JetBlue announced today that it would be starting non-stop service between Boston and St. Thomas, as well as between San Juan, PR and St.Thomas as well as St. Croix. The Boston-St. Thomas route will be operated 5 times weekly with an A320 during the winter season; the northbound service requires a technical stop in San Juan. San Juan-St. Thomas will be served twice daily on an Embraer E-190, while San Juan-St. Croix will see once daily service on the same equipment. The proposed flight times are as follows:
Depart SJU 0825 Arrive STT 0855 Depart STT 0930 Arrive SJU 1005
Depart SJU 1510 Arrive STT 1540 Depart STT 1730 Arrive SJU 1805
Depart SJU 1425 Arrive STX 1505 Depart STX 1605 Arrive SJU 1650
Depart BOS 0935 Arrive STT 1430 Depart STT 1520 Arrive BOS 1929 (via SJU)
JetBlue has been steadily building up their presence in San Juan for a while now. Back when American first announced their draw-down (more on this later), JetBlue immediately countered with Jacksonville-San Juan; one of the routes being cut by American. They announced service to St. Maarten earlier this year, and St. Thomas and St. Croix have just been added. As it stands now, JetBlue will operate 35 peak day departures from San Juan, with service to 10 destinations (Tampa, Fort Lauderdale, Orlando, New York JFK, Boston, Jacksonville, Santo Domingo, St. Maarten, St. Thomas, and St. Croix).
The change in San Juan’s competitive situation from just 2-3 years ago is staggering. For the longest time; American was the bully on the block in San Juan. Their hub there dated back 25 years; by comparison JetBlue entered the market in 2002. At its peak, American(or more appropriately American Eagle)’s hub in San Juan was an efficient machine with close to 100 flights per day (some on 265 seat Airbus A300s) that collected passengers from myriad points throughout the United States, and funneled them through San Juan to multiple Caribbean points. Obviously, the make-up of these passengers was decidedly leisure.
As American’s costs rose throughout the 2000s, they slowly chipped away at the San Juan hub; pushing it down to ~55 daily departures. Once they announced their “cornerstone strategy” (focus on Dallas, Chicago, New York, Miami, and LA) in 2009; it became obvious that San Juan’s days were numbered. A little more than a year later; the hub was axed- losing close to a third of its daily departures.
So how does all of that relate to JetBlue? Well, the loss of American service on intra-Caribbean markets left a void that can’t be effectively filled by existing players (such as LIAT and Air Jamaica/Caribbean). So the onus seemed to fall onto American low-cost carriers (such as Spirit?) who were nimble enough with low enough costs to make Caribbean markets work. JetBlue was the first player to really step in and take advantage of the pent up demand; they are now the largest carrier in the San Juan area.
It also interested me that these two destinations were the first to be announced; as I am sure that there are other airports with far more O&D to and from San Juan. However, the DOT DB1B database allows us to estimate yields for this route.
I did a little digging into the Q1 2010 data (relevant because these are winter-heavy routes), and what do you know. Saint Thomas-San Juan has a daily yield of $1.93, and one-way demand of 87 passengers per day each way. To put that $1.93 yield in perspective; $0.25 is considered very high for the airline industry. So if ever there was a market in need of low-cost stimulation; that’s it.
St. Croix-San Juan, while not priced so exorbitantly still checks in at $1.40 in yield and 75.4 O&D passengers per day. Both of these routes have competition from multiple legacies; United and Sun Country to St. Thomas, American and Seaborne Airlines to both. With the apparent price gouging on these routes; the presence of JetBlue should stimulate the market greatly.
So where does JetBlue move from here. In my opinion; if they want to build up a true hub in San Juan; they should move cautiously towards the role the hub played for American; connecting passengers from the US to the Caribbean. You could see flights to major northeast O&D centers, as well as strong JetBlue markets in other parts of the country (such as Austin). When mixed with healthy service to larger Caribbean destinations, the potential is there for JetBlue to have an effective hub in San Juan. Perhaps they could also explore a deal with Cape Air to serve destinations too small for their E190s; such as Anguilla and Nevis.