague for trips to Europe. This spring, they flew JetBlue down to catch their Air France flight. On their return trip they sailed through the snazzy new T1's customs at rush hour and JetBlue gladly accomodated them on an earlier flight. For both O & D and connections, JetBlue is well poised to take advantage of the new JFK.

At Rochester, New York, where fares are 4th highest in nation (per DOT), JetBlue has been a huge success, with high load factors to JFK. The Cartel doesn't seem inclined to compete. American dropped its ERJ's from ROC to LGA last spring...why compete with low fares when you can only make money by gouging? After Sept 11, US Airways cut 5 of 8 LGA flights; some of that was probably coming anyway.

Yes, all that quickly-instituted Upstate NY service was to some extent done to please the NY Congressional delegation who got JetBlue the slots at JFK. But the numbers, and the response of the Cartel, validate the business sense of that decision. JetBlue flies a third of its daily capacity to Upstate NY; they wouldn't be so profitable if such a large segment weren't performing.


Jim








Need a new airline paint scheme? Better call Saul! (Bass that is)
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Mon Oct 15, 2001 10:35 pm

I have just 2 words for this:

GO JETBLUE!!!!!!!!!
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Mon Oct 15, 2001 11:21 pm

>>It'll be interesting to see how well they weather the current situation. They may say they are profitable...but then again, who knows? I don't see an IPO being offered any time soon.<<

Greg: they have posted a profit(Don't know if operating or net but nonetheless it's a profit!) of about $10 million on 140 million of revenue.

They aren't the only ones putting off an IPO. COEx is delaying theirs I think.
 
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RayChuang
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RE: JetBlue & How It's Building On Southwest's Success

Mon Oct 15, 2001 11:57 pm

I think because B6 is successful being a higher-class Southwest, they will probably do well in the long run because they won't have the high seat-mile costs that plague the majors.

One thing I do see is B6 buying 12-14 A321's by 2004-2005 to accommodate JFK-FLL and JFK-US West Coast flights.
 
Greg
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 12:33 am

Neeleman is sweating his IPO because he wants his original investment back (as due his backers). At one point, he had some fairly deep pockets, but they are not so deep anymore. He needs the money to fund those aircraft that are on captital leases (not operating leases). It will be very interesting in about six months.

Still, comparing a year old company with 15 planes with one that has 250 planes and 30 YEARS of profitibility is fairly ridiculous.
 
DeltaSFO
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 1:10 am

When I get a look at JB's balance sheet, I'll decide whether or not to sing their praises. Oh, wait, they're not even publicly traded. Nevermind.

Also, their transcons from JFK and IAD to OAK and LGB are nice for the market segment they serve, but if you guys think that the big money travelers in these markets are leaving the Big Three for jetBlue, you're smoking some high grain crack.
It's a new day. Every moment matters. Now, more than ever.
 
MAH4546
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 2:08 am

DeltaSFO, think? They are! jetBlue has already become on of the dominant carriers between the Miami area and New York City, with for flights a day between South Florida and JFK than any other airline (8 right now; 13 by December). Thier Long Beach and Oakland services have been so succsesful, that third dailies are coming from JFK. JFK-LGB goes triple daily 1 November (announced after the attacks). FLL-LGB is not far off, and, yes, jetBlue will be able to give dominant AA a run for its money (AA runs seven daily Miami-Los Angeles flights). The fact is that business travelers, myself included, are sick of paying high, last-minute fares on AA, UA, etc. I could not care less if I don't have an FF program, but if jetBlue can get to were I need to go at a good price with service that the majors can't offer, I'm all for it. Besides, I'll still fly the majors when jetBlue is not an option.
a.
 
Greg
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 2:16 am

If you could care less whether they have a FF program, they you are NOT a frequent flyer. Don't try to pass yourself as one.

You're right that they may dominate certain segments of the market..but then again, JFK sees very little domestic service. Include traffic from LGA and EWR (both closer to NYC than JFK) and see what results you get

Give AA or DL, or UA a run for the money? They can squash little JB like a bug. They will never be a major player in transcon routes till they server SFO and LAX.
 
DeltaSFO
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 2:49 am

Wow, SFOintern, good use of the vernacular. Very descriptive.  Big thumbs up
It's a new day. Every moment matters. Now, more than ever.
 
Guest

RE: JetBlue & How It's Building On Southwest's

Tue Oct 16, 2001 4:05 am

Greg: I know a guy in NYC who flies once/month to San Fran on his own money. Would he rather pay the $2500 and get FF miles, or pay $500 on B6 but w/No FF miles? The last year says his choice.
 
MAH4546
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 5:59 am

Greg, add LGA/EWR and jetBlue is still #4 on Miami-New York City, after American, Continental, and Delta. And yes, I am a frequent flyer, I just perfer saving money over getting FF points, though, like I said, I have NOTHING against the majors, AA is my favourite airline, and unless I am flying to NYC, I do fly them.
a.
 
Greg
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 6:28 am

You may not like what I say...but it's right. Jet Blue has a limited fleet and destinations. Being number four in a market is like being number 14. I don't wish them any ill-will...I just don't see them as being as successful as some of the other posters. They tend to have a cult-like following which is kind of strange...

SFO_Intern is free to call me anything he likes--it's his opinion. I don't take much stock in what students say until they can back that education with some success. So, to me he's basically a zero.
 
CPDC10-30
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 6:31 am

Greg, you're a zero to all of us here, so its a washout I guess  Smile/happy/getting dizzy
 
Dazed767
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 6:46 am

They are doing well, and they will grow larger. They are a new airline, they aren't going to have 250 planes and 60 destinations like WN. They expanded quickly in almost 2 years and are doing good....18 planes and 17 destinations...not bad. May all your skies be JETBLUE, Greg  Acting devilish
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 7:11 am

Greg, please lay low while the loudmouths calm down. It's a pity to see the JB zealots so predictably trading punches with those who see things more conservatively (and, I think, more realistically). The facts just fade away, and the thread evolves into a war...

As for facts, SWA had a fleet of 353 as of last June...not 250.
 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 7:43 am

Greg,

In the coming years, as I enter my chosen career, I hope to prove your ass wrong. By then you should be fully rotting in hell.

And for the record, I am not a jB zealot. You are an idiot for thinking that I am directly comparing jB to WN.

All I was trying to ask was how jB is using WN strategies, and modifying them for its operation. Gauging jetBlue's success, while maybe premature, is something that gets more definite as time goes by.

All the trade magazines are trumpeting Neeleman's success, so do you think they're being premature too?

By and large, there is no question WN is the beacon of airline success... but that does not mean jetBlue couldn't be following WN's path.
 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 7:55 am

If you also notice, jetBlue picked the right time to enter the transcontinental market when it did. Tower Air folded some time ago, and there had been low-fare transcontinental demand that had not been met.

Interestingly, jetBlue's trunk routes (with the exception of JFK-ROC) are mimicking Tower's trunk routes... JFK-Florida and to the West Coast. Tower also flew San Juan flights, so low-fare JFK-SJU flights are a feasible possibility.

As much as I hate to say this, jetBlue is hurting the Big Three. Although the pain may be small at this point, it could get worse. My beloved United will have its yields eroded (even if slightly) on its SFO/LAX-IAD transcons when jB starts IAD-OAK/LGB.

This is why United is starting IAD-OAK. If United didn't see a potential threat, it wouldn't be making a defensive move.
 
sccutler
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 7:55 am

It's all about service, and (just like WN), if JB can continue to provide reliable service, well-presented and at a competetive cost, they have a good shot.

As for those who claim the absence of a FF program materially affects JB's prospects, I beg to differ; a FF program is one way to differentiate from similar competitors; JB does so with price, service and... what, attitude? Something.

The strategy of starting with a big pile of cash (something Neeleman could do because of the credibility he gained with Morris); and growing big enough to have substantial frequency on some core routes, appears to be a well-conceived one; even when times were great, it is tough for a major to "squash" a competitor whose costs are som much lower. Now, big traditional airlines are having to conserve capital, and can scarcely afford to throw money at losing routes, just to spank a competitor whose costs are lower.

But I agree- the capital markets are in control now, and if JB can live through the next 18 months or so, I think they have the goods to be big.
...three miles from BRONS, clear for the ILS one five approach...
 
ScottB
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 8:10 am

It seems like the last resort of those who are unable to successfully defend their points from valid criticism ends up being personal attacks. If you don't like what someone has to say - just call them a "hemorrhaged anus" or a "zero" - yeah, that will definitely put him in his place...NOT.

That said, while it seems that jetBlue is doing a good job finding niches at JFK and LGB, it still remains to be seen how effective that strategy will be in the long term. Unless the rules change at LGB, jetBlue will be limited by the 27 daily slots they possess there. By comparison, similar-sized Southwest stations are PDX (33 daily flights), PVD (28 daily flights), BHM, TUL (26 daily flights each), ISP, SDF, and OKC (23 daily flights each). I just don't see how you can have a "hub" with an operation that small unless you're America West.

Moreover, while I think JFK was an excellent choice for a home base, it will become a considerably more challenging environment in the next ten years. Growth at New York City's other two major airports (LGA and EWR) will certainly be constrained by capacity limitations; this is why both AA and DL put forth plans for significant expansions at JFK. And what will the operational environment at JFK be like when B6 has hypothetically expanded to 200 departures, while AA and/or DL have also expanded similarly (and don't forget the afternoon/evening rush hours)?

And, of course, the question remains: Where do they go after JFK/LGB/FLL?
 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 8:27 am

ScottB--

Greg has consistently based arguments on who is posting, quickly criticizing that even a valid point (whether wrong or not) is made by a teenager.

While I shouldn't be taking it personally, I've found his judgment of me as simply a "student nobody" as quite annoying.

Also, it is exactly the question of what to do after the three core cities that makes me wonder if jB is looking at international opportunities.
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 8:41 am

SFOintern:

Greg can be pretty blunt in his opinions, but I think you are really over-reacting to him. Please take a little time away from this thread and reread what has been posted, and I think you will agree.

We all have our opinions, and we all enjoy the right to express them. But, none of us need to react to opinions with anatomical references and other crudities.
 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 8:47 am

Lsjef--

In retrospect, I did overreact and resorted to crassness, yes. But quite possibly you haven't read other threads where Greg's comments merit his place on other user's "most disrespected users" lists.

OK, I'm over it. Back to the topic... what about international service by jetBlue? What are some barriers to entry, or some potential firm-specific advantages for this type of service? (can you tell I've been thinking of econ a little too much lately?)
 
ScottB
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 8:51 am

"In the coming years, as I enter my chosen career, I hope to prove your ass wrong. By then you should be fully rotting in hell" - yes, that's really quite mature.

Looking at "international opportunities" is certainly not following Southwest's strategy. The problem with international flying is that it introduces a quite a number of additional costs - like dealing with a different set of laws, multiple currencies, hiring bilingual staff to dealing, or customs and immigration. And most "international opportunities" beyond the Caribbean, Mexico, and Canada would require a new fleet type with additional range - again, another departure from Southwest's strategy.

Arguing that jetBlue is picking up passengers from the failure of Tower Air isn't entirely reassuring; after all, Tower failed. If jetBlue can do it while keeping RASM above CASM, then that's fine.
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 10:07 am

Stop fighting guys.


I have full faith in jetBlue and that it will do rather well in the following years nd yes I do, in some ways, think they are following in SWA's path. But it will be some time before they reach the scale needed to be compared to Southwest. Right now they're only similar, with more frills.

They've done it right though. Sticking with one aircraft type (a cheap aircraft at that) is certainly a smart move, as well as targeting high-yeild business pax for low-yield fares. See, if a company is going to pay for an employee to fly for business means they want to have it be in a business-class-like setting, but as cheaply as possible. Right now jetBlue is winning brownie points which will come in very handy should they ever reach the size and profitablility needed to expand across the atlantic. When that time comes (and I do believe it WILL come eventually), JB will have already hooked alot of loyal biz travellers and economy pax as well, thus securing fairly good success acorss the atlantic. but then they'll have Euro standards to meet, which is a whole new ball game but I think they can do it, eventually.  Big thumbs up

Right now I think they should hold off on expanding, just for a time, till more fund come in. Then, move transcon to OAK or SFO, perhaps snagging SEA or PHX in the process. Denver could be an interesting prospect as well, but that all comes down to Neelman and his cash source, so I'm not going to say where they will and will not expand because we won't know till we get there. However I assure you they will get through this crisis, and they will have success, slowly but surely winning over in their little niche. They are not a major threat to the big airlines but in a decade or so very well could become one. If Neelman is smart, as the cash comes in he better build himself a "Cash cushion" to rely upon when the majors start competitive pricing to rid them of the parasite that jetBlue will become.

"Cash cushion" what is that? Simply a wad of cash to break any falls jetBlue might have, hence cushioning any pitfalls they might encounter. IF they start losing pax to AA on some routes due to competitive pricing, for instance, they can operate some routes at a loss for a time, and sitll not be hurt by it. Besides, the more JB establishes its reputation in the industry, the more committed flyers it will have, regardless of fare wars.

I believe JB will succeed, do you?

Aloha 737-200!!  Wink/being sarcastic

BTW, if they even come CLOSE to my home town, I'll make a special effort to fly them, "just because"  Big grin
 
Tango-Bravo
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 10:34 am

Aloha 737-200:

Interesting thought about the possibility of jetBlue eventually flying to Europe. For starters, they will have already established plenty of on-line feed into JFK, which would presumably serve as their gateway to Europe. Their standard, single class of service with the basic frills pax most want (meal service would probably need to be added), along with a sensible, equitable fare structure would be a welcome "innovation" in the trans-Atlantic market. It would be a huge improvement over the "steerage class" low-fare flights once offered by the likes of Laker, People Express and Tower Air while avoiding the excessive costs of pandering to the never-ending, ever-increasing demands of a handful of pax.

For their trans-Atlantic flights--if/when--it would seem logical for an ETOPS twin to be utilized by jetBlue; in the interest of keeping their fleet all-Airbus, the A330-200 and/or A330-300 would look great in jetBlue colors!

Can anyone post a computer-assisted artist's conception of a 332 or 333 in jetBlue livery?

 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 11:46 am

ScottB--

No, possible international expansion is not following Southwest's strategy.

HOWEVER, jB could modify a southwest fundamental by making reasonable pricing structures with reasonable restrictions, etc. (a la Sir Freddie Laker). They could choose to fly to secondary airports in Europe, maybe from JFK-STN (London Stansted).
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 12:04 pm

It seems to me that we really aren't discussing "SWA fundamentals" as much as we are discussing smart tactics to deal with the enormous shortcomings of an aviation system predominated by over-sized, greedy airlines...let's call them GorillaAir. They have slowly accumulated the strength to control various markets -- sometimes alone, and sometimes together in tacit collusion -- and the only practical inroad for an upstart is to go into smaller markets.

SWA has been extremely successful employing this strategy for thirty years, largley because they have also consciously avoided going head-to-head in the monopolized/duopolized fortress hubs like ORD, DFW, MSP, DEN, etc.

JetBlue has undeniably made some good progress, but their product is still extremely limited. Their claim to being nationwide rests predominantly on redeye flights -- filling a niche that SWA has always refused to fill (look at a SWA schedule; their employees are never scheduled to fly in the early morning hours, perhaps another element of their success formula).

JetBlue expansion into a DEN or elsewhere would be incredibly unlike SWA...and would likely bring very damaging reactions from UAL or other GorillaAir members.

While I am impressed by the progress JetBlue has made thus far, I do not see an easy future. SWA just seems to grow faster and faster every year, and is now gobbling up state after state in timeframes as short as a year. JetBlue has to not only find niche markets not well served by GorillaAir; they must also eventually go head-to-head against SWA...and in that battle, they have no chance.
 
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coronado
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 12:25 pm

Sun Country's new 737-800 with all leather seating are a welcome addition to MSP, which SWA and JetBlue have to date avoided like a plague due to NWA's extremely aggressive tactics. I am in business for myself and while I value my NWA and AA frequent flyier miles, the fact I can get a round trip on Sun Country MSP-LAX for under 500.00 at relatively short notice earns them my business. While NWA counters with exactly one flight each way at a few dollars less, I am smart enough to realize why NWA is offering that fare! If it werent for the Sun Country's and jetBlues of the world, my short advance notice ticket on NWA would be over $1200 round trip. There are an awful lot of self employed businesspeople now days. All of us in this position should do whatever we can to support the SWA, jetBlue, Airtran; ATA and Sun Country's.
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
MAH4546
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 12:25 pm

Scott, jetBlue does not need anything more than LGB/FLL/JFK. Right there they have in thier hands America's largest O&D markets. While I do think A321s and maybe even A319s, can be in jetBlue's future (JFK-FLL and trans-cons), I don't think A330s or international expansion (beyond the already known possible FLL Caribbean hub) are in the cards. What you should expect from jetBlue during 2002 is flights from Long Beach to Ft. Lauderdale, Seattle, Portland, Denver, Orlando, and a few others, even more JFK-FLL frequencies  Smile-)), and very possibly both JFK-SJU and FLL-SJU by December 2002. My opinion only. I have no idea what jetBlue has up thier sleeves.
a.
 
LoneStarMike
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 12:41 pm

Our local NBC affiliate in Austin just ran a 30 second story on JetBlue. The story basically said that they were the first U.S. airline to begin installing Kevlar (sp?) cockpit doors on all it's aircraft which are bulletproof. The story also mentioned that JetBlue was considering installing camera's in the cabin so the pilots could better monitor what was going on. I must say, I was a bit surprised to see the story because JetBlue doesn't even fly here.

As far as JetBlue's LGB operations go, I remember when they first announced that LGB would be a focus city for JetBlue. Lots of poeple laughed and said it would never work and they could only have 27 departures a day anyway. The impication was that LAX was a lot more convenient to more of the population than LGB was.

But I have to wonder with all the delays getting through security if LGB might become more attractive to people who might have flown out of LAX or other LA area airports in the past. It may take longer to drive to LGB for some people, but it seems like they wouldn't be standing in line for hours to clear security. That fact, coupled with lower airfares and less restrictions might influence more people to give JetBlue a try.

Regarding JetBlue's (lack of a) FF program, didn't I read somewhere that when JetBlue did start up a FF program that it would be retroactive and that people would get credit for flights they had already taken, or am I mistaken?

LoneStarMike

 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 3:49 pm

Lsjef--

Re: WN's growth... its CEO Parker has mentioned how its increasing size is starting to make operations cumbersome. It is hard for WN to make changes to its schedules because it operates without hub banks. One aircraft might overnight in a different place every day of the week.

Because of WN's point-to-point structure, it finds itself operationally confronted more and more as it grows. Parker mentioned how, prior to 9/11, labor unrest was actually becoming a reality at WN. Undoubtedly, a larger labor force associated with a larger airline meant workers starting to desire parity with the larger carriers.

There is a saturation point for growth, and while WN will still be growing, somehow I feel the growth will stop before 500 planes are in the fleet. Unless some miracle scheduler or corporate motivator can be hired, WN's schedules will get more complicated than they already are, and its corporate culture will atrophy over a larger workforce.

The demand for air travel, however, will not saturate in the foreseeable future. Even with revised post-9/11 predictions, air traffic is still poised to grow exponentially in the next decade.

History has shown the inefficiencies of megacarriers. United, on the shrink, and Aeroflop come to mind. AA/TW isn't turning out to be a happy marriage. Economies of scale don't seem to exist in the airline industry. The larger you get, the higher your average costs.

I do bleieve that growth that will become too costly for WN to engage in will be picked up by some other smaller, and by that time, more nimble carrier. It might be jetBlue, it might be AirTran, who knows?

I don't believe that a standoff between WN and jetBlue, though, will be a battle won before it is even fought. While low cost, they have different personalities. I think jetBlue's strategy is perhaps building on Southwest's simple-but-sophisticated formula, to a more contemporary and dynamic operation suited for hub-routing and transcontinental (maybe even transoceanic) routes.
 
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lindy field
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 9:48 pm

Do you people think that JetBlue will be able to capitalize on United's withdrawal from late-night and early morning operations? As a fairly frequent passenger on JetBlue's transcon redeye flights, I do.
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 10:04 pm

A330s WOULD be an interesting prospect, however, that's quite far off, IF it happens. If jetBluie is smart, they will avoid SWA at all costs, ALL COSTS, because once they cross that path SWA will kill them with several swift blows. I love SWA by the way, and I love jetblue, so I'm fence sitting on the SWA vs. JB issue, if it comes between the two I'll fly a major. I'd just as soon love to see a JB A330 in Honolulu, but that's thirty years off at best!  Big grin (And there's no guarantee JB will be aroudn by then.)

Aloha 737-200!!  Wink/being sarcastic
 
Greg
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RE: JetBlue & How It's Building On Southwest's Success

Tue Oct 16, 2001 10:22 pm

There is some misunderstanding that I want JetBlue to fail. This is not the case. I just don't see them as the Cinderella story that they portray to the media (and yes, they can do that since they won't release financial information). This was all done so that the initial IPO would be successful. It will be interesting to see from the SEC filing forms what the actual financial condition of the company is...

I've flown them twice. It's no better or worse than the majors. But, I expected more since they fly from an inconvenient airport, have no F-class cabin (in which to upgrade), no FF program (to earn those upgrades), and a limited schedule to primarily vacation markets. A PTV is no big deal--I work inflight anyway.
In my opinion, they pose no threat to any of the majors. However, because of their size, they are vunerable to a fare ware. Any of the big six can easily sustain the losses more than JetBlue just by the nature of their cash flow.
 
Guest

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 12:30 am

Well all I can say is that before 9/11 jetBlue was running 97% load factor in and out of Long Beach(LGB) and now as of 10/16 their load factor is somewhere in the 75-80% full on the flights in and out of LGB. I think that they have had success here so far but the future will tell what is gonna happen. After all I have worked at LGB long enought to see Sterling One, Presidental, Sun Jet, WinAir and Allegiant all come and go.

Stephen
Fan of seeing jetBlue make it at LGB
 
DCA-ROCguy
Posts: 3890
Joined: Fri Apr 21, 2000 5:03 am

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 3:39 am

Greg, you're right that the Cartel carriers are better able to maintain a cash-flow fare battle with JetBlue if they so desired. Before Sept. 11, we were seeing the first obvious comptetitive responses by the high-cost Cartel to JetBlue--UA's new IAD-OAK route, and DL's new JFK-MSY route, etc. I suspect that the timing had to do with the failure of the UA-US merger, and a decision by Cartel carriers that they no longer had anything to lose politically by going after JetBlue.

Had Sept. 11 not occurred, the efforts probably would have intensified in routes that the Cartel cares about--principally the higher-yield long-haul routes. The Cartel, especially American, was already beginning to surrender Upstate NY-NYC to JetBlue in any event, at least as a strategic move.

However, Sept. 11 changed the political situation in JetBlue's favor again. The Congress has made vigorous noises about demanding "accountability" of various sorts,in exchange for the fat taxpayer bailout. One of these demands is, that low-fare carriers not be treated predatorily.

The Cartel is in a pickle here--they are still hemmhoraging cash. And now they are into Uncle sam for $5 billion plus probably the whole $10 billion more in loan guarantees. Uncle Sam ain't gonna sit by idly if they try to crush low-fare carriers on the taxypayer dime. And frankly, the low-fares are still to an airline far better managed, and have far more economically sound cost structures, than the majors.

Only the majors' size keeps them in a cash flow position to outlast the non-WN low-fares in any predatory fare battle. But that could come into flux too, down the road if not now. The high-cost House of Cards is probably coming down permanently. The new Oct.31 radical cuts at United are probably a sign of things to come.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
Greg
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RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 3:56 am

I'll agree. To a point. There won't be any predatory pricing to eliminate competition. It was too effective!

However, the majors can afford to slowly bleed new entrants with just enough revenue dilution to make them unattractive to investors and deplete cash. I think this is more likely the case. The direct overlay of specific routes signals that the majors are either a) getting nervous (which I don't beleive is the case) or b) want to stop JetBlue before they achieve any critical mass. It's easy to dump capacity on a single city. I think their move into Long Beach was in response to this perceived threat.

I'll agree that some low cost are better managed--Southwest is a case in point. However, the public necessity of having United or American or USAir in the air is considerably more than having JetBlue around (so, I guess I'm saying in a nice way not to over emphasize their importance). While predatory pricing may be monitored, I doubt capacity will. It too, is an effective means to destroy yields.

Do you agree with my Long Beach theory?
 
sfointern
Posts: 1104
Joined: Wed Oct 10, 2001 1:19 am

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 5:22 am

Believe it or not, I actually do agree with your LGB theory, much as I hate to say it  Big thumbs up

Jim,

Interesting point vis-a-vis the politics of airlines at first hesitating to compete with jetBlue.

-Hass
 
USAFHummer
Posts: 10261
Joined: Thu May 18, 2000 12:22 pm

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 5:25 am

Just a note, I, USAFHummer, am NOT the same person as the "Greg" that is posting...although my name happens to be Greg and I sign my threads with that.....

Greg
Chief A.net college football stadium self-pic guru
 
ScottB
Posts: 5414
Joined: Fri Jul 28, 2000 1:25 am

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 5:44 am

I will simply have to respectfully disagree with SFOintern about Southwest's potential for growth in the future. While it is certainly true that maintaining the corporate culture with an ever-expanding workforce becomes increasingly challenging, I suspect the events of 9/11 (and the company's response - i.e. no furloughs) have strengthened the family atmosphere at the company as everyone at Southwest has pulled together to make sure the company survives and thrives. And Southwest has always been very selective in its hiring. I think the last few years were difficult for them with the economy being so strong; they've generally been unwi

I also doubt that scheduling aircraft will be a major stumbling block on the path to growth. I think the point was that it's difficult to tweak the schedule *on short notice* because of the way they schedule their flights point-to-point. It's a bit less of a challenge when you have months to plan and sophisticated computer software to assist you.

The size of Aeroflot wasn't the cause for its demise; the fact that it was a state-owned/run enterprise without a real need to make a profit or run efficiently (since they were the only game in town, they could do whatever they wanted) meant that they were in for a rude awakening once the Soviet/Russian economy began to convert from a command economy to a merket economy. United's problems aren't primarily due to its size; you can list at least half a dozen reasons: poor labor relations (and perhaps unrealistic expectations in some labor groups), weak economies in Asia and now the U.S., an ill-timed merger agreement with US Airways, increasing competition from low-fare carriers with lower costs, an increasingly outmoded business model, and even a loss of focus on the core business. As for AA-TWA - there are precious few mergers in the airline industry which have gone smoothly; even AA-Reno ended up being a huge mess with the pilots' sick-out!

I do think that the old views of growth in air travel have to go out the window at this point. I actually don't believe that it will grow as quickly as expected; the increased costs of security in money, time, and inconvenience will make people find other alternatives to flying. I don't think anyone disputes the need for additional security; I just think it will deter some from flying.

I don't think there's any doubt that jetBlue will expand at LGB; what remains to be seen is how UA, WN, AS, and HP respond on any hypothetical short-haul routes. And whether they will really need to given that B6 is limited to 27 daily departures. As to whether LGB will be more convenient from the perspective of clearing security - well I guess that depends on what the capacity of their checkpoint is (since that does seem to be a big bottleneck these days). I think it's clear that the airlines must respond with more equipment and personnel devoted to security screening in order to avoid losing customers.

As for FLL - you could end up with a quite a fight between Delta, Southwest, and jetBlue...
 
sfointern
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Joined: Wed Oct 10, 2001 1:19 am

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 6:16 am

ScottB--

I respect your rebuttals. And I do agree then, that with more sophisticated computer programs, WN will be able to tweak its schedules efficiently.

However, as it expands to a larger and larger size, employees will simply seek a larger piece of the pie. This is undeniable. History has shown that the largest airlines pay the largest wages (on average).

My example of Aeroflop was indeed flawed, and while United's depressed state is a result of mismanagement more than anything, the extent to to which large carriers come to exist --to harbor large networks-- causes larger airlines to become unwieldy to operationally manage at certain points.

Even in United's boon fom 1994-1999 (and the first part of 2000), while United soared financially, operationally it was a dirtbucket; inefficient as mud! It has always had the worst baggage handling and consistently posts atrocious on-time records.

Also, history has shown that the increasing amount of infrastructure needed to run a large network carrier make marginal costs exceed marginal revenue. Average costs go up.

Simply put, if WN grows beyond 500 airframes (an airbitrary number, but large nonetheless), it cannot escape being defined as a "network carrier" given the amount of destinations it will serve by that point (you can only add so many frequencies on existing city pairs).

In short, WN will become a network carrier sooner rather than later if they continue to grow at astronomical rates, and while they will still have low costs, they will start to experience the burden of the megacarrier: unwieldy marginal costs.
 
sfointern
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RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 6:19 am

Re: FLL

Shoot, don't forget CO's best laid plans there. They do have a new terminal of their own now, remember.
 
MAH4546
Posts: 24522
Joined: Wed Jan 24, 2001 1:44 pm

RE: JetBlue & How It's Building On Southwest's Success

Wed Oct 17, 2001 7:35 am

SFOInterm, CO does have a nice mini operation out of FLL, but I really don't think it will go anywhere. On mainline, all there is four destinations - Cleveland, Newark, Houston, and LaGuardia. If they were smart, they would start some Central American routes out of FLL.
a.
 
DCA-ROCguy
Posts: 3890
Joined: Fri Apr 21, 2000 5:03 am

Greg--LGB

Thu Oct 18, 2001 2:15 am

Your theory does offer one plausible reason that JetBlue entered LGB. There aren't direct route overlays by the majors. So JetBlue will have firmer control over its yield management on LGB routes, than they would by say flying JFK-LAX.

And of course the majors won't be able to enter LGB because JetBlue bought all the available slots allowed by local NIMBY's.

The most basic reason JetBlue entered the LGB market, though, surely has to be that they believe in LGB's economic potential. I think it will work for them.

Another interesting thought....might Southwest have stayed out of LGB partially because of the slot restrictions? There are less than 40 departure slots a day, an awfully low ceiling for Southwest in such a large market. Even at DAL they don't have that kind of restriction.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
Greg
Posts: 5539
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RE: JetBlue & How It's Building On Southwest's Success

Thu Oct 18, 2001 2:25 am

Actually, I don't think LGB was the right move if they were strictly looking for a West Coast presence.

Ontario, although somewhat in WN territory, would probabably have been a more solid choice. With no restrictions, it would have been very easy to set small hub operation feeding the immediate southwest with the west coast. It's likely, however, that this may have be already saturated with WN and America West.

28 slots, with no real growth potential beyond that, is very restricted. It will be interesting to see what happens once that limit is met.
 
N509JB
Posts: 486
Joined: Wed Nov 28, 2007 9:20 pm

RE: JetBlue & How It's Building On Southwest's Success

Sun Oct 21, 2001 4:51 am

In the immortal words of Popeye "I've stands all I can, and I can’t stands no more"

Honestly Greg, your complete ignorance of facts and spewing of BS propaganda amazes me...ever think of running for congress?

I'll start at the beginning...

Say what you want about "We'll never know for sure"...I do know for sure. They tell us. We were profitable until the 11th. IT’S A FACT. Not open for debate, no matter what you say. Just like the sky is (jet) blue, and the ocean is wet, we were making a profit up until Sept. 11th. Still don’t believe me, even though I WORK for the company, unlike YOU? Read this post, and its responses: http://airliners.net/discussions/general_aviation/read.main/605182/

Case closed.

"It's way too early to be handing accolades out to JB. They have how many planes? 15 or so? Hardly a fleet...more like a handful. And they serve a bunch of low yield tourist destinations. It's impossible to compare them to Southwest."

No, its not. In this industry, and in the times we are in, anyone with any sense in their head would have to admit that the jetBlue story is extraordinary. So, we don’t have 500 aircraft, for Gods sake, we are not even 2 years old yet. What did you expect, a start up to begin operations with 100 aircraft? Still, I'd rather have 15 full planes, than 250 near empty ones  Big grin

What tourist destinations? The only ones in our system I can think of are MCO and BTV. That’s one classic example of stereotypical BS that comes out of you over and over Mr. Brokenrecord. And you have nothing to back it up.

"You may not like what I say...but it's right. Jet Blue has a limited fleet and destinations. Being number four in a market is like being number 14. I don't wish them any ill-will...I just don't see them as being as successful as some of the other posters. They tend to have a cult-like following which is kind of strange... "

But you "don’t care about facts" right Greg? Honestly you lost all cred when you said that comment. You are living in a world devoid of reality if you don’t think jetBlue has been successful. The biggest insult of all is calling our supporters "cult like". You and maybe 2 others seem to be the only ones who see things like this. So who’s the cult after all?

"I don't take much stock in what students say until they can back that education with some success. "

And I don’t take what you say seriously until you can back your comments with facts, which you have yet to do. Ever.

"I've flown them twice. It's no better or worse than the majors. But, I expected more since they fly from an inconvenient airport, have no F-class cabin (in which to upgrade), no FF program (to earn those upgrades), and a limited schedule to primarily vacation markets. A PTV is no big deal--I work in-flight anyway.
In my opinion, they pose no threat to any of the majors. However, because of their size, they are venerable to a fare ware. Any of the big six can easily sustain the losses more than JetBlue just by the nature of their cash flow. "

It suddenly, in one comment becomes crystal clear. You are one of those people that feel better about himself by tearing down the good things in life. You've flown us twice? Why, If you don’t like it? Prove to me that we fly from and inconvenient airport. You think departing and leaving on time is inconvenient? No we don’t have your precious 1st class, but you knew that before you bought those tickets didn’t you? Anyway, this is one of your most ridiculous arguments. We don’t need 1st class; we are doing just fine w/out it.

You cant back anything you say with facts. You spew the same garbage over and over. "Limited schedule to primarily vacation markets" my ass. PROVE IT! Check old posts everybody, I've proven him wrong. I for one don’t know how you don’t get tired of saying the same things over and over.

So based on your comments, this is how a new start up airline should commence operations:

Headline: New York Times

Gregair to begin flights from its LGA hub starting December 5th....

New York City: New entry into the commercial aviation industry Gregair announced today that it would begin service to 240 destinations from its LGA hub, starting December 5th. They will begin service with 300 all first class configured Boeing 777 aircraft. In flight services will include cubicles for all passengers to get work done, and meals will consist of pizza or take-out Chinese, to deliver that "working late at the office" feeling. No PTVs will be offered in flight however.

"Nowhere in our aircraft will there ever be a PTV" says CEO Greg Brokenrecord. "They are frivolous and unnecessary, and they distract from work. We even went so far as to have our cockpits fitted with the older instrument panels because the new glass cockpits look too much like PTVs."

Gregair's market is the business traveler with non-stop flights from LGA to Sioux City, Iowa, continuing to Tokyo, Japan.

"We are the only start up that can say we started as a major airline. I never believed in growth and patience anyway. We are after the traveler who wants it all and wants it now" says Brokenrecord. "Which is why I decided to start operations with a frequent flyer program"

When asked at a recent press conference how he planned to operate over 240 flights from and already over congested LGA and how he planned to land the large 777 aircraft on LGA's smaller runways safely, Brokenrecord simply stated: "I don’t need facts."
 
Pilot1113
Posts: 2276
Joined: Thu Aug 05, 1999 1:42 pm

RE: JetBlue & How It's Building On Southwest's Success

Sun Oct 21, 2001 6:27 am

N509JB--

That's great!!! LOL!  Big thumbs up You've earned a place on my renovated buddy list!

- Neil Harrison
 
Dazed767
Posts: 4967
Joined: Tue May 18, 1999 11:55 am

N509JB

Sun Oct 21, 2001 7:22 am

I bow down to the.
"We're not worthy, we're not worthy".

I do not think it could be better said that that. Big grin

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