JetBlue Wants Regulators To Review Transatlantic Joint Ventures

For years JetBlue has been talking about potentially launching transatlantic flights.

Their existing A321s should already have the range to operate some transatlantic flights, though they’ll soon take delivery of A321neos, which have even more range, and open up more routes. On top of that, the airline has the option to convert some A321neo orders to A321LR orders, and that plane has even more range.

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Personally I feel like JetBlue needs to either launch transatlantic service or just stop talking about it, because they’ve been talking about it for years.

JetBlue did recently reveal that if they were to launch transatlantic flights, Boston to London would be the most likely first route they’d operate. That makes sense, given that Boston is a hub for them, and it’s also one of the shortest transatlantic flights out there.

Anyway, yesterday JetBlue CEO Robin Hayes made some interesting comments regarding transatlantic service, and I’m not fully sure what to make of them. Essentially Hayes is concerned about the control of important foreign markets that the “big three” US airlines have through their joint ventures.

As reported by Reuters:

“We believe that regulators should be doing everything they can to make it possible for new players and new models to have a fair shot at competing,” Hayes said.

Hayes believes competition authorities in the United States, the UK and the European Union should force slot divestitures to create a level playing field for new entrants, particularly in the wake of major consolidation among U.S. carriers over the past decade.

Generally I do think the “big three” US airlines have too much control, though personally I view that as more of an issue in the domestic market than the transatlantic and transpacific markets.

First of all, Hayes notes that we’re at “risk of decades of high fares because of legacy transatlantic partnerships.” Transatlantic airfare is as low as it’s ever been, in spite of the “big three” and their partners controlling 80% of the market share. That’s for a couple of reasons:

• There’s simply too much capacity (personally I see transatlantic demand decreasing before it increases, so the only solution would be to cut capacity)
• Transatlantic ultra low cost airlines have kept the “big three” and their joint ventures in check, though it’s clear the ultra low cost business model hasn’t necessarily been working that great

I do see merit to Hayes’ comments regarding wanting slot divestitures at congested airports, but I’m just not sure how practical that is.

For example, Heathrow slots are worth tens of millions of dollars each. You can’t just take those away from airlines and reassign them given what they paid, and I also don’t think it would even be economical for JetBlue to lease Heathrow slots from other airlines, given how much that would cost them per flight.

JetBlue is creative, and I feel like there are lots of other ways they could make transatlantic service work. If their product is good enough, they should be able to make a route work to one of London’s lower cost and less congested airports. The same is true in other major European markets.

So yeah, I’m not disagreeing with Hayes here, but I also feel like he’s not being completely realistic in terms of what regulators are going to do. If he’s waiting for regulators to control the “big three” and their joint ventures, I think JetBlue will never launch transatlantic flights.

Maybe that’s exactly his goal — to continue making excuses for why JetBlue won’t launch transatlantic flights (which may just be a good business decision), because it sure doesn’t seem like it’s happening anytime soon.

What do you think — will JetBlue ever follow through with transatlantic flights, and is there merit to what Hayes is saying?