JetBlue Said to Win LaGuardia, Washington Flights

[Hatu]

JetBlue Airways Corp. (JBLU) won an auction to add flights at New York’s LaGuardia airport and Reagan airport in Washington, beating rivals that included Southwest Airlines Co. (LUV), two people familiar with the matter said.

JetBlue’s winning bids totaled $72 million, while Calgary- based WestJet bid $17.6 million, according to data on a government website. Mateo Lleras, a spokesman for New York-based JetBlue, declined to comment.

http://www.bloomberg.com/news/2011-11-23/laguardia-reagan-flight-slots-fetch-100-million-in-bids.html?cmpid=yhoo

 

[Maark767]

JetBlue Airways Corp. (JBLU) won an auction to add flights at New York’s LaGuardia airport and Reagan airport in Washington, beating rivals that included Southwest Airlines Co. (LUV), two people familiar with the matter said.

JetBlue’s winning bids totaled $72 million, while Calgary- based WestJet bid $17.6 million, according to data on a government website. Mateo Lleras, a spokesman for New York-based JetBlue, declined to comment.

http://www.bloomberg.com/news/2011-11-23/laguardia-reagan-flight-slots-fetch-100-million-in-bids.html?cmpid=yhoo

I think this is good!!!! When AA and B6 merge this will give AA more presence at LGA and DCA. It's all part of the big picture.

 

[WorldTraveler]

uh... unless AA's salaries get slashed substantially B6 doesn't want anything to do with AA. And if anyone buys the other, it may well be B6 buying AA.
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AA has had plenty of slots at LGA but they have been unable to use them productively.
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B6 is shelling out an enormous amount of money to gain access to some key markets... they may well decide that they can gain the best returns in some of AA's top business markets - like they did in BOS-ORD and where they are doing quite well.
Until something official happens with a change of ownership, AA and B6 are still tough competitors and last time I checked, B6 has pushed AA out of a number of markets.

 

[Maark767]

uh... unless AA's salaries get slashed substantially B6 doesn't want anything to do with AA. And if anyone buys the other, it may well be B6 buying AA.
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AA has had plenty of slots at LGA but they have been unable to use them productively.
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B6 is shelling out an enormous amount of money to gain access to some key markets... they may well decide that they can gain the best returns in some of AA's top business markets - like they did in BOS-ORD and where they are doing quite well.
Until something official happens with a change of ownership, AA and B6 are still tough competitors and last time I checked, B6 has pushed AA out of a number of markets.

Jetblue pushing AA out of markets is part of the whole picture. I have seen this done before with AA. AA temporarily gives up market share to B6 and keeps loyal pax loyal to AA by offering advantage miles on B6 flights. Then at a later date, AA regains those lost markets by simply buying/merging with that airline. In this case it would be B6.

 

[WorldTraveler]

It is well documented that AA's revenue is being hurt by the loss of the key markets in which B6 has succeeded at pushing AA out of.
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You truly can't believe that AA can replace the revenue it once made flying aircraft with sales of AAdvantage miles or codeshare revenue - both are band-aid approaches to much larger structural problems at AA.
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Less you think it will be a panacea for B6, you might consider that they are paying $4-5 million per slot pair for the opportunity to operate these new flights; even if that cost is spread over 40 years, B6 will have a cost PER FLIGHT of $1200-1500 higher than its competitors... that is a significant cost difference on a domestic flight.
Further, B6 is paying that money to its network carrier competitors DL and US who will have to wait about 4 months before they begin their new flights but then they will be using the money B6 is paying for these slots to allow them to fight against their new competitor. Talk about a stacked deck!
There is no assurance that B6 will ever be able to make money using the slots it has gained.
That is also why B6 WILL NOT be using these slots to fly Florida leisure flights; these slots will be used in markets where B6 has the best chance of recovering that money - high value business markets. Not surprisingly, DFW, IAH, and MIA - all network carrier monopoly routes - are some of the highest fare destinations from LGA and DCA and they are also high volume routes - which means it will be quite easy for other carriers to succeed in those markets. Of course, US and DL are also likely to start flights using THEIR new slots in these same markets which puts even more pressue on AA and UA.
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And if the end stage you desire is for AA to fail so they can be bought out by B6, then I can assure you there will be very few AA people who will think that is much of a goal to pursue.
If you think that AA will be in a position to be acquiring a carrier that is doing fairly well, you might not want to look at the reality that will likely be quite different.

 

[shaka]

Where do you think they will fly to out of LGA?

What about DCA?

Thanks

 

[WorldTraveler]

Where do you think they will fly to out of LGA?

What about DCA?

Thanks

business heavy routes into other carrier hubs... look at how well they have done in BOS-ORD and that might provide some indication

 

[FWAAA]

I assume that B6 will fly business-heavy routes into other carriers' hubs, like perhaps LGA-DTW, LGA-MSP and LGA-ATL, as well as the obvious candidates LGA-MIA, LGA-ORD, LGA-DFW and LGA-IAH.

 

[WorldTraveler]

I assume that B6 will fly business-heavy routes into other carriers' hubs, like perhaps LGA-DTW, LGA-MSP and LGA-ATL, as well as the obvious candidates LGA-MIA, LGA-ORD, LGA-DFW and LGA-IAH.

there are ONLY 8 slot pairs at each airport for US domestic carriers since WS can only use theirs to/from Canada... B6 will go where they have the greatest chance of making money and also where there is the least low fare competition. It doesn't take much to figure out where the highest average fares out of NYC and DCA are and also see those are large monopoly routes - and are NOT to DL hubs.

 

[WorldTraveler]

FWA,
do you really think that B6 is going to write checks to DL and US for $72M and then turn around and attempt to compete with them on routes that DL and US have far more slots than B6 could dream about?
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Do you realize the whole lunacy of this slot deal? DL and US tried for 2 years to swap slots - which if left alone would have at best required them to compete against other network carriers on their own terms.
2 years later, DL and US receive over $90M from carriers that are dying to grow at LGA and DCA and who are subsidizing the start up costs for DL and US to expand their operations.
And DL and US KNEW all along where the use of the new slots would be targeted - AA. AC. and UA - who DL and US are only too happy to see the low fare carriers attack.
And then DL and US will follow those "low fare carriers" into the same markets previously operated solely by AA, AC, and UA using those low fare carriers own "low fares". (if you can discount much after paying $4-5M for a daily flight. )
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So, DL and US are making a fortune on slots that low fare carriers will use to go after markets currently dominated by DL and US' network competitors - and then DL and US will follow.
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Could you think of a more bizarre "solution" if you tried?