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When one door closes, another opens.
With the collapse of low-cost trans-Atlantic WOW Airlines on 28 March, New York-based New York-based airline JetBlue has announced plans to launch several daily flights on one of the main routes. the busiest in the world between London in 2021.
The connections – the first of JetBlue in Europe – will be served by long-range versions of the Airbus A321 from New York and Boston, with a reinvented version of the airline's premium economy service called Mint, which offers flat seats on US domestic flights, as well as extras. such as free high-speed Wi-Fi, Amazon TV and tapas-style dinners. JetBlue thinks that its history of providing a premium service at a lower cost than that of its rivals will be enough to attract transatlantic business travelers away from major carriers such as American and Delta, whose price, the CEO of JetBlue, had been described as "obscene" last year.
"Flying next week with a business class ticket to Boston or New York from here would cost at least £ 6,000 ($ 7,800). [roundtrip] buy a ticket published, "said Hayes in a speech about new flights to London on Thursday." The opportunity we have to drastically reduce, and I mean drastically, tariffs in the premium cabin is very important.
JetBlue is still evaluating the number of flights it will offer and the London airports it will serve, but Mr Hayes is confident that the airline will have access to "more than one" of British capital.
Overhead
The expansion is part of a broader movement to Europe, considered the airline's "next natural step," JetBlue said in a statement following a party celebrating new routes. Hayes confirmed Thursday that the airline also had Schiphol Airport in Amsterdam on its radar.
After a long time considering setting up in Europe, JetBlue has finally embarked on a route to London. (Monica Garcia – Getty Images)
Over the last 20 years, JetBlue has grown from a start-up company to 5% of the US air market. (The Southwest and the Americans each control 17.8%, for comparison). It is also the largest airline in Boston, serving 70 cities with 150 daily flights. It has 253 aircraft and 23,000 crew members and operates 1,050 flights a day to 22 countries. Its evolution coincided with the huge growth of American air traffic. In 1998, the year before it was founded, 30 million passengers traveled to New York's John F. Kennedy International Airport. Today, that number is 62 million.
But there is a wrinkle in the upward trajectory of JetBlue. The US air market is now extremely consolidated, with four airlines controlling 80% of air travel, the result of a series of mergers involving groups like Northwest, Continental and US Airways that began in 2005. Today , four out of five passengers from the United States fly on Delta, United, American or Southwest. So, to develop, JetBlue must look further and, with the Icelandic WOW Airlines collapsed and its low-cost and long-haul Norwegian rival facing financial difficulties, the airline feels an opportunity to pass itself off for the low-cost. , transatlantic airline. Thus, after long considering an expansion in Europe, JetBlue decided that the time had come.
"We can accomplish things that others have not been able to do," Hayes said. "We can combine our low rates with our superior offer."
JetBlue is not the only company to see an opportunity hovering over the Atlantic: after recording a pre-tax loss of £ 26.1 million this week, Virgin Airways is now aiming for a return to profitability , partly via an extension to 18 transatlantic flights a day from Boston and New York with Delta long-haul partner next year.
"This is not something that JetBlue has spontaneously proposed. It's a thoughtful and authentic strategy, and I think they're waiting for the timing to be right, "said Nick Wyatt, Travel and Tourism Manager at GlobalData, a data analyst. "It's a combination of the fact that JetBlue believes it's possible to offer a lower price, and that some cheaper airlines are struggling."
"Change"?
In many ways, JetBlue seeks to replicate the success of its entry into the US transcontinental market, where it plays a disruptive role in the marketplace by offering its Mint flat service between New York and California for $ 599 one way. However, questions arise as to whether it will excel where WOW and Norwegian have failed, especially as JetBlue saw its profits drop to just under $ 190 million in 2018.
The low-cost predecessors of JetBlue provide a lesson on what not to do. WOW, for its part, used a business model consisting of carrying "very, very low fares across the Atlantic via Iceland," said aviation expert Chris Tarry. (JetBlue, meanwhile, has the facilities and the plane to go directly to the East Coast.) And Norwegian pays the price of an expansion too fast. Arctic Aviation Assets, its Dublin-based aerospace leasing company, has postponed delivery of new Airbus aircraft for 2019 and 2020 due to reduced capital spending. It was the second delivery report of the airline this year.
Slot machine
Another factor to consider is fierce competition. As in the United States, JetBlue faces a series of large established joint ventures or JVs in its new market. Together, companies like Delta-Virgin and American-British Airways control 70% of air traffic between the United States and Europe.
More importantly, the joint ventures exercise a grip on European landing slots, with International Airlines Group (British Airways, Iberia, Vueling, Aer Lingus) currently controlling around 60% of London Heathrow landing slots.
In simple terms: to survive, a new entrant needs landing slots. And for the moment, they are very few in Heathrow, which means that JetBlue is much more likely to operate from Gatwick, located south of London.
The Icelandic airline WOW, a discount carrier, ceases operations at the end of March. (JOEL SAGET / AFP
/ Getty Images)
"We consider that London is really the lowest point of the current battle around JV," Hayes said Thursday, adding that it would appear that the landscape of airline alliances is changing. In the United States, for example, the Ministry of Transport recently approved the creation of a joint venture between Delta and Aeromexico, but only on the condition that they be required to submit a new application to extend their landing slots. . This directive led to the sale of 24 landing slots in Mexico City. JetBlue took six, allowing the airline to launch direct services in the light of daylight from Boston, JFK, Fort Lauderdale and Orlando.
Hayes hopes that something similar will come from the ongoing review of Delta-Virgin and American-British Airways joint ventures to prevent joint ventures from simply encroaching on niche markets. landing of smaller airlines as a result of a merger or takeover, as provided by the acquisition of Virgin The British low-cost airline Flybe inherits its space at Heathrow.
"We will bring the planes, we will bring the low rates, we will bring the service, we will bring all the rest. What we can not bring are slots, "Hayes said.
welcome aboard
Despite this, industry analysts believe that JetBlue could succeed where WOW and Norwegian are not. Mint may be in his hand for the simple reason that it allows the airline to offer discounted premium economy service, which is the largest revenue generator per square meter of aircraft.
"JetBlue has a high-end economy cabin and that's where I would start if I wanted to compete with an incumbent operator," says Tarry. "It's the real battleground because it's the people on the margins. They will either go from the economy or trade to companies. "
And pricing is the key. "What WOW and Norwegian teach us is that a certain price is needed to make it profitable," Wyatt said. "But if the price is right, if you travel directly to attractive destinations without too much thrills, they can succeed."
An additional element in favor of JetBlue is that the London-United States route is one of the most established international routes, with 2.4 million passengers traveling between London and New York in 2018. The flight path between Heathrow Airport and JFK in particular is the busiest international in the United States. Half a million trips each year between the British capital and Boston.
"The market is vast and lucrative," said John Strickland, aviation expert. "[B]But the companies in place are not going to make their life easier either and tell them: "Come and take part in the action". "
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