Welcome back my friends to the show that never ends. It’s time to take yet another look at JetBlue’s plans for Spirit.
After yesterday’s look at the JetBlue focus cities it wants to grow further, today it’s time to look at the cities where JetBlue doesn’t have much presence and wants more. As a reminder, I looked at Cirium scheduled seats departing each airport for July 2022. Also, here’s the quote from the acquisition announcement.
The acquisition will increase relevance for JetBlue in certain key focus cities (Fort Lauderdale, Orlando, San Juan, and Los Angeles) as well as Big Four airline hubs (Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami).
Of course, Southwest would likely take great offense to JetBlue saying it has hubs, but, well, it does. So, let’s just tackle these in the order mentioned.
When it comes to Vegas, JetBlue is irrelevant with only 4 destinations (3 of which Spirit also flies). Spirit, however, has grown to be the second largest airline behind the big hub carrier Southwest.
In July, Southwest has 63 destinations from Las Vegas. Spirt overlaps on 29 of those. It and JetBlue have another 10 that Southwest doesn’t serve.
This does get JetBlue more gate space in Las Vegas, but what will it do with it? Spirit and Frontier fueled their growth with low fares, and this is the perfect market for that kind of product. JetBlue may appeal to the fancy folks looking for a better experience, and that works in places like New York and Boston. But at a higher fare, it remains to be seen just how much of the Spirit market can still be served profitably. I imagine the Kansas Cities and Sacramentos of the world will be tough unless JetBlue shifts its model post-merger.
In the Metroplex, JetBlue barely exists at all with only a few flights to Boston and New York/JFK. Spirit is large enough to be neck and neck with Delta for a distant third place, but in terms of flights, it is easily dwarfed by American and Southwest. It does serve 16 destinations from DFW today, mostly bigger cities at 1x daily. Does JetBlue try to maintain breadth here? Or does it aim to consolidate frequency in the most lucrative markets? Either way, it will struggle to be a meaningful competitor to either American or Southwest.
If we move down the road to Houston, we see something similar with JetBlue again just serving Boston and JFK. Spirit has more than that, but United is the big gun instead of American. This market looks very similar to Dallas, and similar decisions will need to be made.
If we head north to Chicago, it’s a more crowded house. Frontier has largely decamped to Midway, leaving Spirit as the ultra low cost operator at O’Hare. That’s a big advantage that it doesn’t have elsewhere. Of course, that’s behind United, American, and Southwest’s new and growing presence at the airport.
With gates at O’Hare at a premium, JetBlue shouldn’t have to worry about a low fare competitor. It can raise fares and potentially make this work. But that also does require the other behemoths in the market letting JetBlue grow without being challenged. That won’t happen, so the question is… will JetBlue be able to carve out a higher fare niche for itself despite intense competition?
Detroit is one of the more interesting airports on this list. The former home of Spirit Airlines, Detroit has very little ULCC presence outside of Spirit itself. JetBlue is not much to speak of, but Southwest is also small. This would seem like a decent opportunity for JetBlue to be the tweener to take traffic away from Delta. Of all the focus cities, I think I like the opportunity here best.
Unlike Detroit, Atlanta has plenty of lower fare competition. There’s the ever-changing, shrinking, and confused Southwest operation there. Then there’s Frontier which is bigger than Spirit in the market already. So what would JetBlue do in a market like this? If Delta is willing to let Detroit be competitive, it’s not going to let that happen in Atlanta. I can only assume that if JetBlue makes a play for Atlanta, it is going to feel the pain.
JetBlue saved the biggest question mark for last. Miami is a market that changed dramatically during the pandemic with many airlines starting and growing service, including JetBlue and Spirit. JetBlue is in there with Boston and JFK but also Newark and Los Angeles. That’s it. But Spirit went into the market in a big way.
We’ve seen Frontier pull down some of its Miami flying and focus elsewhere in recent months. That could be an airport constraint, in which case I’m sure it would love some divestment, or it could just be a commercial decision. JetBlue will already have a mega focus city up the road in Fort Lauderdale, so that reduces the impact from a Miami focus as well. I’m just not sure where this one will fall.
All of these markets have similar traits, but the real question is… where does the new JetBlue fit? In a place like Detroit, there may be actual opportunity, albeit likely not an enormous one. Elsewhere, the water is murkier.
The big caveat here is that we don’t really know what the JetBlue product and positioning will be. If JetBlue changes post-merger despite what it says today, that could change the calculus in a more favorable way.