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JetBlue Adds 4 Cities to Its Route Map, Following Rivals

By Adam Levine-Weinberg - Dec 20, 2020 at 12:34PM

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Leisure-oriented airlines are preparing to capitalize on an expected recovery in demand in 2021.

The COVID-19 pandemic has decimated air travel this year. Paradoxically, though, that has led a number of airlines (particularly low-fare carriers) to expand their route maps. Southwest Airlines ( LUV -2.34% ) chief commercial officer Andrew Watterson explained it best, noting that entering new markets allows Southwest to tap into new revenue sources, whereas existing markets don't need as much service today as they did before the pandemic.

Indeed, Southwest Airlines has gotten aggressive about entering new markets this year. Now, JetBlue Airways ( JBLU -1.80% ) is looking to get in on the action, rolling out plans to start service to four new cities in the first half of 2021.

A JetBlue Airways plane preparing to land

Image source: JetBlue Airways.

Searching for leisure travel demand

During the first wave of the pandemic this spring, nearly all air travel ground to a halt in the U.S. At the nadir in mid-April, the Transportation Security Administration (TSA) processed just 4% of its usual volume of airport passenger screenings.

Many corporate executives expect business travel to remain severely depressed for years, or even permanently. However, a fair amount of leisure travel has already resumed. Over the past week, TSA passenger screenings have averaged close to a third of year-ago levels. That's still a huge drop, but it's a big improvement compared to April.

Considering that the pandemic is still raging, the resumption of leisure travel points to substantial pent-up demand. Leisure travel is likely to accelerate significantly during 2021, as the rollout of COVID-19 vaccines starting this month should tame the pandemic by next summer or fall.

Not surprisingly, airline executives are eager to tap into this expected demand pool. For example, since the beginning of 2020, Southwest has announced that it will enter 12 new markets. It has started flights to some of those cities already, while it will launch service to others in the first half of 2021.

A Southwest Airlines plane preparing to land, with mountains in the background

Southwest Airlines has significantly expanded its route map this year. Image source: Southwest Airlines.

JetBlue follows Southwest's lead

Like Southwest, JetBlue has launched lots of new routes over the past six months. But up until last week, its route experiments have mainly connected cities where the airline already had other flights. JetBlue did begin flying to Georgetown, Guyana, this month, but that route was first announced last year. The only new destination it had announced in 2020 was Montrose, Colorado, gateway to the Telluride ski area.

JetBlue will add at least four new destinations to its route map in the first half of 2021, though. First up is Miami, one of the cities that Southwest Airlines entered just last month. Beginning on Feb. 11, JetBlue will offer up to 14 daily round-trips to Miami from Boston, New York, Newark, and Los Angeles. Notably, the Los Angeles flights will operate twice a day and feature JetBlue's highly acclaimed Mint premium service. The low-fare carrier will also start flying to Key West, Florida, from New York and Boston in February. JetBlue will operate those routes during the winter season only, with flights four days a week.

On April 15, JetBlue will launch daily service to Guatemala City from New York. The airline had announced that route in January but delayed the start of service because of the pandemic. Lastly, it will begin flying to San Jose del Cabo, Mexico, on June 17. It plans to offer daily service to the popular beach resort from New York and Los Angeles.

What it means for investors

JetBlue has been one of the hardest-hit airlines during 2020. The company's route network is heavily concentrated in New York City and Boston. The pandemic ripped through both cities (especially New York) with a vengeance this spring. Furthermore, state and local officials in the Northeast have been aggressive about combating the spread of COVID-19 via travel restrictions and stay-at-home orders. That has dampened travel demand relative to parts of the U.S. where government officials took a more laissez-faire stance.

But JetBlue could also recover faster than many other airlines, as leisure travel accounts for the bulk of its revenue. Indeed, once the pandemic gets under control, the carrier could benefit from a surge in leisure travel demand originating from New York and Boston, as many people gave up their vacations in 2020. CEO Robin Hayes recently said that he expects the carrier's leisure business to fully recover by the end of 2021.

Adding new routes to leisure destinations like Miami, Key West, and San Jose del Cabo will help JetBlue make the most of rebounding demand next year. That should provide some relief for the company's long-suffering shareholders.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
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