In 2003, three-year-old airline JetBlue Airways (JBLU 3.85%) decided to expand to Atlanta. It began with flights to its Southern California base at Long Beach Airport and then quickly added flights to Oakland.
Within months, JetBlue was gone from the Atlanta market. JetBlue's arrival set off a wave of brutal competition with Delta Air Lines (DAL 0.01%) and AirTran Airways, which both had hubs in Atlanta. Fares to the West Coast fell from as high as $2,000 roundtrip to as little as $176 roundtrip, leading to huge losses.
Stiff competition from Delta forced JetBlue to pull out of Atlanta in 2003. Image source: The Motley Fool.
JetBlue is finally getting ready to take on Delta Air Lines in its hometown and largest hub once again. JetBlue is still a fraction of Delta's size -- but this time around, with annual revenue that now exceeds $6 billion, it is much less of an underdog.
JetBlue makes Atlanta plans
A few weeks ago, JetBlue sent a letter to Atlanta's Hartsfield-Jackson International Airport expressing interest in renewing service there in Sept. 2017, according to The Atlanta Journal-Constitution. JetBlue said it wants access to two "preferential gates" in order to operate 16 daily flights to Atlanta.
This would represent an unusually bold expansion for JetBlue. In recent years, it has typically entered new cities with fewer than half a dozen daily flights. That said, Atlanta is a much bigger market than most of the cities where JetBlue has been growing lately.
JetBlue didn't reveal where it plans to fly, but it's a safe bet that it won't be attempting flights to the West Coast again. Instead, JetBlue will probably concentrate on flights to its four East Coast focus cities: Boston, Fort Lauderdale, New York, and Orlando. Those are markets where JetBlue may be able to compete successfully against Delta Air Lines.
Boston is the key
Among those four cities, Boston is the key. In recent years, JetBlue has emerged as the largest airline in Boston. This has allowed it to start making inroads in the corporate travel market there, against rivals like Delta.
The biggest impediment to JetBlue's momentum among business travelers is its absence from several large cities, including Atlanta. For example, industrial giant General Electric is in the midst of moving its headquarters to Boston. JetBlue isn't likely to win its business, though, if it doesn't serve key markets like Atlanta and Cincinnati, where GE has major operations.
JetBlue needs to serve key cities like Atlanta to win over business travelers. Image source: JetBlue Airways.
JetBlue has been gradually filling in the gaps in its Boston route network, opening routes to Detroit, Cleveland, and Nashville in recent years. In late October, it will start flying six times a day from Boston to New York's LaGuardia Airport. That's a key business route currently dominated by the Delta Shuttle and the American Airlines Shuttle. Beginning a Boston-Atlanta route is a natural outgrowth of this strategy.
Flights to Florida could be the other big piece
Fort Lauderdale is the other city that JetBlue would almost certainly serve if it enters the Atlanta market. JetBlue announced earlier this year that it plans to grow by nearly 75% in Fort Lauderdale in the coming years, eventually operating an average of 140 daily departures there.
Nonstop Atlanta-Fort Lauderdale flights would allow JetBlue to carry tourists heading to South Florida. JetBlue can also offer connections to nearly two dozen destinations in Latin America and the Caribbean via Fort Lauderdale.
JetBlue may enter the busy Atlanta-Orlando market, too, competing for that route's ample tourist traffic. There's also a chance that JetBlue would serve other markets in Florida where it has a more modest presence, such as Tampa and West Palm Beach.
The only other place that JetBlue is likely to consider flying from Atlanta -- at least in its first round of expansion there -- is New York. Slot constraints may prevent it from flying from Atlanta to its main base at JFK Airport. However, the FAA recently lifted slot constraints at Newark Airport, making that a potential jumping-off point for New York-Atlanta flights.
Don't be surprised by a modest start
While JetBlue has teased the possibility of operating 16 daily flights in Atlanta, I think it is likely to start a good deal smaller than that. Flights to Boston and Fort Lauderdale are really the only "sure things." After all, those are JetBlue's two primary growth markets.
The only reason for going from zero to 16 daily flights in Atlanta in a short period of time is if the airport requires it as a condition of getting gates there. But if JetBlue takes an aggressive stance like that, it risks sparking another costly price war with Delta Air Lines.
