JetBlue wants to scale back its operations drastically. Faced with reduced demand the carrier is now looking to take advantage of Department of Transportation guidelines that could see the company remove 16 large airports from its network while still remaining compliant with the CARES Act service obligations.
Prompt approval of this exemption request will help ensure that JetBlue is in a post-crisis position to contribute to the country’s economic recovery. JetBlue fully intends to gradually resume service to the levels prescribed in the Order at each of these airports as soon as it is both safe to do so and when even the slightest customer demand re-emerges. When this health and economic crisis subsides, a strong and healthy JetBlue will resume its pivotal competitive role in ensuring that travel can resume and U.S. economic links are strengthened.
Three weeks ago JetBlue asked the Department of Transportation to allow for 11 destinations to be suspended. The company focused on smaller markets where demand approached nil and particularly longer routes, flights more expensive to operate and typically flown less frequently. The DOT denied the initial request, pointing out a need to keep smaller communities connected to the national airspace network. With that guidance in hand JetBlue announced a new route plan over the weekend that would see several destinations served as one-stop trips from a hub.
Then came rulings from the DOT for Frontier Airlines, Sun Country and Cape Air. In these decisions the Department identified a new set of rules. Specifically, larger airports that see significant connecting flow might not need service from every small airline as well. For any “small” carrier (defined as less than 10% of total US enplanements) the Department no longer requires service to major hubs. In its answer Monday morning, denying the bulk of Frontier‘s broad application, the DOT listed 26 markets that are either a “large hub” (>1% of passenger enplanements) or experience a disproportionally large volume of connecting traffic. Sun Country’s request covered many of these markets and was approved. JetBlue now hopes for the same.
The revised application seeks to suspend service at:
- ATL Hartsfield Jackson Atlanta International Airport
- CLT Charlotte Douglas International Airport
- ORD Chicago O’Hare International Airport
- DFW Dallas/Ft. Worth International Airport
- DEN Denver International Airport
- DTW Detroit Metro Airport
- IAH George Bush Intercontinental Airport
- LAS McCarran International Airport
- MSP Minneapolis – St. Paul International Airport
- BNA Nashville International Airport
- PHL Philadelphia International Airport
- PHX Phoenix Sky Harbor Airport
- PDX Portland International Airport
- SAN San Diego International Airport
- SEA Seattle-Tacoma International Airport
- TPA Tampa International Airport
JetBlue details the low loads for these destinations in its briefing, noting that even with significant capacity cuts the carrier frequently sees load factors well below 10%. Only Tampa (15%) and Philadelphia (19%) have averaged higher for April. At the low end, Minneapolis-St Paul comes in with a 3% load factor for the month.
JetBlue also calls attention to the DOT’s willingness to allow for reduced service where only larger aircraft can be used, flying 2000+ miles to reach a destination. While the DOT has generally applied this rationale for allowing reduced service to Hawaii, JetBlue points out that its service to Portland typically operates as a transcon, only a couple hundred miles different from the Hawaii flights. And it similarly cannot down-gauge while still operating the trip.
Should the Department apply the ruling evenly it appears that JetBlue will be able to drop more destinations than it initially hoped for. That means an even lower cash burn as the company tries to ride out the crisis. But it would also mean keeping the flights to smaller markets, some of which had converted to one-stop trips.
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Doug K says
By September most of these Jet Blue cities will be back in action. The worst is over. Jet Blue is flush with government zero interest loans and grants. The planes will start filling up by mid June to early July. Life goes on. It must. It always has after the worst natural and man made disasters. While some folks are hurting financially, most have lots of cash (stock market is only 16 percent down from its all time highs), federal stimulus dollars, and people have not been spending the past two months. So there is pent up demand, and we will see this power back the entire economy over the summer. Happy days will be here again, the skies above are going to be busy again. Happy days are here again. Tomorrow, tomorrow is just a day away.
Seth Miller says
The worst is far from over and very few Americans have “lots of cash” or even investments in the stock market. Suggesting that planes will be filling up by mid-June to early-July goes against the view of every aviation expert and industry source.
This is a very, very bad take on the situation. Stay safe, though based on the comment I’m guessing you’re not really thinking that way.
Agreed. Until a vaccine is found AND given to the majority of the population, travel will remain under significant pressure. In addition, the social distancing measures required on airlines means airplanes will be flying at much lower load factors. The only way an airline can make lower load factors work financially is to raise fares. Raising fares further mitigates the return of demand.
I do not believe this to be true. WH just released a report that by Sept 1st there could be 130,000 deaths. People are going to be very hesitant to fly until we get a vaccine. I have domestic tickets in June and July and travel to Japan on Oct. 1st. My wife and I are big travelers, but we might cancel these trips. I keep getting more and more miles as this is my hobby for decades, but it might be awhile before we travel. We have 8 Bonvoy certificates that must be used by January. Was planning to get a couple of rooms at Mt Fuji Marriott to use them for 4 nights. But, might not make the trip. Killing me.
I agree with Seth, I have been in the Airline industry for over 27 years and have never seen anything like it on such a global scale. It is much different than 9/11, when people jumped back on the planes few months after the event. Airlines will see very slow come back and the worst is ahead after September 30th, when all Government restrictions come to an end. We will see massive reduction in staffing following by possible consolidation of some of the carriers. “We are all in this together” will have different meaning in this business, it will mean that smaller carriers, including JetBlue will seek merging with others in order to survive. Large airlines will have the biggest problem because International markets, which created majority of their income, will be slower to come back then domestic, yet consolidation will be harder for them due to monopoly rules.
If the the vaccine is developed next year and fall virus come back is not as strong as expected, I suspect it will take full 2-3 years for the airline market to recover. By then we will see many brands disappear in mergers or complete shut down of the business.
Michael Owen says