Low-Cost Threat
ARLINGTON (theHub.com) - Beginning in September, Southwest Airlines will add a Saturday-only flight from Philadelphia to San Diego, bringing the airline’s service from Philadelphia to as many as 29 daily nonstop flights. Separately, low-cost carrier JetBlue Airways plans to begin service from New York LaGuardia Airport in September with seven daily flights to Fort Lauderdale, giving it operations at two of the New York area's three major airports. The airline said it would expand service to several Florida cities from Kennedy Airport, its primary hub, adding daily flights between Kennedy and Orlando, Fort Myers, West Palm Beach and Tampa. The new flights, plus its expanded service, mean JetBlue will have as many as 71 flights a day this winter between New York and Florida. Service between LaGuardia and Fort Lauderdale will begin Sept. 17 at introductory fares of $79 each way.
JetBlue is also adding service this fall between Boston and Fort Myers, starting with one daily flight and building to three. Delta’s low-fare subsidiary Song already flies the route. JetBlue will begin Boston-Fort Myers service on Oct. 21, adding a second flight on Jan. 6, and a third on Feb. 3. The airline has a fleet of 60 Airbus A320 jets and aggressive plans to expand. JetBlue next year will take delivery on the first of 100 Embraer regional jets.
With higher fuel costs in the revenue equation, well-known Wall Street industry analyst Samuel Buttrick of UBS Securities estimates that legacy carriers’ losses will be more than first predicted. Buttrick estimates that mature network carriers will lose $2 billion to $2.5 billion this year, on top of the $23 billion they have lost since 2001. Early this year, he and other analysts were expecting the industry to lose $500 million or less. "The problem stems from core and personnel costs that... along with fuel costs produce a total operating cost that is higher than passengers are willing to pay," according to the June issue of Unisys R2A Scorecard, an industry newsletter.
As US Airways and all legacy carriers contend with higher-than-expected fuel prices and relentless discounting by low-cost airlines, the reality is that low-cost carriers now account for about one-quarter of domestic U.S. airline traffic. In nine years, from January 1995 to January 2004, low-cost carriers have gone from flying 336 domestic U.S. routes to serving 1,375 routes.
ARLINGTON (theHub.com) - Beginning in September, Southwest Airlines will add a Saturday-only flight from Philadelphia to San Diego, bringing the airline’s service from Philadelphia to as many as 29 daily nonstop flights. Separately, low-cost carrier JetBlue Airways plans to begin service from New York LaGuardia Airport in September with seven daily flights to Fort Lauderdale, giving it operations at two of the New York area's three major airports. The airline said it would expand service to several Florida cities from Kennedy Airport, its primary hub, adding daily flights between Kennedy and Orlando, Fort Myers, West Palm Beach and Tampa. The new flights, plus its expanded service, mean JetBlue will have as many as 71 flights a day this winter between New York and Florida. Service between LaGuardia and Fort Lauderdale will begin Sept. 17 at introductory fares of $79 each way.
JetBlue is also adding service this fall between Boston and Fort Myers, starting with one daily flight and building to three. Delta’s low-fare subsidiary Song already flies the route. JetBlue will begin Boston-Fort Myers service on Oct. 21, adding a second flight on Jan. 6, and a third on Feb. 3. The airline has a fleet of 60 Airbus A320 jets and aggressive plans to expand. JetBlue next year will take delivery on the first of 100 Embraer regional jets.
With higher fuel costs in the revenue equation, well-known Wall Street industry analyst Samuel Buttrick of UBS Securities estimates that legacy carriers’ losses will be more than first predicted. Buttrick estimates that mature network carriers will lose $2 billion to $2.5 billion this year, on top of the $23 billion they have lost since 2001. Early this year, he and other analysts were expecting the industry to lose $500 million or less. "The problem stems from core and personnel costs that... along with fuel costs produce a total operating cost that is higher than passengers are willing to pay," according to the June issue of Unisys R2A Scorecard, an industry newsletter.
As US Airways and all legacy carriers contend with higher-than-expected fuel prices and relentless discounting by low-cost airlines, the reality is that low-cost carriers now account for about one-quarter of domestic U.S. airline traffic. In nine years, from January 1995 to January 2004, low-cost carriers have gone from flying 336 domestic U.S. routes to serving 1,375 routes.
