Over the past month or so, U.S. air travel demand has started to recover in a meaningful way from the COVID-19 pandemic. Of course, demand remains far below normal levels. This Wednesday, the TSA screened just 441,829 passengers: 17.3% of the number screened a year ago. Yet that marked a big improvement from five weeks earlier, when TSA screenings stood at just 7.5% of 2019 volumes.

With demand improving -- particularly for summer leisure travel -- many airlines are restoring some of the flights that they had cut during the peak of the pandemic. Yet JetBlue Airways (NASDAQ:JBLU) is going one step further. Aside from restoring capacity on some routes, the airline plans to launch 30 new routes over the next several months.

A JetBlue Airways plane preparing to land

Image source: JetBlue Airways.

This aggressive move shows that JetBlue's solid balance sheet is allowing it to take some risks. And it's terrible news for one competitor in particular: United Airlines (NASDAQ:UAL).

New routes on the way

Demand for leisure travel has improved at a surprisingly rapid pace over the past several weeks, according to JetBlue officials. In many markets, the incumbents haven't restored capacity as quickly as demand has returned. JetBlue sees this as an opportunity -- at least in the near term -- to reactivate parked aircraft and make more work available for its employees.

With the demand recovery weighted toward leisure travel, there's a heavy focus on Florida and the Caribbean among JetBlue's route additions. In fact, 20 of the 30 new routes touch one of those geographies. For example, in Philadelphia (an American Airlines hub), JetBlue is opportunistically launching service to Fort Myers, Orlando, Tampa, West Palm Beach, and San Juan in August.

Transcontinental routes -- including some from Florida -- also make up a significant proportion of the new routes. Transcontinental demand held up relatively well during the pandemic, according to JetBlue's management.

Inevitably, some of these routes will fail due to rival airlines' competitive responses, changes in the demand environment, or other factors. Others may be eliminated in favor of business-friendly routes as business demand rebounds. In its press release announcing the new flights, JetBlue explicitly stated, "Like the rest of the JetBlue network, these new routes will be regularly evaluated. The airline will remain flexible, allowing market demand to determine how long a particular route continues to operate." But as a whole, JetBlue appears to expect these routes to at least cover their variable costs -- thereby reducing the airline's near-term cash burn.

Growth in Newark is especially noteworthy

The most notable part of JetBlue's growth plan is its expansion at Newark Liberty International Airport (just outside of New York City). Whereas many of its new routes to Florida from various cities in the Northeast and Midwest may prove temporary, JetBlue appears more serious about long-term growth in Newark, building on its strong brand recognition in the area and capitalizing on Southwest Airlines' decision to end service there last fall.

Today, JetBlue flies from Newark to its Boston hub and a handful of destinations in Florida and the Caribbean. Over the next two months, it plans to add up to 15 additional daily departures from Newark to nine new cities: Austin; Charleston, South Carolina; Jacksonville, Florida; Las Vegas; Los Angeles; Phoenix; San Diego; San Francisco; and Sarasota, Florida. Operating these routes will require at least a dozen aircraft.

JetBlue's growth in Newark is a direct challenge to United Airlines, the airport's dominant carrier. JetBlue will break United Airlines monopolies on several routes. Most of the other markets it is entering are comfortable duopolies (with United and one other carrier) today.

The biggest threat to United is in the Newark-Los Angeles and Newark-San Francisco markets, where JetBlue plans to launch its popular Mint premium service, which features a premium cabin with 16 lie-flat seats. Today, United is charging over $5,000 roundtrip for business-class fares in these markets. While JetBlue will fly these routes just two or three times a day, compared to a dozen or more daily roundtrips for United, Mint premium fares could start below $1,000 roundtrip. United will be forced to choose between allowing JetBlue to carve out a profitable niche and engaging in a damaging fare war it can ill afford.

United's woes deepen

While the Newark-Los Angeles and Newark-San Francisco routes are particularly lucrative, as a whole, JetBlue's growth in Newark and other markets threatens a relatively small proportion of United's route network. That said, tougher competition will add to the headwinds that United's already-battered business faces.

In normal times, United Airlines would respond aggressively to a competitive intrusion like what JetBlue plans. By matching or even undercutting JetBlue's fares, United would seek to prevent its rival from gaining a foothold at one of its most important hubs.

However, United Airlines has the greatest reliance on international routes of any U.S. airline. It also relies on high-fare business travelers for much of its revenue and profit. With international demand and business travel expected to return slowly, United was already facing the weakest demand outlook of any major U.S. airline. Furthermore, its balance sheet is significantly weaker than that of JetBlue. Right now, a fare war would probably hurt United much more than JetBlue.

Trying to expand in a competitor's hub during a period of historically weak demand is an incredibly bold move by JetBlue. But if it works, it could pay off enormously in the long run, primarily due to the high profit potential of JetBlue's Mint premium service.