JBLU to leave ATL

[lowecur]

Effective 12/5/03, per another message board.

 

[Eagleflip]

Paging General Lee, Paging General Lee..

So, General, do you declare victory now or will you wait until those upstart AirTran folk fold their cards and walk away too?

Juuuust kidding. While the boss said that we could have stayed there and made a little money, there were simply better uses for the jets elsewhere. And so we leave ATL, Hartsfield-Jackson, or whatever the name will be next week.

But to paraphrase Gov. Ahhnold..."we'll be back."

Sometime.

 

[IB6 UB9]

I expect the General will need some time to carefully draft his response. It will have to look diplomatic ("I hope we all continue to do well") while still claiming victory ("we will see and we did see") and, of course, still include the Delta Advertisement (see any previous 1300 posts).

 

[jetblue320]

I expect the General will need some time to carefully draft his response. It will have to look diplomatic ("I hope we all continue to do well") while still claiming victory ("we will see and we did see") and, of course, still include the Delta Advertisement (see any previous 1300 posts).

And don't forget the ever popular "and we fly to all three NYC airports" !!!

Just razzing ya General, you know that. We luv ya Man.

See ya

JB320

 

[FDJ2]

Why would JBLU initiate service from ATL only to throw in the towel 6 months later? I assume it had to cost $$$ to start up the ATL flying, what with all the fan fare and all.

 

[jetblue320]

Why would JBLU initiate service from ATL only to throw in the towel 6 months later? I assume it had to cost $$$ to start up the ATL flying, what with all the fan fare and all.

Well, IMHO (and please note this is my opinion and not a known fact) it was a small dose of "we can play that game too" kinda business. As a general rule, we try not to antagonize others by using predatory practices but maybe it was just simply a case of, hey, we aren't some undersized airline that is gonna get bullied out of business by the big boys. Maybe it was not that at all.
But, look at what the reality ended up being.....DL and AAI raised their stakes with additional frequencies, lowered their fares to compete, and probably spent money and effort to counter our service. So in that arena, I'd call that a success on JB's part. If nothing else, it got the flying public to open their eyes. A lot of folks will counter that with the standard "well, JB was losing money and they just decided to leave" and the truth is, as stated in public statements, we weren't losing money, but we weren't making enough to warrant service there anymore. Plus, we can make more money elsewhere, plain and simple. But, I think the competition learned that we can play, and play hard.

I am curious how the die-hard DL passengers feel now that DL has retracted the added service and raised their fares back to the high that they were before, if in fact that they have. I don't watch their fares, but I feel sure that they are back to pre-JB in ATL prices.

It was fun (one of our core values) nevertheless watching the other guys scramble for market share that was their's all along! It all came about just about the time DL announced the introduction of Song. We had a lot of fun with that. We named a plane "Song Sung Blue", we passed out a couple thousand baseball hat's with a musical note on the front with some catchy logo's on them, and other nonsense all in the name of increasing morale and heightening awareness amongst ourselves. I'd say the entire campaign was a smashing success, at least from our point of view.

As far as FDJ2's question about the money it took to start service to ATL, I think the only money spent and not recovered in some form or fashion was on the baseball hat's! I still wear mine faithfully everyday as a reminder of humility. Never stop looking over your shoulder!!

See ya

 

[flyingitalian]

If you are truely honest you will realize that it costs a lot of money to open a new city. Hey just admit it you are right when you say there are plenty of places to make money. That is a 100% correct statement, however to still be honest the company in new and will make mistakes, and hey this was one of them. The mistake is not they got beat, or beat the other guy, the mistake is that there are easier ways to make money so why bang your head against the wall. I think you will see Jet Blue hesitate before going into a lion's den next time.

 

[lowecur]

flyingI

The lions den has nothing to do with it. B6 made a mistake by going into a feeder hub for both DL and FL, without having a feeder network in place. Let's face it, many people who board those planes to LAX, SFO, and OAK are fed into the system from smaller markets around ATL. B6 never had a chance at those customers.

B6 will be back, but they will establish their feeder network first with 190 service. FL will keep those prices low for the present, thus continuing to make those markets low fare for ATL pax. DL will continue to lose money on those markets until they get a renegotiated contract.

 

[SpeedBird]

I think the guys who's deserves a lot of credit for jetblue's early withdrawal is not Leo Mullin, but Joe Leonard.

I'm sure that David & Dave, while planning for this start-up did not expect that AirTran would expedite it's transcon service by subcontacting with Ryan Air for A320s which could almost immediately respond once jetBlue announced their ATL-LGB route expansion. By not making this move AirTran would of had to wait till June 2004 before responding with its own aircraft and crews. That would have been enough time for jetBlue to build the route up and compete effectively enough against Delta, and perhaps put AirTran at the disadvantage.

I also believe that this is what makes ATL a somewhat unique fortress hub, since it also possesses a very capable LCC carrier that also calls it "home." The only other two fortress hubs that would have the same situation are Denver and Salt Lake (I'm sure I've forgotten at least one other).

While the General will most certainly disagree with me, I do think the lion's share of the credit goes to AirTran and Mr. Leonard for jetBlue's premature exit from ATL.

I also believe that AirTran has made a big coup in DFW by picking up four gates and getting a potentially good foothold into Dallas-Ft. Worth ahead of jetBlue. I am not sure when jetblue will show up there, but they will have to work extra hard to overtake AirTran as the preferred LCC alternative to AMR once they do arrive.

My hat's off to everyone at AirTran!

 

[skykid]

Excellent post Speedbird! I think you nailed it.

 

[FDJ2]

jetblue320

I guess that's an interesting way of looking at it. Some might think that the concept of showing a little muscle and then running out of town when the fights on a little odd, but to each his own. Regardless, I hope enjoy your hat as a momento of the day you entered into the fray.

 

[FDJ2]

While the General will most certainly disagree with me, I do think the lion's share of the credit goes to AirTran and Mr. Leonard for jetBlue's premature exit from ATL.

Hey, no need to wait for the General to disagree with you, I will. Perhaps the General can put up some stats to back me up, but I believe it was DAL that put up a great deal more added capacity at a competitive price than Airtran to beat back the big bad blue force from the north.

 

[SpeedBird]

FDJ2:

I most definitely agree with you about the tremendous amount of additional capacity that Delta added to the market. But I believe that jetBlue planners were expecting that to happen when they decided to jump into the market. However, I've got $20 bucks that says they were caught by surprise with AirTran's move to employ wet-leased A320s and started ATL-LA service BEFORE jetBlue's inaugural flight.

There are enough disaffected ATL passengers who will never step foot on a DAL jet, unless forced to, and they were the passengers that were up for grabs to the first LCC that could introduce a competitive service in this market. JetBlue didn't have to convert the whole town, just enough to fill a 450-500 seats a day. As mentioned earlier in this thread, FL's strong hub feed in ATL helped make Leonard's move with A320's more of challenge than Delta's capacity-dumping counterattack, since AirTran had already won over many of these Delta refugees in other markets.

Of course, this just one man's opinion.

 

[Ty Webb]

Speedbird hit it right on the money. But, while credit should go to Joe Leonard, it should also be recognized that Joe Leonard needed the approval of the AirTran Pilots' union, the NPA.

AirTran management came to the pilot group before JB hit ATL, and said, in short, "We need to start service to the West Coast NOW, not wait until the new aircraft arrives, next year!"

The AirTran NPA (union) BOD gave the Company the ability to subcontract with Ryan until the new planes show up, which allowed us to start LAX, LAS, SFO, etc.

That decision will pay off for the AirTran pilots, when the new planes show up, and are placed on those routes, per the letter of agreement.

While I think JB is doing very well, let's call this ATL thing what it is- a mistake. Why else waste the resources, and then back down in the face of competition? All you are doing is teaching DAL and AirTran that you will back down if they meet the threat- not good.

Who would have thought that I would ever write a post that had DAL and AirTran working together on anything?

Medic!

 

[skirt]

According to David Neeleman, it was indeed Airtran, not Delta, that made the ATL market unattractive to JetBlue. Here are some verbatim comments from the Oct. 23rd analyst conference call:

Jim Parker - Raymond James - Analyst:

Good morning, guys. David, you mentioned about taking aircraft out of Atlanta, Oakland Oakland, Long Beach to Boston. And you actually mentioned shareholders, how that would be good for them. And that's very refreshing, because all airlines don't mention shareholders. What does that imply, though, about future expansion and going into major airline hubs? Is there any major implication how maybe you could do that or maybe it's better to do other things right now?

David Neeleman - JetBlue - CEO and Director

I think it depends on the situation, Jim. There are certain markets where you may only have one airline in there between. I think where we got caught a little bit is the fact that Delta was in there in a big way. Air Tran wasn't serving it and then Air Tran started flying it, and then it became kind of a war between Air Tran and Delta. We certainly with our cost structure could have stayed in there for a long time just to kind of prove a point, but we're not into proving points. We're just into making money. So we thought it was it was a lot better allocation of assets.

But there are other markets that we think can be very attractive to us and that are maybe more strategically important. So that I wouldn't necessarily say that we made a decision not to go into those hubs. But I will tell you that it will be much easier and much less risky for our shareholders to do it with the 190. The 190 I think will help introduce service in markets at a significantly lower cost and keep the frequency at a really high level that will allow us to do that and many other things. So that I think it's going to give us a lot of flexibility that we may not have today, but we're still doing pretty dang good. So we're excited about that."

John Owen - JetBlue - EVP and CFO :

On the 190s, we did an assumed average stage length. And we're assuming in our plan that the 190 will fly an average day's length of around 600 nautical miles. At the same assumed average stage length, the 190 in our analysis was about 1 cent in CASM higher than the A320 for the comparable stage length.

Tom Marcico Analyst:

Then your earlier comments in reaction to one of the questions about your ability to put into 190s into other markets and have significantly lower costs. What does that relate to?

David Neeleman - JetBlue - CEO and Director:

Are you talking about like fortress hubs or things like that?

Tom Marcico Analyst:

Yes. You mentioned Atlanta.

David Neeleman - JetBlue - CEO and Director :

You look at the trip cost difference. It's maybe -- I don't know exact percentage off the top of my head, but maybe 35, 40% cheaper per trip. So when you have a hundred seats to be able to do that. And a lot of these hubs you have to have frequency to make a difference. And so you can start with a frequency level which is much higher with significantly lower risk on a per trip basis if you're just flying 100 people a flight on an 190 versus 100 people a flight on a 320.


Skirt - the newhire F/O:

Probably more than you wanted to know, but the answer is that Airtran made the Atlanta market unattractive for now, not Delta. The 190 will bring JetBlue back to Atlanta in the coming years.

Skirt

 

[jetblue320]

Question

The lions den has nothing to do with it. B6 made a mistake by going into a feeder hub for both DL and FL, without having a feeder network in place. Let's face it, many people who board those planes to LAX, SFO, and OAK are fed into the system from smaller markets around ATL. B6 never had a chance at those customers.

B6 will be back, but they will establish their feeder network first with 190 service. FL will keep those prices low for the present, thus continuing to make those markets low fare for ATL pax. DL will continue to lose money on those markets until they get a renegotiated contract.

lowecur or somebody, help me out, who is FL? Haven't seen that one before. Is it the two letter for Airtran? I've seen AAI used for Airtran because that is their stock ticker symbol.

Thanks.

 

[G4G5]

Airtran was the airline that was going to be the most adversly effected with B6's success in ATL. Lenord was smart, it's one thing to fight on a daily basis against DAL. It's another to allow a competing LCC in your back door. The 737's from Ryan, was a smart move. The other thing to remember is Lenord is not going away. He already has his version of the ERJ-190, now he's ging out and getting the larger equipment.

IMHO B6 underestimated Lenord. My guess is they won't make that mistake again.

ATL is extremely difficult, that's why LUV has decided to not to bother and take a stronghold in BHM.

Speaking of LUV, Lenord may have 4 gates in ATL but that's is going to prove much more difficult then just beating AA. KDAL belongs to LUV and unlike BHM, DAL is right down town and an easy LCC alternative Vs Airtran and their 4 gates at DFW.

AA makes DFW work because of the vast network, AA also has the Eagle factor to compete with any LCC. The same weapon that DAL will no doubt use (has anyone else seen the planned ASA/Comair expansion at DFW).

While getting kicked out of Atl is a blemish on B6, at least Dave was smart enough to take the assets to a place where he can make more money. I believe the saying is, Live and Learn

 

[FDJ2]

then it became kind of a war between Air Tran and Delta.

It sounds like Delta had something to do with it. I very much doubt that JBLU got chased out of the ATL market by a couple of leased A320s, but maybe that's all it takes. JBLU was going to have to deal with a war with DAL out of ATL anyways, so I don't see how adding a couple of Air Tran flights into the mix made that much of a difference, in the end it's still war. I guess JBLU just saw other routes they could cherry pick for now. At the end of the day, it really doesn't matter what we think about it, the future success or failure of our airlines will not hedge on what is written here. It's just fun getting a few jabs in. No harm, no foul. Y'all take care.

 

[lowecur]

320

FL is the code for Airtran. Just like B6 & DL.

 

[Ty Webb]

Good point, but I think you mean Airbuses from Ryan. We are getting B737's for ourselves, starting in June.


The other thing to remember is Lenord is not going away. He already has his version of the ERJ-190, now he's ging out and getting the larger equipment.

Another good point.

Speaking of LUV, Lenord may have 4 gates in ATL but that's is going to prove much more difficult then just beating AA. KDAL belongs to LUV and unlike BHM, DAL is right down town and an easy LCC alternative Vs Airtran and their 4 gates at DFW.

Here I think you mean DFW, not ATL (we have around 25 gates in ATL).

We go to many places that SWA doesn;t go, so while they are a powerhouse, if you want an AAlternative to go to BOS, PHL, DCA, DEN, LGA, EWR, and other places, we're aavailable, not to mention the smaller cities like ICT, MCI, MLI, Freeport, SAV, MYR, GSO, PNS, etc.


AA makes DFW work because of the vast network, AA also has the Eagle factor to compete with any LCC. The same weapon that DAL will no doubt use (has anyone else seen the planned ASA/Comair expansion at DFW).

You could say the same things about competing against Delta at ATL. We also have RJ's available to us though AWAC.

We are short on planes right now . . . yet we are expanding at DFW, so the powers that be (ie Bob Fornaro and Joe Leonard) obvioulsy believe that we are making the right move.

We'll see, but so far, the smart money is betting with them, not against them.