AAflyer
Well-known member
- Joined
- Nov 26, 2001
- Posts
- 1,493
Rude Welcome Awaits JetBlue
American and United Airlines have slashed ticket prices on routes the low-cost carrier will fly out of O'Hare beginning in January
By Julie Johnsson
Tribune staff reporter
November 6, 2006
JetBlue Airways won't enjoy a honeymoon, or much love, from its competitors when its jets enter Chicago's O'Hare International Airport for the first time on Jan. 4.
David Neeleman, the low-cost carrier's chief executive, is challenging United Airlines and American Airlines, the airport's two dominant carriers, on their busiest routes out of the Windy City: flights to New York City and Los Angeles.
The world's two largest airlines have a history of lashing back at competitive threats from upstart carriers. And they're already lowering prices on flights between Chicago and New York in anticipation of JetBlue's arrival.
Welcome to Chicago, JetBlue.
After trying for years to get into O'Hare, JetBlue faces a tough slog, perhaps one of the toughest in its six-year history.
With only five flights planned a day, it will be a tiny player facing a protracted fare war just to survive in Chicago, a key element in the New York-based airline's expansion strategy.
So far, Neeleman is unfazed, even as he watches United and American gird for battle.
"We get matched everywhere [on fares]," the 47-year-old executive said in an interview. "There's a big market there at these fare levels for everyone. We think we'll do well."
The winner in this fight? The consumer, of course.
American Airlines rolled out a special $59 fare each way on flights from Chicago to New York only hours after JetBlue announced last month that it would charge that price. United matched the two carriers on Friday.
That's a savings of nearly 65 percent from the full fares the two major carriers charge, and a sign of the chilly reception in store for the newcomer, travel experts say.
"They're going to hit [JetBlue] with everything they've got, including the kitchen sink," said Tom Parsons, CEO and founder of BestFares.com.
He predicts that United and American will welcome JetBlue to O'Hare with extended fare sales or by offering double or triple miles to frequent fliers who travel with them to cities where JetBlue flies.
The two airlines won't reveal their plans but vow to rise to the competitive challenge.
"In order to remain competitive and keep our market share, we have to be very competitive with our fares," said Tim Wagner, spokesman for Ft. Worth-based American.
"We look forward to competing vigorously with JetBlue and all the carriers at O'Hare," added Megan McCarthy, a spokeswoman for Elk Grove Township-based United.
The question is how JetBlue and Neeleman, its founder, will respond to the onslaught from United and American at their fortress hubs. In 2003, the low-cost carrier retreated from Atlanta after only six months when it ran into stiff competition from Delta Air Lines at its home hub.
But Neeleman is confident the airline will do better here. One big advantage, he said, is the well-traveled route from Chicago to New York.
"Atlanta is an overused example," he said. "We'll get enough business to fill our measly five flights a day just based on our strength in New York."
JetBlue will command the lion's share of traffic from O'Hare to John F. Kennedy International Airport when it launches service next year, making it an attractive choice for passengers seeking to connect to international flights. It will account for 63 percent of the available seats between the two airports to American's 17 percent, according to data compiled by Back Aviation Solutions. United does not fly to JFK from Chicago.
JetBlue also boasts one of the youngest fleets in the U.S. airline industry and amenities such as leather seats, 36 channels of DirecTV and Dunkin' Donuts coffee.
While its perks and hip image appeal to leisure travelers, JetBlue may find it tougher to lure travelers flying to New York or Los Angeles for business.
United and American offer near-hourly service to LaGuardia Airport and Los Angeles International Airport. And those airports are located closer to commerce centers than JFK or Long Beach Airport, where JetBlue flies.
Unlike United and American, JetBlue isn't affiliated with any global marketing alliances. That's a big negative for road warriors who like to convert the miles they rack up into overseas trips to exotic locales.
Its amenities "don't make up for miles, chances to upgrade, easier-access lines through security," said Steve Berg, executive vice president for sales for Effen Vodka, who treks to New York at least once a month. "All those things are more important to myself and most frequent travelers that I've talked to."
But JetBlue has one thing its rivals can't match, Neeleman said: "Our people are the greatest. It's an easy way to travel."
Still, JetBlue is retrenching after breaking even in the third quarter on revenue of $628 million. With cash reserves of $456 million, it has less leeway to sustain money-losing service than do United and American, with $4.1 billion and $5.1 billion in unrestricted cash, respectively.
It's not clear whether Neeleman has the resolve to survive a sustained price war to win over travelers like Berg. But he's optimistic.
"This is the epicenter for JetBlue," Neeleman said of the JFK-to-O'Hare route. "We feel much better about our chances here. On almost any route out of [JFK], we do well."
Indeed, the newcomer shouldn't have any trouble filling its planes, said Ray Neidl, analyst with Calyon Securities, calling from O'Hare, where he'd been waiting more than two hours for a seat on a flight to New York.
"There are at least 50 people standing by for the flights," he said. "That tells you demand is strong. ... Chicago's big enough. They can make a go of it here."
American and United Airlines have slashed ticket prices on routes the low-cost carrier will fly out of O'Hare beginning in January
By Julie Johnsson
Tribune staff reporter
November 6, 2006
JetBlue Airways won't enjoy a honeymoon, or much love, from its competitors when its jets enter Chicago's O'Hare International Airport for the first time on Jan. 4.
David Neeleman, the low-cost carrier's chief executive, is challenging United Airlines and American Airlines, the airport's two dominant carriers, on their busiest routes out of the Windy City: flights to New York City and Los Angeles.
The world's two largest airlines have a history of lashing back at competitive threats from upstart carriers. And they're already lowering prices on flights between Chicago and New York in anticipation of JetBlue's arrival.
Welcome to Chicago, JetBlue.
After trying for years to get into O'Hare, JetBlue faces a tough slog, perhaps one of the toughest in its six-year history.
With only five flights planned a day, it will be a tiny player facing a protracted fare war just to survive in Chicago, a key element in the New York-based airline's expansion strategy.
So far, Neeleman is unfazed, even as he watches United and American gird for battle.
"We get matched everywhere [on fares]," the 47-year-old executive said in an interview. "There's a big market there at these fare levels for everyone. We think we'll do well."
The winner in this fight? The consumer, of course.
American Airlines rolled out a special $59 fare each way on flights from Chicago to New York only hours after JetBlue announced last month that it would charge that price. United matched the two carriers on Friday.
That's a savings of nearly 65 percent from the full fares the two major carriers charge, and a sign of the chilly reception in store for the newcomer, travel experts say.
"They're going to hit [JetBlue] with everything they've got, including the kitchen sink," said Tom Parsons, CEO and founder of BestFares.com.
He predicts that United and American will welcome JetBlue to O'Hare with extended fare sales or by offering double or triple miles to frequent fliers who travel with them to cities where JetBlue flies.
The two airlines won't reveal their plans but vow to rise to the competitive challenge.
"In order to remain competitive and keep our market share, we have to be very competitive with our fares," said Tim Wagner, spokesman for Ft. Worth-based American.
"We look forward to competing vigorously with JetBlue and all the carriers at O'Hare," added Megan McCarthy, a spokeswoman for Elk Grove Township-based United.
The question is how JetBlue and Neeleman, its founder, will respond to the onslaught from United and American at their fortress hubs. In 2003, the low-cost carrier retreated from Atlanta after only six months when it ran into stiff competition from Delta Air Lines at its home hub.
But Neeleman is confident the airline will do better here. One big advantage, he said, is the well-traveled route from Chicago to New York.
"Atlanta is an overused example," he said. "We'll get enough business to fill our measly five flights a day just based on our strength in New York."
JetBlue will command the lion's share of traffic from O'Hare to John F. Kennedy International Airport when it launches service next year, making it an attractive choice for passengers seeking to connect to international flights. It will account for 63 percent of the available seats between the two airports to American's 17 percent, according to data compiled by Back Aviation Solutions. United does not fly to JFK from Chicago.
JetBlue also boasts one of the youngest fleets in the U.S. airline industry and amenities such as leather seats, 36 channels of DirecTV and Dunkin' Donuts coffee.
While its perks and hip image appeal to leisure travelers, JetBlue may find it tougher to lure travelers flying to New York or Los Angeles for business.
United and American offer near-hourly service to LaGuardia Airport and Los Angeles International Airport. And those airports are located closer to commerce centers than JFK or Long Beach Airport, where JetBlue flies.
Unlike United and American, JetBlue isn't affiliated with any global marketing alliances. That's a big negative for road warriors who like to convert the miles they rack up into overseas trips to exotic locales.
Its amenities "don't make up for miles, chances to upgrade, easier-access lines through security," said Steve Berg, executive vice president for sales for Effen Vodka, who treks to New York at least once a month. "All those things are more important to myself and most frequent travelers that I've talked to."
But JetBlue has one thing its rivals can't match, Neeleman said: "Our people are the greatest. It's an easy way to travel."
Still, JetBlue is retrenching after breaking even in the third quarter on revenue of $628 million. With cash reserves of $456 million, it has less leeway to sustain money-losing service than do United and American, with $4.1 billion and $5.1 billion in unrestricted cash, respectively.
It's not clear whether Neeleman has the resolve to survive a sustained price war to win over travelers like Berg. But he's optimistic.
"This is the epicenter for JetBlue," Neeleman said of the JFK-to-O'Hare route. "We feel much better about our chances here. On almost any route out of [JFK], we do well."
Indeed, the newcomer shouldn't have any trouble filling its planes, said Ray Neidl, analyst with Calyon Securities, calling from O'Hare, where he'd been waiting more than two hours for a seat on a flight to New York.
"There are at least 50 people standing by for the flights," he said. "That tells you demand is strong. ... Chicago's big enough. They can make a go of it here."
uke:
