JetBlue is continuing to grow their operations in Boston, focusing on business markets in a big way. The carrier announced today that they will offer service between Boston and Philadelphia with five daily flights beginning May 23, 2013. This is not a small entry into a market, testing the waters to see if there will be resistance. This is a major move with the expectation that they have to show up with a solid offering or be beaten out of the market by US Airways.
Speaking of getting beaten out of the market, Southwest tried to attack US Air on this route recently. The carrier added service in June 2010 and competed with US Airways for 20 months before throwing in the towel. As of February 2012 Southwest killed the route, leaving US Airways once again as the only carrier on the route. JetBlue is no stranger to competing with an incumbent on a major business Boston route. The New York-based carrier has previously established similar service at Washington’s National airport and Newark.
The route schedule offers reasonably good timings for business travelers:
It would be nice to see one early morning flight out of Philadelphia and a later flight out of Boston – as it stands a "day trip" out of Philly is really only about half a day – but the schedule has potential. That said, JetBlue will be competing with 15-17 daily departures on US Airways. The shuttle-type service will be tough to match. JetBlue faced a similar schedule discrepancy in Washington, DC and eventually grew their operation to 10 daily flights to keep pace. The Philadelphia operation may need to grow to succeed, though it is not clear that demand exists for both JetBlue and US Airways to run "shuttle" operations on the route.
Also worth noting is that, despite the reputation of Philadelphia as a massive US Airways fortress hub, the carrier isn’t nearly as dominant there as some other airline hubs around the country. Not that the JetBlue service appears to be focusing on connecting traffic, but there could be an opportunity here. If nothing else it should help bring fares down for passengers. Currently a one-way fare in the nonstop market is $404 while return trips can be had for as low as $260 return. Even aside from the introductory $17.76 fare sale there is the opportunity for the lower one-way fares to make a big difference for both leisure and business travelers. And to cut at US Airways’ bottom line.
It is not surprising that, eventually, younger airlines have to compete on major business routes to try to win customers. JetBlue has taken a relatively conservative approach lately on this front. They’ve been somewhat selective and limited in their moves but they seem to be working as the carrier has maintained loads and yields as they’ve expanded. Still, this is a market where such an effort has been staged before and the challenger lost. It will be interesting to see if JetBlue can succeed.
Earlier this month JetBlue updated their website to add back the NYC booking code to search options. I didn’t pay it much attention at the time but I probably should have. Not only because JFK, EWR and LGA are now easily searchable from a single query, but because that’s not the only regional code they added. And while NYC is a reasonably common one (so are WAS and, to a lesser extent ZLA) some of the others I’ve not seen before.
NYC – JFK, EWR, LGA, HPN & SWF
XBO – BOS & PVD
ZLA – LAX, LGB & BUR
XSF – OAK & SFO
XFL – FLL & PBI
WAS – IAD, DCA & BWI
And there’s even an international entry available in the Dominican Republic.
XDR – LRM & SDQ
JetBlue is adding South Carolina to their route network; the carrier will launch 3x daily service from Charleston on February 28, 2013. There will be two daily flights to JFK and once daily service to Boston.
Not surprisingly, the airline also is playing up aircraft size as part of the announcement. In the New York City market only Delta and United Airlines offer service and both do so on smaller regional jets, though at least one of the Delta frequencies is on a larger regional with a first class cabin. In the Boston market the only competition is once-daily service from Southwest.
It will be interesting to watch this destination develop. Not a lot of capacity added and there is already a decent amount of lift in the market, but JetBlue clearly thinks there is room to grow things.
After seeing the pilots soundly reject the most recent contract put to a vote American Airlines turned to the courts to discover their future. By failing to achieve a negotiated agreement both sides were left to rely on the Court to decide if the company could reject the existing contracts and impose a new term sheet on the union. Historically the companies have mostly been successful in these claims so it was quite a surprise when the ruling (warning: 111 page PDF!) came out late Wednesday afternoon with this line:
…[T]he Court finds that American has not shown that the proposal is necessary as required by Section 1113. For the reasons set forth above, therefore, American’s Motion to reject the collective bargaining agreements of the APA is denied.
Yup, the pilots won. Sortof.
It turns out that of the many changes the company is seeking to implement, some more significant than others, only two were rejected by the Court. And of the two, one is quite unlikely to actually have any impact on the pilots anyways. The Court has also given the company three days to file an amended proposal, one that seems quite likely to actually be approved. So what did the pilots actually win?
Well, for starters, they got the AMR executives to admit as part of their testimony that they weren’t really trying to run the business. Rather, they were
“kick[ing] the can” down the road to permit the Company to “limp along” until sometime in the future when there might be increased demand, a benign fuel environment, and a convergence in American’s labor costs vis-à-vis other carriers.
Nothing like just hoping for the best as a business strategy. Sadly, these executives were well compensated for those "efforts."
The testimony also drew out a couple interesting nuggets with respect to competition in key markets. LCCs have been eating American up in a few areas. The San Francisco-Boston market saw a 60% drop in average fare (courtesy of JetBlue) over a 10 year period prior to American dropping the route. And average fares in the Caribbean and Latin American markets have dropped roughly 9% over the past 14 years, again blamed on LCC competition.
The LCC’s expansion in the Caribbean and Latin American region has hit American particularly hard because a large portion of American’s revenue had traditionally been generated from this region. (Kasper Decl. ¶ 56 (American’s average inflation-adjusted fares to this region have dropped by approximately 9% between 1998 and 2011 notwithstanding a five-fold increase in the price of jet fuel)).
It is not clear if the term "LCC" in this context specifically means JetBlue or if Spirit Air is also included. Either way, American got beat up pretty badly in those markets and responded by essentially closing up shop.
On the topic of regional carriers, the ability of the airline to outsource some operations to subcontractors, the pilots lost pretty badly. American wants to add nearly 200 regional jets in the 80-90 seat range. The company notes that the only way RJs are truly competitive is when they are large enough to offer a premium cabin to appeal to business travelers and to be efficient from a CASM perspective. These flights would be operated by a regional carrier and therefore the union pilots would lose out. American’s proposal would allow more than 800 RJs in the fleet based on the current mainline fleet size. The Court pretty much sided with the company on this one, finding that the American request is "reasonable and necessary when compared to its network competitors."
The two points where the pilots won cover the furlough policy and codesharing abilities.
American attempted to essentially remove all limitations on the ability to furlough pilots. The current contract permits American to furlough up to 2,000 pilots and their reorganization plan calls for only 400 to be affected. Yet the company wants to remove all restrictions on that front. The court was reasonably decisive on this point, noting that, "While American claims to seek more broad furlough authority to address unforeseen emergencies, there appears to be no need to do so…"
The furlough policy also currently permits a more senior pilot to volunteer in place of a junior pilot. In many cases, according to the company, such moves necessitate furloughing both employees because of the work rules in place. The entirety of the proposed furlough policy changes were rejected but the Court. It will be interesting to see if American tries to get this portion revoked without changing the other aspects of the policy or if they walk away from the issue completely.
Regarding codeshares, the ruling was similarly favorable to the pilots and for similar reasons. Currently only Hawaiian Airlines and Alaska Airlines are permitted as codeshare partners domestically and then with significant limits. Essentially the airline asked for carte blanche to change that without demonstrating the necessity for such a dramatic shift in policy. In rejecting the proposal the Court notes that, "American has not established how its codesharing proposal relates to the showing of necessity set forth in its Business Plan. American’s failure to do so is problematic because of the central role the Business Plan plays in this Section 1113 proceeding…."
The other interesting bit in the codeshare section of the document is some insight into the history of codeshares in the US market. The filing recognizes how the other airlines were forced to maintain strong codeshare relationships in order to compete with the American route network: "In 2006, for example, Northwest had codeshare agreements with various carriers on 709 routes, Delta on 400 routes, Continental on 319 routes, US Airways on 276 routes and United on 196 routes." The ruling also recognizes that these airlines generally are more restrictive on codesharing now due to their growth through mergers. Ironically, American’s attempt to grow the use of codesharing to levels similar to their competition is hampered because the competition generally needs fewer codeshares to compete. So just being comparable actually is not sufficient in this case.
Much like the furlough policy, it is not clear just how much American will back down on on this one. Clearly they cannot have unlimited codeshares both domestically and internationally but it will be interesting to see just how much leeway the Court is willing to grant on this front.
Finally, one other interesting stat which came out of the ruling concerns sick leave. According to the data provided to the Court, "in 2011, the average pilot was paid 78.4 hours of sick leave, more than one month’s worth of flying." That’s a lot. I’m not sure if that includes long-term disability combined with short-term bits or other mitigating circumstances but the number does seem rather high.
So, yes, the pilots won on a couple points. But not enough to really be celebrating right now it would seem. Fixing these couple points shouldn’t cost the airline too much and on the other, more significant points the pilots lost pretty badly. I was quite surprised with the initial ruling. After reading the details, however, it doesn’t actually seem all that shocking after all. We’ll see what happens with the amended filing soon enough.
UPDATE: This deal managed to disappear with the 1pm ET data load just like Keyser Soze. But it was fun while it lasted.
Whether this is a mistake or a sale probably doesn’t matter too much, especially because it seems to be booking quite well right now. A number of US gateways have flights to Tel Aviv via a connection in Europe for under $400 all in right now. Travel is valid from October 26th – December 16th or December 24th – March 24th, 2013. And inventory looks pretty wide open right now. Here’s what prices look like on a 7-day trip from NYC in November:
Chicago and Boston have similar fares available. The flights are coded by El Al but book on to partners meaning that mileage earning has the potential to be minimal or non-existent. But you can fly on American Airlines and Swiss, among others, as part of the deal if you’d rather than than flying on El Al metal. Oh, and thanks to connection rules on international itineraries a nearly full day or even overnight in a European connection point is possible, too.
Book online through an OTA. You can try to get a few more bucks back through Vayama, Expedia or CheapoAir using the links here or just use your favorite OTA and see how it plays out.
This is most likely the result of a fuel surcharge not being loaded properly with the partner-operated flights so no idea how long it will last. I’m having trouble finding time to make a proper trip out of it and I’m not too keen on a mileage run to Israel being my first visit so I’m going to skip it. But if you’ve got any interest in visiting Israel this winter the chances of a lower fare coming along are virtually nil.
Some more discussion online can be found here:
Following on the moves in California last week to add high-speed rail links on the west coast, Amtrak announced plans this week to up train speeds on the east coast to over 200 miles per hour. These speeds will cut travel times between New York City and Philadelphia to less than 40 minutes; travel to Washington, DC and Boston will be around 90 minutes with the new speeds. Great news, should it ever actually come to pass.
The plan calls for more than $150 billion in spending to achieve these goals and provides no indication of where the funding will come from. Amtrak’s spokesman offered up some interesting insight on this issue. In addition to hoping that the NE Corridor can get some of the $450 million Florida rejected – money that California is also after – the following theory was offered:
You have to have a plan and if you have a plan, the money will follow.
They also plan to add rail connectivity to several airports in the region (PHL and HPN currently are not linked and are highlighted in the report) and note that the Acela rolling stock will need to be upgraded starting in the next decade.
Oh, and their target timeframe for all these improvements is 2040. Takes the concept of long-term vision to a whole new level.
JetBlue has been experimenting for a bit now with the idea of bulk ticket purchases for a specific route. Back in February they offered up packs of flights between Long Beach and the Bay Area. Now they’re offering a similar deal for flights between Boston and any of the three Washington, DC area airports they serve.
The Boston-DC deal is only available in 10-packs and is priced at $699, plus $7 per departure for taxes. The $7 fee is payable when the individual flight is reserved. Like the California GoPacks the DC ones allow for booking up to 90 minutes prior to departure, last-seat availability and they are transferrable to any passenger. Travel dates on the pack are April 23 to June 27.
Unlike the California pack, the 10-pack deal in DC actually appears to be better than the currently available fares on almost all of the dates/routes I checked. There are a few flights available for less, but not many, even with a $62ish fare published between BOS-BWI. The fare is there but inventory is quite spotty. I was somewhat hesitant to recommend considering the California pack based on the pricing but the DC one looks to be quite competitive, especially with access to all three airports and about 16 daily flights in each direction.
More T&Cs available on the page over at jetblue.com.
Boeing has resumed deliveries of Boeing 787 Dreamliners this week; Japanese carrier JAL received two of the planes over the weekend. This adds a second airline to the operators list for the type and also introduces the first aircraft with the GE engine type versus the Rolls Royce engines on the ANA planes.
JAL will be using the planes on their Tokyo – Boston route, skipping over an extended period of domestic proving/training runs and getting the plane directly in to long-haul service. And, much like ANA, the carrier is going with a spacious 2-4-2 configuration in coach:
Business class looks pretty nice, too:
Oh, and the toilets up front are a special model developed by TOTO and which include a warm water wash feature.
Six additional routes are planned for the aircraft over the coming year as additional deliveries are made. This includes two destinations new to JAL, San Diego and Helsinki.
Great news that the planes are being delivered again. The backlog at this point is pretty significant and it seemed that the company was starting to run out of storage space at the factory when I was there a couple weeks back. It also means that the other carriers with pending deliveries can start to better plan for receiving those aircraft in the coming months.
A bit more coverage of the delivery ceremony for the JAL 787s can be found from Airline Reporter here.
Photos courtesy of JAL
I’m generally a big fan of Scott McCartney’s The Middle Seat column in the Wall Street Journal so I was excited to read his post today about "Getting the Most Out of Your Frequent Flier Miles." I was hoping for some great insight into award pricing algorithms or inventory patterns. Instead I got a primer on how to not get any value from points. Such a disappointment.
There are a number of take-aways from the post but the main conclusion is this:
With domestic coach tickets, you generally get not much more than one penny per mile in value from airlines – that’s a $250 ticket for 25,000 miles. If the ticket now costs $400, you likely will have to pay 40,000 or 50,000 miles.
Not only is it simply wrong, but it is also very misleading in terms of getting the most from your points. Other than the programs of JetBlue, Virgin America and Southwest, (and also one option from Delta or American Airlines) the redemption rates are not tied directly to the selling price of the ticket. If there are no discounted seats left it is less likely that award flights will be available at the lower rates, but that’s tied to the inventory, not to the fare price. As the prices go up at the low end it actually means that the "value" realized for redeeming points is arguably higher since the cash option will be more expensive.
McCartney also picks a few random routes and tries to read into overall domestic award inventory based on his searches for economy class seats on one carrier for each route. His approach fails miserable in many ways.
First off, it appears that the searches he performed were based only on using the website of the carrier where the miles are sitting and then by just putting in the end points. This resulted in finding only a handful of seats for Boston-Ft. Lauderdale on Delta, Orlando-Seattle on American or Washington, DC – Austin on US Airways. For the Delta results this approach overlooks the issues that their website suffers from for award bookings; it is very limited, especially when searching for connections. For American I see very different results than McCartney did, with plenty of award seats open at the "Saver" level.
Both of those are questionable, but the US Airways one is the most egregious bad advice of the three:
And if you’re in Washington, D.C., and have US Airways miles you’d like to use to go to Austin, Texas, get ready to pay a heavy price—besides the $25 processing fee that US Airways charges for a “free’’ ticket. For the 10 months in the rest of this year, there are only five days when US Airways offered a flight to Austin at its basic mileage price.
In addition to only searching on US Airways’s website, McCartney ignores the fact that Dividend Miles can be redeemed for flights operated by United Airlines. Checking the award calendar there it is clear that finding an award seat from DCA-AUS is actually a rather trivial task on most days for the rest of the year. Yes, you’ll have to call in to book it, but that’s a small penalty for saving 25,000 points.
Sorry, Scott, but you missed the boat BIG TIME on this one.
As noted on AirlineRoute.net, Delta will be cutting two London routes this spring, Atlanta – Gatwick and Miami – Heathrow. The final eastbound flights will be on 16 April 2012 with the final return the following day.
Like most carriers, Delta launched their London service into Gatwick in 1978 because they had no rights to fly into Heathrow. With the cutting of this Atlanta route the carrier is ending their service at that station, having moved all service to Heathrow.
The Miami route is a more recent development. It was added in March 2011 as part of the approval of the BA/AA/IB ATI and their required divestiture of routes in certain markets, namely Boston and Miami. Delta picked up both of those routes and apparently the Miami route isn’t so profitable for them.
It is hard to know if this is really good or bad news for the London-USA market. Certainly the carrier cutting routes suggests that the market is soft in some areas, though it can also be seen that the the trimming of inventory is going to tighten the market and increase fares.