An optimistic tale

posted on 24th November 2020
An optimistic tale

JetBlue has faced the same pain as airlines around the world during the pandemic but has still launched 60 new routes. Edward Robertson finds out how.

For the majority of airlines, the Covid-19 virus that has swept the world has led to them retreating from the skies as they focus on the key money-making routes that they are still permitted by governments to operate.

So it is interesting to see jetBlue’s response. CEO Robin Hayes says the airline has been as badly hit as its rivals, to the extent that he believes only losing about $6 million a day at the time of writing is a considerable bonus compared to the $50 million daily loss the airline incurred at the start of the pandemic.

Speaking in an online interview at WTM Virtual in November, he adds despite the losses and the global issues the pandemic has caused to the world’s aviation industry, the American LCC has still announced the launch of 60 routes during the crisis.

Hayes says: “I never thought I’d say we’d do 60 new routes in a year as I never thought I’d see more than 10 and yet we’ve done 60 and there’s probably more to come.”

He adds much of the reason behind the strong programme of new route launches is down to the fact that the airline takes the majority of its bookings directly online which provides it with a wealth of data, from which destinations customers are looking for to the price they are prepared to pay.

While he admits this data must be weighed up against how uncertain the current situation is in the US, he adds providing his staff have the right attitude then they can make a success of any of the new routes which are not only domestic but stretch down to the Caribbean and Latin America.

“Nimble is definitely the new word for 2020,” Hayes says. “There’s a whole load of uncertainty in the planning process that we’ve had to adapt to … but I feel now we are looking at things and responding to them.”

He adds this attitude means the airline can now launch a new route in about a week and can still generate bookings as consumers leave their decision-making to the last minute, due to the ongoing uncertainty during the Covid-19 era.

Three-pronged response
While Hayes may appear relatively upbeat about the situation as it unfolds, he adds jetBlue was hit hard by the pandemic, with passenger volumes falling to between 3 and 5 per cent in March and April, creating “the most devastating set of events that any of us have ever faced”.

However, the airline was quick to respond with a three-part strategy that was implemented in the spring.

Hayes says the first response was to ensure that both staff and passengers taking any remaining flights felt safe with a number of health and safety measures, including being the first airline in the US to enforce mandatory face coverings for travellers unless they have a valid excuse.

“That was pivotal in helping more people have the confidence to fly,” Hayes says.

Secondly, staff moved to protect the airline’s financial security by cutting cost swhile also raising new forms of liquidity, which was considerably helped thanks to jetBlue’s situation when Covid-19 struck.

Hayes says: “We were very aggressive in raising new forms of liquidity. One of the benefits of having a fleet that’s largely your own and not leveraged against previous debt is we were able to leverage it against debt, so we have plenty of cushion.”

Finally, he adds the airline took a positive approach as to how it would emerge from the pandemic and it is this attitude that he credits with the introduction of the new routes which means the airline has grown passenger volumes from the disastrous figures of March and April to between 30 and 40 per cent today.

London calling
While much of Hayes’ work in 2020 has been focused on ensuring jetBlue survives the immediate impact of the Covid-19, he is still planning the long-term recovery which could see the airline’s first European route introduced in the third quarter of 2021 with a flight to London.

He believes the north Atlantic market can be cracked by the same tactics that were used to get many of jetBlue’s services successfully up and running previously.
Hayes says: “I’ll point to what we did back in 2014 when we introduced JFK to LAX, where fares at the time were a matter of course $2,100, $2,200 and we rolled out $595.

“We want to have a profound effect and we want part of our legacy in the north Atlantic to be that this is the airline that came along and profitably brought premium fares down for everyone. If you don’t want to fly jetBue then fine, but you’re going to have a lower fare flying on one of our competitors as that’s what we do.”

He adds that the London route will be served by any of the airline’s 26 Airbus A321 LRs and XLRs currently on order while further European expansion could be on the cards, although he declines to name any other destinations currently under consideration.

However, Hayes argues the airline has fewer problems dealing with the seasonality some airlines encounter when operating to Europe’s cities as during the winter he can simply switch many of the aircraft involved in the programme to jetBlue’s Caribbean routes.

He adds: “That is one of the benefits of being a North American operator with our equipment. It is not as seasonal a business as you see in Europe with summer and winter performance.

“Ultimately I see a few years down the line where we have a number of all-year-round markets to Europe because they are functioning all year and a number of seasonal markets.”

Which is probably just as well given the number of issues the pandemic has caused. And while it would be too early to say exactly what the future holds for JetBlue, it is good to find airline executives still positive and discussing plans for the future, whatever it may hold.