Long Beach = Waterloo

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On 8/22/2002 5:33:35 AM

And what if JB is successful in LGB-OAK/LAS? Would they still chase greener pastures in more transcons while cutting (or reducing) OAK & LAS?
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I would consider that likely, especially cutting LAS. I don't think this is an attempt to permanently establish another LA - SF shuttle, but I could be wrong. If these new routes turn out to be profitable (which is by no means a given), I'd bet longer hauls would have a much higher margin and make more sense for a slot-limited airport. In that case, LAS flying may be shifted to long-haul (LAS - JFK) or dropped, and then some OAK frequencies whittled away as necessary to introduce new service. IMHO, LAS is not a place to make much money, in the casinos or at the airport. Let WN, HP, and N7 keep it.
 
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On 8/21/2002 8:24:38 AM

How many times can we miss the point on LGB? A lot, apparently. As the more attentive posters have mentioned, this was merely meant to hold the slots that were in contention. Do you think that the guys that have made all of this happen suddenly went brain-dead? Keep hoping, but it isn't going to happen.

My point that seems to be lost on everybody is that LGB is not JFK because it is surrounded by low-fare airports. There is nothing to draw people to LGB over the others. This is wholly different in NYC. Whether they fly long-haul or short-haul they will have low-fare competition.
 
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On 8/21/2002 7:13:23 PM

First, it shows that B6 is not focused on the original plan. OK, plans can change, but I submit that a second hub and/or focus cities were never in the original plan. I would submit a list of carriers who deviated from their plans and failed, but that would be a long list.

Silly as this may sound, I am curious how you know this was never in their original plan.


--
A press release posted on JetBlue's website:

JetBlue Airways, The First 'Mega Start-Up' Unveils Launch Plans

JetBlue to introduce a fleet of new planes; live satellite TV at every seat

New York, NY (July 14, 1999) JetBlue Airways, the nation's most heavily-capitalized start-up airline was officially named at a New York City press conference this morning. The company, previously referred to as New Air, will be the first carrier to equip its jetliners with 24-channel live in-flight satellite television at every seat.

CEO David Neeleman unveiled the name stating: "We want to be New York's new low-fare, hometown airline. JetBlue will bring to the city a superior product at a very affordable price, on average, 65% less than current fares on some routes; call it a new shade of blue."

JetBlue, to be based at New York's John F. Kennedy International Airport, plans to commence operations in early 2000 and serve up to a dozen cities with 10 aircraft by the end of its first year of operations. Considered to be the nation's first "mega start-up" applicant, the company's fleet will comprise up to 82 new Airbus A-320 aircraft valued at more than $4 billion.

"It's a new kind of low-fare airline," Neeleman added. "JetBlue will offer wider seats, more legroom, and more overhead storage space than any other airline in its class and, with 24 channels of live in-flight television, you'll never have to miss your favorite show on the road. What's more, our aircraft are some of the world's quietest, most emission-friendly passenger jets."

JetBlue's new aircraft will seat 162 passengers in a single coach cabin. Innovations will include computerized "touch-screen" check-in and unique onboard services. Despite these state-of-the-art conveniences, JetBlue's fares will average 65% less than other airlines on identical routes.

The company has not yet announced its final route structure but is considering service to 44 cities: Atlanta; Boston; Buffalo; Burlington, VT; Canton/Akron; Charleston, SC; Charleston, WV; Charlotte; Chicago; Cincinnati; Cleveland; Columbia, SC; Columbus, OH; Dallas/Fort Worth; Dayton; Denver; Flint; Ft. Lauderdale; Ft. Myers; Grand Rapids, MI; Greensboro, NC; Greenville/Spartanburg; Houston; Indianapolis; Jacksonville, FL; Louisville; Memphis; Milwaukee; Minneapolis/St Paul; Nashville; New Orleans; Norfolk; Orlando; Pittsburgh; Portland, ME; Raleigh/Durham; Richmond; Rochester, NY; Salt Lake City; Savannah; Syracuse; Tampa; Washington, DC; and West Palm Beach.

JetBlue has three applications pending with the federal government in Washington, DC. Two applications, one with the US Department of Transportation (DOT) and one with the Federal Aviation Administration are for certification to become an air carrier. These are both currently under review. A third application, also under review at the DOT, is for an exemption from the High Density Rule. This exemption application has received the strong support of political and civic leaders from many of the cities JetBlue is interested in serving, and especially here in New York.

New York Governor George Pataki said: "(JetBlue's) service to and from New York's Kennedy airport promises to give New Yorkers the ability to travel throughout the Empire State and beyond at affordable fares on new quieter jetliners. Our administration has worked with New Air as they began operations, and we look forward to continuing to work with New Air to help them succeed in providing the low-cost and accessible air service that is long overdue for so many New Yorkers."

U.S. Senator Charles Schumer added: "I share with (JetBlue) a strong commitment to reducing airfares in Upstate New York. The high fares at Buffalo, Rochester and Syracuse Airports have had a crippling effect on the local economy and the prospect of adding a new, low-cost air service will provide a boost for the region's economy."

U.S. Representative Gregory Meeks stated: "With its base of operations at JFK, my district will reap the economic benefits of 1,500 jobs while having the ability to travel for business or pleasure at low airfares and on brand new, environmentally friendly aircraft. It is for those reasons why I have been working hard on behalf of New Air to urge the Administration in Washington to grant their request to operate at Kennedy International Airport."

New York City Mayor Guiliani said: "For more than a year, the City of New York has worked with the New Air Corporation to help achieve their dream of becoming New York's hometown low-fare carrier. Today, thanks to the tireless determination of many people, that dream has become a reality. On behalf of the entire City, I want to wish (JetBlue) great success as they build a bold new airline for a new millennium."
--
Ok. So where in the plan does it say 'focus cities'. I see "based at JFK Airport". You'll notice many other items in this press release became reality. Some of the markets from JFK to be served were changed. Like I said, plans change, thats ok. But I think that adding the focus cities is a big change. Furthermore, Neeleman said, "We want to be New York City's low fare airline". No mention of the West Coast... In fact, no west coast destinations were even listed as potential. The furthest west is SLC, IAH, and MSP. No LGB, LAS, ONT, OAK, or SEA. Seems to be a deviation from the plan. You are right that I do not have specific knowlege, I can only go by what the company has said publicly.
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Second, why did B6 make a big deal out of this? Its not like any other airlines were beating down the door trying to get these . By making a big deal of it, they invited attention, controversy, and legal problems.

It appears to me that B6 entered into the agreement with LGB very quietly and did not make a big deal of their entry or their plans. While there is less than 3 years track record to view, this does not appear to be their business style. Once into a market, they make their services known widely but I believe that saying they made a big deal of their entry is probably inaccurate. It would appear that the big deal was made by those other carriers who were not beating down the door to take advantage of those available 27 slots and suddenly faced a little competition in their playgrounds.


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The following press release sounds like a big deal to me. Had they only announced 2 roundtrips to JFK with no mentions of possible future service to 14 other cities and all 27 slots, maybe they would not have elicited the reponse from AA, AS, HP. Just a thought. Also, I guess they started thinking of additional focus cities by 2001... Two years later.

JetBlue Picks LA/Long Beach as Second Focus City!


-- Twice Daily JFK Service Will Be First Of 27 Departures From New West Coast Base --

New York, NY (May 23, 2001) - JetBlue Airways today announced that Long Beach Airport near Los Angeles, CA will be the airline's second base of operations, with 27 daily departures to as many as 15 cities to be scheduled over the next two years. JetBlue launched service from New York City's John F. Kennedy International Airport in February 2000 and now serves the city with 38 departures a day to 14 cities across the U.S.

JetBlue's first service from Long Beach, just 21 miles south of Los Angeles International Airport, will be two daily roundtrip flights to JFK commencing on August 29. Fares between New York and Los Angeles will range from $129* one way, which is up to 73% less than other airlines' equivalent fares in the market. JetBlue's most expensive "walk-up" fare will be $299 one way, which is as much as 75% below fares available from other nonstop carriers in the market. JetBlue charges only $25 for itinerary changes, one of the lowest change fees in the industry, compared to $100 on most major carriers.

The airline's daily schedule will be:


New York/JFK to LA/Long Beach LA/Long Beach to JFK
Depart - Arrive Depart - Arrive
8:25am - 11:10am 12:05pm - 8:15pm
6:10pm - 8:55pm 9:50pm - 6:00am (next day)

Also, JetBlue is considering service to up to 14 additional cities from Long Beach including Boston, MA, Chicago, IL, Denver, CO, Dallas, TX, Fort Lauderdale, FL, Houston, TX, Las Vegas, NV, Oakland, CA, Portland, OR, Phoenix, AZ, Sacramento, CA, Salt Lake City, UT, Seattle, WA, and Washington, DC.

"JetBlue is bringing more than low fares between Los Angeles and New York, we are flying brand new, quiet, fuel-efficient jets with comfortable all-leather seating, and the friendliest crews you'll ever meet" said David Neeleman, JetBlue's CEO. "And as the only airline to offer up to 24 channels of LiveTV at every seat, we're the most entertaining airline to serve the nation's two entertainment capitals," he said.

"The announcement that JetBlue will be flying out of the Long Beach Airport is great news for Long Beach," said Beverly O'Neill, Mayor of the City of Long Beach. "Not only will the opportunity to fly directly to Midwestern and eastern cities from Long Beach enhance our ability to attract businesses, but the carrier's outstanding reputation in the industry will help increase the attractiveness and efficiency of our airport."

"JetBlue is going to change the way people in Southern California fly," said Henry Toboada, Long Beach City Manager. "Area residents have always known that the Long Beach Airport was a jewel in the rough - well now the jewel is polished and on the crown. JetBlue is well capitalized and within two years it will provide 27 daily flights that will directly link Long Beach to as many as fifteen major metropolitan centers. We are delighted to welcome JetBlue to Long Beach."

"I appreciate that JetBlue is sensitive to the surrounding neighborhoods and uses some of the world's quietest, most emission-friendly passenger jets," said Jackie Kell, Councilwoman, Fifth District. "JetBlue has shown it is committed to working positively with communities and we are looking forward to their becoming part of the community here in Long Beach."

"Long Beach Airport and JetBlue have much in common - we're both customer friendly and low cost," said Chris Kunze, Airport Manager, Long Beach Airport. "We're looking forward to our relationship and to the expanded flight offerings and destinations. I am personally very excited about JetBlue's brand new, neighborhood-friendly fleet of aircraft."

Since launching operations 15 months ago, JetBlue has served some two and a half million passengers with a fleet currently comprising 14 brand new Airbus A320 aircraft. The airline, the best-funded start-up in U.S. aviation history, takes delivery of an aircraft every five weeks on average. The airline recorded its first monthly profit in August 2000, and has now reached six consecutive months of profitability.


JetBlue was voted #2 Best Domestic Airline for comfort and service in the 2001 Zagat Airline Survey and recently received top ranking (A grade) in an online survey by PlanetFeedback.com. According to the Department of Transportation, as of February 2001, JetBlue has received 12 letters of complaint since starting service, which equates to less one complaint per 100,000 passengers flown.

From February 2000 through March 2001, JetBlue operated 15,529 flights, with a completion factor of 99.5%, and leads the industry with an average load factor of 75.7% (or percentage of seats filled). The airline has recorded an on-time performance of 81.2%, compared to 72.6% for the top 10 airlines in the U.S, according to the DOT. JetBlue's rate of delayed, misplaced or lost bags is less than half the majors at 2.54 per 1,000 bags handled, against 5.2 for the 10 major carriers.

From its base at John F. Kennedy International Airport, New York City's most ontime airport, JetBlue flies: six times daily to Fort Lauderdale, FL; five times daily Buffalo and Rochester, NY; four times daily to Orlando, FL; three times daily to Tampa, NY, and Syracuse, NY; twice daily to Burlington, VT, Los Angeles/Ontario, CA, Oakland, CA, and West Palm Beach, FL; and daily to Denver, CO, Fort Myers, FL, Salt Lake City, UT, and Seattle, WA. JetBlue will begin twice daily service between New York and New Orleans on July 25.

With JetBlue, all seats are assigned, all travel is ticketless, all fares are one-way, and a Saturday night stay is never required. The airline offers $2 each way off fares booked through its web site, www.jetblue.com. For more information, schedules and fares, please visit www.jetblue.com or call JetBlue reservations at 1-800- JETBLUE (538-2583).

* All fares are subject to a $2.75 per segment Federal tax and up to $9.00 Airport Passenger Facility Charge.

1 The Department of Transportation defines "ontime" as being within 14 minutes of scheduled arrival
2 According to the February 2001 Air Travel Consumer Report provided by the U.S. Department of Transportation.



TV EDITORS PLEASE NOTE: B-roll footage is available on-line at no charge from www.thenewsmarket.com
--


Ok. So I think LGB for JetBlue is a mistake. Will it sink the airline?Probably not. But I do think it has the potential for stunting growth in the near term, because now LGB is a problem that needs to be fixed. Rather than concentrate on what the next best opportunity for B6 is, they will be concentrating on how to fix LGB.

Let's let time tell the story on this one. The powers who be are obviously not sitting in a windowless room counting their change. In the short time of operation, B6 has built a very loyal customer base with over 60% repeat customers. Load factors are hovering in the low 90% range day in and day out. LGB is obviously another market that shows great promise for the company and without severely deviating from the 'original plan', the company is flexible enough, reality based enough and yes maybe a little aggressive in taking on a competitive market. My bet is that it was not done as a whimsical move but part of the carefully laid plan following in depth analysis and research which has allowed them to be a viable option in so short a period of time. By saying B6 is just another low cost carrier, you may be missing the full story. While seat pitch, cost, seat covers, IFE, etc. are all important, the thing that is happening here which is more than lipservice is that B6
does things a little differently. They listen to what the public wants and treat them to that with respect and not in a cattle car fashion.


--
You are right... Time will tell. If I were running an airline, I would not purposefully add flying that at best can break even. I would go for a profit. Maybe that's just me. In the meantime, what happens when JetBlue develops a small following of folks who like going to OAK and LAS, and then they alienate those passengers in favor of more profitable long hauls. I think that would be a PR blunder... But you certainly cannot fly $19 fares to LAS forever.

Furthermore, Enrila's point is very valid. Prior to JetBlue at LGB, LA had 4 airports all of which had significant low fare competition. Prior to JB's entry to NYC, NYC had 4 airports with extremely limited low fare competition. Now JFK has JB and ISP has LUV, so that has changed a bit. Also, the East in general has less low fare competition. So why not take advantage of the US and UAL situations, and fight LUV and AA instead? Why take on the strongest carriers instead of the weakest? I know JetBlue fans hate the comparison, but didn't PEOPLExpress take on the strongest carriers and lose? They did ok against USAir and Eastern up and down the coast, but when they took on American and United to Chicago and transcon, things went bad pretty quickly. Sure, PE had other problems that JB doesn't. But I think there is value in that comparison. LUV is another good example. They have built their strength by moving in on weaker carriers, not stronger carriers. Notice they have not made big moves at DTW or CLE where they are head to head with a major, and many other major hub airports, they don't even serve. Meanwhile, they have had extensive growth where they are head to head with a weak carrier... STL, PHX, LAS, BWI.

Like I said, will this kill JB. No, it won't. But in the meantime, AirTran is adding service all over the east and midwest where others are are floundering... And JB is missing out on that.

Thanks for playing....[;)]
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On 8/20/2002 6:09:45 PM

I think JB will fly to FLL, IAD, and other east coast points. From FLL they will fly to the west coast just because they can't possibily fly from FLL to JFK any more then they are, 10 a day last I saw.
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Think again! FLL-JFK is 16x daily this winter. Yes, SIXTEEN.
 
Well, there is no use trying to contend with this litany of freepress reconstruction blasted with the force of a fire hydrant. Good foot work my friend.
I think there are valid points in both our views and certainly neither of us knows what goes on in the minds of the corporate helmsmen but I do believe there is more than meets the eye.
It is certainly unfair to say that all upstarts will make the same mistakes as those of yore. While PEX made some serious blunders, that was then and this is now. I really don't see a lot of parallels and it is certainly a different business climate than in the newly deregulated industry of the '80s.
There has always been a place for innovation in our country and just because it appears to go against the grain, it isn't necessarily bad.
It is only my opinion (unbiased), that we will all be surprised in the long term by the direction of B6 focus in the LGB and OAK arena. Since it apparently has become an arena. It doesn't take a lot of in depth analysis to recognize that LAS will be a temporary endeavor to protect the precious few slots which are all of a sudden so in demand at LGB.
My guess is that within a year, those 6/day flights will be 3 a day and there will be new markets in their place. I personally don't see the UAL/LUV blood bath of a few years ago repeating itself in this marketplace. While the players are definitely in a territorial protective stance at present, the real issues have yet to surface and will most likely give us plenty to debate over in the future.


Thanks again for playing...
[;)]
 
Jetblue doing all the short hauls between Oakland-LA-LAS, is this likely to increase brand awareness.
An morning and evening flights between LA & Oakland would still be useful to capture customers in both cities.
LAS would probably go long haul from JFK and IAD at least once a day, probably not going to be all that profitable but plenty of vacationers looking for a cheap fare.

What is the TV programming like on the Transcon overnight flights.
 
OK, I give up. Long Beach, as someone so eloquently stated, is not JFK. That much I'll agree to. But for those who think LGB is Jetblue's "Waterloo" remember this. Nobody was talking about LGB a couple of years ago. Why all the hulabaloo? Figure it out yourself.
 
Wow, so many points to make so little time

1) Do some members really believe that JetBlue would have put its entire business strategy out on a press release? And we should measure JetBlue not on its profitability or management accumen, but by how they have managed against their original 1999 press release.

2) Hasn't Sept 11 changed every airlines business plans? And to JetBlue's credit they have maintained profitability where virtually all others have not.

3) Part of good management is adapting to changes in competitions, business conditions to take advantages of opportunities that hadn't been initially presented.
 
Airplanefan,
how can you argue with the conventional widsom so well represented on this board? To stray from ones business plan is suicidal. And yes, these people know everything about Jetblue's business plan. Hell, they probably wrote it. They also have done thousands of hours of marketing research, which led to the startling conclusion that Long Beach is not JFK. I could go on, but I'm sure you get my drift. To those who think they understand Jetblue's business plan, I'm glad David and Dave are at the helm, and not you. (Since someone will miss the sarcasm in this post, I apologize to you, in advance, for your confusion).
 
Jbu320:
Well you asked where I got some of my ideas from, and I showed you. In the meantime, I will make some brief points:

1) PEX/JB Parallel. PEX initally operated a low-fare, low-frill operation north/south against ineffective competitors. JB initially operated a low-fare, low-frill (although not as low as PEX) operation north/south against ineffective competitors. Intially, both carriers were successful. Later, PEX added transcons and biz markets. The big boys took notice and action to counteract the competition (remember, AA used some innovations like revenue management and freq flyer program). Later, JB added transcons (are the biz markets far behind? I keep hearing JB at ORD rumors...). The big boys took notice and action to counteract the comepetition. OK, fine, JB has more resources than PEX to weather the storm. I still don't see why your purposefully go after the strongest two carriers.

2) If the long term LGB plan is long hauls to the midwest and east, I do not think that is a failed strategy. However, I think that the implementation of it is terrible. No airline has been interested in those slots for 10 years or so. I am willing to bet, that without JB's interest, they would still be available today and next year... Since there was no pressing need to tie up the slots, why bother? The City of LGB must have made the case to JB that these were in high demand, even though when they were available nobody wanted them.

3) Meanwhile, JB is missing opportunities to take advantage of US at JFK and UAL at IAD. But I guess, AirTran, Southwest, and Frontier can keep beating up on these two obvious targets, even though of these carriers, JB is the best positioned to take advantage. And why are they missing these opportunities? To add to the 70-some odd flights between LA and LAS and OAK. And at $19 to boot. All this to protect slots that would have been available anyway had they taken another approach.

Airplanefan: You are right, 9/11 has significantly altered this business. I think JB is missing the big opportunities as I already said. LUV and AirTran and Frontier are not.

Farley: Your sarcasm aside, post-dereg airline history is littered with start-ups who deviated from their plan and ended up out of business. Maybe I do need to list them. Meanwhile, airlines that have stuck with their original successful concept (like Southwest and Midwest Express) are still around. This assumes your original plan is feasable, unlike National. I think JB's original plan is very feasible. I don't think that LGB is a bad idea. I think this implementation plan in awful. But thats just my opinion.

I've had fun playing [:bigsmile:]
 
No pressing need to tie up the LGB slots? Nobody wanted them? Really! That is news. The whole business plan angle was debated ad naseum on plane business and other places. I'll just let the statistics keep doing the talking while all of you "experts" tell us how to do it right. Do some reading in the meantime.
 
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On 8/23/2002 1:53:41 PM

I'm still amazed that this small airline has the 4th most posts of any of the boards on here.


but the majors aren't worried....
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Of course, if the number of posts on a bulletin board were any indicator of how well an airline would do, TWA would be absolutely dominating the industry today.

The real reason why this board has so many posts is because there is an interesting story here. You have a new airline which is in the process of expanding, which gives something to talk about. American is still straightening out the TWA acquisition, which gives them something to talk about, etc... Northwest, on the other hand, is just plugging along without any dramatic news to discuss, hence a lower number of posts
 
Don't you know that the Bloonies don't like comparisons to PE?... ;)

Gotta agree that all this attention on filling up LGB is probably going to cause more long term damage than good. As already pointed out, it is diverting attention from what could be greener pastures, such as moving into MCI to replace Vanguard, or moving into IAD where UAL is too distracted with their own lack of direction and impending Chapter 11 to respond...

The only "strategic" value I see in trying to salvage the operation at LGB is so that David and his planning folks don't lose face.
 
Bus, you really need to be a bit less defensive when it comes to UAL's finances... Especially when your company has issued press releases on this to the world... There's no smugness -- it is simply fact. And thank you for your concern over my knowledge of our own balance sheet, but I think I'm a bit more informed as an insider on AMR's finances than you are as an outsider.

Don't believe me? Look for yourself...

http://cbs.marketwatch.com/tools/quotes/fi...report=2&freq=1

Frankly, trying to draw a parallel between finances and aircraft accidents is one of the more tasteless things I've seen in a while... I shouldn't have to remind you about SUX, COS, or HNL, all which took place within a few years of each other....