’ expansion Fort Lauderdale, Florida, could help the carrier tap a large and affluent market as the carrier expands into Latin America, its executives say.
The carrier now has about 60 flights per day from Fort Lauderdale but could raise that by more than 50% to 100 flights per day, President Robin Hayes told investors this week. JetBlue recently launched flights from the airport to Lima, Peru, the fourth South American city in its network. The airline says it does not plan to stop with Lima and could add to its growing network in Latin America and the Caribbean, although Hayes did not outline which destinations it could select next.
JetBlue currently flies from Fort Lauderdale to Medellin and Bogota in Colombia, and flies from Cartagena, Colombia to New York John F..
Despite the plans, management stopped short of saying JetBlue will make Fort Lauderdale a hub and reaffirmed its commitment to being a point-to-point carrier. "Only about 10-15% of our traffic connects," Hayes said.
Expansion in Fort Lauderdale puts JetBlue in direct competition with ultra-low-cost carrier Spirit, which is based at the airport. Although this competition is significant, JetBlue’s hard product differentiates it from Spirit.
"We have a significant revenue premium to Spirit, which offsets our seat-density difference," Hayes said. Jetblue’shave 150 seats in a one-class configuration, while Spirit operates its A320s with 178 seats, including four premium-economy seats.
The carrier’s Florida and Caribbean routes have been "incredibly profitable," said CFO Mark Powers. "The ramp-up period for those routes to become profitable is much shorter than for other cities." JetBlue sees Fort Lauderdale as a "terrific opportunity," because Broward County is investing heavily in improving the airport and runway infrastructure. Second, the passenger catchment area is large, particularly for the kinds of passengers JetBlue targets, and fares have typically been high. Expansion at Fort Lauderdale allows JetBlue to tap more high-value customers than it would if it were to serve Miami, whichdominates.
"We see potential in a hybrid position as a high-value leisure and business carrier," Powers said. The carrier is investing in its on-board product; JetBlue recently unveiled its new broadband Wi-Fi service and will soon begin operating A321s with lie-flat seats in a premium cabin.
These changes don’t mark a shift in strategy but an evolution, Atmosphere Research founder Henry Harteveldt said. "Fort Lauderdale is an attractive leisure destination, providing access to much of South Florida and to cruise lines, and is a growing convention market," he said.
The carrier is positioning itself to be a major player in the Latin America market, despite the dominance American has in the market from Miami. "If JetBlue starts to deploy its Mint [premium product] on flights to Lima and Bogota, the airline becomes much more attractive to the premium leisure traveler," Harteveldt said.
JetBlue’s changes to its loyalty program, continued expansion in Latin America and premium product signal that the carrier could be a more credible competitor the major network airlines and Southwest, Harteveldt said. But JetBlue could find itself hamstrung if it doesn’t develop a mid-continent hub. Doing so would "unlock the value in its network and make it more appealing to the business traveler, he adds.