US airline JetBlue bets on economical flight plans | Business | Economic and financial news from a German point of view | DW


US airline JetBlue will launch transatlantic flights on August 11, a route that is one of the most lucrative in the world, with revenues of around $ 11 billion (€ 9.8 billion) per year. .

Some believe low-cost flights across the Atlantic could spearhead the post-pandemic aviation industry rebound after being hit hard by the impact of COVID-19.

Others suggest that the experience of low-cost carrier Norwegian Air – which went from zero to carrying more than 2 million people from New York to Europe in 2019 until bankruptcy a year later – should deliver caution.

Meanwhile, restrictions still make it difficult to travel between the UK and the US. The United States is not open to non-Americans who have been in the United Kingdom in the last 14 days, while the United Kingdom requires a minimum of five days of quarantine for anyone coming from the United States. The EU, however, recommended adding the US to a list of safe countries of origin.

Pre-pandemic low-cost airlines secured 15% of transatlantic market, with Norwegian providing 40% of all seats

JetBlue: Fight or flight?

JetBlue wants to take advantage of the busiest city couple in the world – New York / London – where competition was already fierce before the pandemic. Virgin Atlantic and British Airways lead the market share on this route, with 38% and 30% respectively.

JetBlue chief executive Robin Hayes said his airline was nothing like rival carriers who had promised to offer low fares on the transatlantic route and then backed down.

The main difference could be a mixed offer with business and economy classes. Norwegian had a fleet of Boeing 787 Dreamliners and no business class. JetBlue will have 24 seats in business class, known as Mint, which some say will allow the airline to compete with existing carriers. Company review Forbes reported that JetBlue’s maiden flight was full.

The airline, one of the largest in the United States, will deploy a narrow-body single-aisle aircraft, the Airbus A321LR.

Hayes says prices will be much lower than those charged by competitors for business class, starting at under $ 2,000 (€ 1,700) for a round-trip from the United States. Forbes found the lowest fare to be a $ 202 Blue Basic ticket from JFK in London on September 8.

“JetBlue can start flight operations under conditions different from those of European airlines: American citizens vaccinated, recovered and tested can enter the EU,” Lufthansa spokesman Thomas Jachnow told DW.

“Conversely, this is currently still denied to EU citizens. This allows JetBlue to return to its home market and thus get back into business,” he added.

Beware of low cost carriers

Norwegian Air began crossing the Atlantic in 2014, with round-trip tickets selling for around $ 500. In the third quarter of 2018, LCCs flew 15% of the 13.2 million seats in the transatlantic market, according to data from the Official Aviation Guide of the Airways (OAG). Norwegian was the largest low cost carrier, offering 40% of those seats.

New entrants to the transatlantic market, such as Norwegian, were popular but unprofitable and started to disappear, with carrier Primera being the first in October 2018, followed by Wow in March 2019 and Norwegian in March 2020.

Many saw it as the end of the low-budget transatlantic market experience. But that doesn’t seem to be the case.

Low-cost leisure airline French Bee returned to the United States on July 15 with a new service between Newark and Paris. The company said there was sufficient demand from U.S. tourists and the freight industry to offer the flights. Another French airline, La Compagnie, has also resumed flights between the United States and France, with its first flight on June 12 between Newark and Paris.

The Norwegians are also making a comeback. Norse Atlantic Airways was formed in February with shares traded on Euronext Growth Oslo since April. The 15 Norse Atlantic planes will launch commercial operations on transatlantic routes in December, the company said. CEO Bjorn Tore Larsen, who owns 15% of the new company, said the airline had “nothing to do with” Norwegian.

But the airline plans to fly the same plane and operate from the same airports and could hire the same, recently laid off staff as well. It also does not offer business and first class cabins.

However, one area in which Norse seems to have learned from Norwegian’s mistakes is that of discussions with labor associations on both sides of the Atlantic.

Ryanair's Michael O'Leary

Ryanair boss Michael O’Leary says his airline is not considering transatlantic flights

Is the market ready?

“The market will only be viable if there is demand,” Peter Knapp, president of Landor & Fitch, a brand consultant, told DW.

Carriers struggled because they weren’t able to make up for their cheap fares by turning around more frequently than their old rivals. In addition, fuel, for which very low cost carriers have no price advantage, represents a larger share of the costs on a long-haul flight than on a short-haul flight.

“Reducing it to 25 minute delays or the core add-on philosophy will never work in the long run,” said Ryanair boss Michael O’Leary. Like Ryanair, Hungarian Wizz Air Holdings says it is not planning a low-cost long-haul strategy.

The economy of air routes longer than seven hours is different from that of short-haul flights, and traditional carriers are better able to manage volatile fuel costs.

However, JetBlue said its A321LR jets are fuel efficient, with a range of 4,000 miles (6,440 kilometers) and use up to 20% less fuel than previous models.

Another advantage could be, like The Guardian The newspaper reported that the pandemic aided JetBlue’s entry into London Heathrow Airport. Indeed, the trade in crucial landing slots was suspended as many flights were grounded, giving JetBlue an early boost.

Are the big boys back?

“Things won’t be going back to the old normal anytime soon, so airlines would be wise to give it some thought. [low-cost] element when developing new strategies or models, ”Knapp said.

If low-cost airlines gain a foothold in the market, bigger carriers will increasingly have to look to the low-cost sector, he says. “This could be a real threat to traditional carriers and it could force them to radically rethink their models,” Knapp said.

“We could see an era where a new competitive arena forces a new era of innovation in the industry as the old guard battles with the new kids in the neighborhood. Who dares to win? This could now be a very exciting time for an industry that has evolved very slowly over the past few years, ”added Knapp.

And many have indeed made the leap into the budgetary arena. As of July 24, 2021, the youngest airline in the Lufthansa group, Eurowings Discover, has been flying and will take over Lufthansa’s long-haul tourism program. International Airline Group (IAG), owner of British Airways, Iberia and Aer Lingus, has created the transatlantic Level discount brand. American Airlines is also adding new transatlantic services to Croatia, Greece, Iceland and Italy and increasing its flights to Spain, Portugal and Italy.

But only the time and timing of the end of travel restrictions will tell if JetBlue’s plans fly or are just another fancy flight.

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