I am not under-estimating anything, both are huge. My point was that both CO and JBLU changed way of doing business, and JBLU bears more risk since it is not an equal exchange.
In addition, you misunderstood what I meant by fares in overlapping market. JBLU has been pricing its product aggressively (discounted) trying to take market share, and it will do less of that now. The result will be higher fare. My bet is that JBLU will change its pricing behavior and adjust capacity, and CO will follow to reciprocate.
Originally Posted by
sbm12
I think that you are underestimating the impact of number 2; I agree more with TWA Fan 1 that this is a huge risk to JBLU because of the sunk cost and unknow upside for revenue, especially since JetBlue always gave it away for free, and they're planning on charging for it on CO.
As to the fares, they aren't low because CO wants to keep them there. It is a cross between a glut of capacity and the need for JetBlue to appear as a low-fare carrier to get a significant chunk of their revenue, just like WN does.