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Hub Wars, Boston Edition: JetBlue v Delta & American

Hub Wars, Boston Edition: JetBlue v Delta & American
Taylor Rains

Tis the season of hub wars. American is battling Delta in Miami, Delta has been expanding into Alaska’s territory in Seattle, and now both American and Delta are taking on JetBlue’s dominance in Boston. Alaska has managed to hold onto its loyal customers in Seattle despite Delta’s growth in the city – will the same be true for JetBlue as it takes on the two legacy carriers?

Competition is Heating Up

JetBlue took an interest in Boston when the competition was weak and has since made the airport one of its most important markets, accounting for 30% of the airline’s capacity. Although the carrier has maintained strong earnings in Boston, it appears revenue is dwindling since Delta and American’s increased presence in the city. Delta’s move to enter Boston was due to high demand, which makes sense as they wanted to capitalize on the opportunity to take shares from the weaker competition. However, American is not known to grow in non-hub cities, so its decision was most likely a response to Delta’s aggressive penetration into Miami, and may be an effort to thwart the carrier’s success.

JetBlue’s Response

The presence of the two mega carriers puts JetBlue in a tight spot. It is much smaller than Delta and American and cannot afford to forgo profits now to meet long-term goals like global carriers can. However, analysts expect the airline can beat the competition.

JetBlue’s CFO Steve Priest explained that because the carrier’s network is structured around point-to-point routes rather than hub-and-spoke, customers will prefer to take its nonstops flights. He said in a statement, “Eighty-five percent of our business is point-to-point. The high-value geography that we have really lends itself to point-to-point business. Think about Boston from a geographical standpoint. It doesn’t really lend itself to a hub-and-spoke city.”

He further explained that JetBlue’s brand in the city would retain customer loyalty. He said, “With that relevancy comes stickiness. We are a very well-loved brand in Boston. When you get that, you can drive the ancillary benefits, like our loyalty program and everything that goes with it.”

Expansion to London

JetBlue has plans to expand its Boston operation, starting with flights to London next year. Priest believes this expansion is necessary for keeping the airline relevant in Boston. He said, “In Boston, we fly 40 of the top 50 routes. Of the remaining 10, five of them are in Europe. By far the biggest is London. Adding London to the network gives us a greater level of stickiness with corporate clients that enjoy flying JetBlue.”

The biggest issue with the new route is that Delta and American already fly to London, with Delta serving both Heathrow and Gatwick and American relaunching its Heathrow flight in March.

To combat the active routes, Priest revealed the airline is fitting its transatlantic flights with a new business class seat. He said, “We welcome the competition.”

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