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JetBlue Airways expansion could hit turbulence

Sun., April 20, 2008

Even as rising fuel costs are grounding weaker airlines – including three this month – airline competition is heating up for travelers flying the Pacific coast.

On the runway is JetBlue Airways Corp. with new 100-seat jets that will begin flying next month from Long Beach, Calif., up and down the coast in a move that financial analysts say may be bold but risky.

Next month, the low-cost carrier, popular with Southern California leisure travelers, is adding six flights from Long Beach to San Jose, Calif., Seattle and Austin, Texas, connecting some of the nation’s top tech-heavy cities. Long Beach passengers can fly one-way to San Jose for $39.

JetBlue rivals aren’t standing around fretting. They are fighting back, increasing flights and cutting fares all along the coast.

“You’ve got a lot of competition out there unlike the East Coast where subpar service allowed JetBlue to make inroads by treating customers well,” said Michael Boyd, an aviation consultant in Evergreen, Colo. “Alaska and Southwest are also known for treating customers well.”

Another West Coast fare war of sorts might be in the works. Last week, Virgin America began service from Los Angeles International Airport to Seattle with $77 one-way fares while Alaska announced that this month it would offer hourly flights from LAX to Seattle. And Southwest added four flights from LAX to San Francisco and was offering $79 one-way fares from LAX to Austin.

“We’ve competed on fares and services with all comers for decades and we’ve always prevailed,” said Steve Jarvis, vice president of marketing for Alaska Airlines. “We’re no stranger to competition, but we’re taking this serious. We’re going to fight it toe to toe.”

Virgin, created by British billionaire Richard Branson, began flying last summer starting with service between Los Angeles International Airport and San Francisco. “American airlines have never really cared about quality in the sky,” he said at the time.

JetBlue is also expanding to Los Angeles International Airport, where it will offer nonstop flights to New York and Boston with fares as low as $129 one-way.

The Forest Hills, N.Y.-based JetBlue has typically focused on transcontinental routes flying California passengers across the nation to Eastern seaboard cities including Boston and Fort Lauderdale, Fla.

With transcontinental growth slowing and with new flight restrictions at JFK, its crowded home airport in New York, the airline has been looking for opportunities in the West, particularly the lucrative routes along the coastline from San Diego to Seattle.

Eventually, it wants to offer international flights to Mexico and Canada.

With a fare war that is likely to have bargain hunters shuffling from one airline to another, JetBlue is betting that new planes will give it an edge. It has ordered 100 of the Embraer planes, which are built in Brazil.

JetBlue first began flying the planes last year on its routes along the Eastern seaboard but will start using them on the new West Coast flights as they are delivered by the manufacturer.

By operating two different fleet of planes, JetBlue is bucking a long-time mantra of low-cost carriers like Southwest that has touted the operating savings and efficiencies of flying one type of plane. Southwest flies Boeing 737s, so it doesn’t have higher costs of maintaining more than one kind of plane as well as hiring and training two sets of pilots. The new plane will be in a dogfight with the new Airbus 320s that Branson is introducing with Virgin America.


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