JetBlue means business with proposed London flights

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T0422MINT_HR
JetBlue says its Mint business-class cabin would be larger on jets flying transatlantic routes.

While confirming on April 9 that it will begin flying to London from Boston and New York sometime in 2021, JetBlue made it clear that it will place an emphasis on serving business travelers in those key markets.

"The fares being charged today by airlines on these routes, specifically on the premium end, are enough to make you blush," JetBlue president and COO Joanna Geraghty said in a statement. 

She added that the airline's Mint business class cabin will be larger on its transatlantic fleet of Airbus A321LRs than the 16-seat Mint cabin JetBlue currently flies on transcontinental routes. 

But analysts said that if the New York-based carrier is to successfully find a niche among business travelers in the highly competitive New York-London and Boston-London markets, it will likely have to do so without serving Heathrow, London's preferred airport among business travelers.

Rob Walker, a London-based analyst for the consulting firm ICF and a former strategist at Virgin Atlantic and British Airways, said, "Clearly, the situation is that Heathrow is massively capacity constrained. "You can only get a slot by spending tens of millions of dollars, so I don't think JetBlue will do that."

Analyst John Strickland, director of London-based JLS Consulting, added, "I don't believe they are targeting Heathrow. They are not Johnny-come-latelies. They know that is a challenge. I think they will be planning to fly into a couple of London airports, Gatwick and Stansted."

Notably, while confirming plans for London service, JetBlue didn't say precisely which airport it will serve. However, the carrier did suggest that it will serve more than one of the London area's four primary international airports. 

Largest among those airports, by far, is Heathrow, which handled 80 million passengers in 2018. But as Walker said, Heathrow is all but tapped out on capacity. In recent years, the airport has typically had two or fewer daily landing and departure slots available for allocation. 

Meanwhile, the cost of buying slots from incumbent airline slot holders can be prohibitive. In 2016, for example, Oman Air paid $75 million for one daily slot pair.

Gatwick, London's second-largest airport, is known primarily for serving leisure traffic. Still, in recent years it has drawn a growing number of U.S. routes due to constraints at Heathrow, the emergence of discount carrier Norwegian Air and efforts taken by British Airways to counter Norwegian. 

But entry into Gatwick, while more feasible than slots at Heathrow, won't be easy for JetBlue either. The airport's single runway is "bursting at the seams," according to Walker, and a slot-trading market has emerged in recent years. In late 2017, IAG, parent of British Airways and Iberia, purchased the approximately 20 daily slot pairs that had belonged to the shuttered Monarch Air for an estimated $78 million. 

More accessible to JetBlue will be Stansted and London Luton, which have available slots. Luton, however, currently offers flights only to Europe and near portions of the Middle East and Asia and is mostly serviced by discount carriers. The airport also has a short runway, which could force extra restrictions on the number of passengers or amount of cargo JetBlue could carry on its A321LRs, Walker said. 

Stansted, too, offers no North American flights at present. The airport does, however, have a longer runway than Luton. Currently, Emirates flies one daily Boeing 777 service from Stansted to Dubai and will add a second daily in July. 

"Stansted is more well-known," Strickland said. "And now Emirates is another seal of approval."

Despite barriers to entry at Gatwick, Strickland doesn't appear to be alone in believing that JetBlue hopes to make the South London airport the destination for at least one of what it said will be multiple daily flights to London from Boston and New York. 

In a move that appeared to anticipate JetBlue's plan, Delta announced on April 4 that it would enter Gatwick in summer 2020 with flights from Boston and New York JFK. 

Strickland said that if JetBlue were to also serve Stansted, 40 miles north of Central London, it would gain access to a growing catchment area, including burgeoning technology and pharmaceutical sectors in Cambridge, 30 miles to the north of the airport.

Still, the carrier would be disadvantaged among some business travelers by not flying to Heathrow, which offers the easiest access to Central London as well as a wide web of connections to locations throughout the U.K., continental Europe and beyond. 

Walker, though, said JetBlue will primarily be tapping into its own U.S. connectivity from Boston and New York to help fill planes, as opposed to focusing on European markets beyond London. 

Strickland said that in putting an emphasis on attracting business flyers with more affordable premium seats, JetBlue will find plenty of room to work with. 

Such seats across the Atlantic can easily cost close to $10,000 roundtrip. 

"There are more things working for them than against," he said. "But this side of the Atlantic [Europe] will be the hardest piece of the jigsaw to fit together in a profitable way."

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