JetBlue (NASDAQ:JBLU) got its start in New York, but since 2008 it has made a big push to grow in Boston. In fact, it is now the largest carrier in Boston by a wide margin -- unlike in the much-larger New York market, where all three legacy carriers have hubs.
On Tuesday, JetBlue made it clear that it sees plenty of room for further growth in Boston. The chic discount carrier announced a number of upgrades to its Boston service, which will help it solidify its dominance in that market.
Back to growth in Boston
When I met with Marty St. George -- JetBlue's executive vice president for commercial and planning -- last week, he emphasized that the airline still saw plenty of growth opportunities across all of its six focus cities, and he called out Boston in particular.
I found that interesting, because while JetBlue has grown significantly in Boston since 2008, its growth there has tapered off in the past year. It added two daily flights to Cleveland in April, but otherwise, JetBlue's only new routes from Boston in the last 12 months were seasonal, once-weekly flights to the Caribbean. Most of JetBlue's recent growth has been focused on Florida.
But JetBlue announced Tuesday that it would add flight frequencies on a dozen routes from Boston in early 2016. Most of the additional flights will be to destinations in Florida and the Caribbean, but the company is also adding flights on more business-oriented routes to New York, Cleveland, and Raleigh-Durham, North Carolina.
JetBlue also announced one new business-oriented route. It plans to start twice-daily nonstop flights between Boston and Nashville next spring. JetBlue served Nashville from 2006 to 2008 with flights from New York. While it didn't work the first time around, JetBlue's route network and appeal to business travelers have both improved considerably since then, so I expect this new route to succeed.
Stepping up its service
Beyond starting service to Nashville and adding flights on a handful of other routes, JetBlue is also taking another big step to bolster its appeal in Boston -- particularly to business travelers. In March, the airline plans to expand its extremely popular Mint premium service to Boston, with up to three daily nonstop flights to San Francisco. It also intends to offer up to three daily nonstop Mint flights to Los Angeles starting next fall.
In addition to having 143 "core" seats, JetBlue's Mint airplanes feature a 16-seat premium section with extremely comfortable lie-flat seats. (I got to try one out for a few minutes last week!) Four of those seats are actually semiprivate suites.
JetBlue began flying its first Mint aircraft between New York and Los Angeles just one year ago, but the service quickly became hugely popular. In addition to seeing strong demand from small and medium-size businesses and wealthy leisure travelers, as it expected, JetBlue has received a surprising amount of interest from large corporations that were previously loyal to the legacy carriers.
Despite this strong demand, JetBlue has kept its opening price point for Mint lie-flat seats at $599. But after a series of increases, pricing tops out at $1,399 one-way, compared to $999 originally. Nevertheless, JetBlue's Mint seats frequently sell out.
Based on JetBlue's success with the Mint product in New York, it seems likely to be successful in Boston as well. It will be interesting to see how quickly demand ramps up, though. Whereas the legacy carriers started offering flat-bed seats on the New York transcontinental routes long before JetBlue, JetBlue is pioneering the flat-bed premium market in Boston.
That comes with advantages and disadvantages. From a product-quality perspective, JetBlue will have an even bigger margin of superiority over its competitors in Boston. On the flip side, it does need to stimulate the premium travel market, since it doesn't really exist today. But given the high quality of the Mint product compared to the competition in Boston, along with the reasonable starting price, that shouldn't be too hard.
As demand builds for the Mint service in Boston, I expect JetBlue to add flights on both the San Francisco and Los Angeles routes. By 2017, I expect JetBlue to offer at least four -- and up to six -- daily round trips on each route.
By adding new flights and introducing its Mint service in Boston, JetBlue is making itself even more indispensable to fliers there, particularly business travelers. This is likely to drive a virtuous cycle of rising market share and route network expansion, boosting JetBlue's profit.