Feb. 11, 2000 from New York to Buffalo.Core Business:
Low-fare passenger airlineRevenues in 2000:
$105.2 millionNet Loss in 2000:
$15.8 millionRevenues in 1st Qtr. 2001:
$63.8 millionNet Income in 1st Qtr. 2001:
To provide low-fare airline service to underserved markets and major destinationsYoung Airline Believes Long Beach Airport Will Attract Loyal Cross-Country Travelers
David Neeleman knew he had a winner when he first saw the nearly empty terminal at Long Beach Airport, a facility that for decades has been living in the shadow of LAX up the road.
With only nine departure gates, $3 a day parking a short walk away, and a compact 50-year-old Art Deco terminal, the facility would make a perfect West Coast hub for his upstart JetBlue Airways. So starting Aug. 28, Long Beach becomes JetBlue's 16th destination with twice-a-day flights to New York's John F. Kennedy International Airport.
"There are 6 million people who live as close to Long Beach as any other airport," said the 41-year-old Neeleman, who started Salt Lake City-based Morris Air in 1984 and sold it nine years later to Southwest Airlines. "When people pull up to the airport and pay the $3-a-day rate for parking and go from the curb to the plane in two minutes, I think the whole experience is going to be bring some loyal customers."
JetBlue already has a number of loyal East Coast customers since it launched its first flights early last year from its JFK hub to upper New York state and Florida.
Currently it serves 15 destinations from the East Coast with 76 flights a day. And it is turning a profit. While the company posted a $15 million net loss last year, during its first 10 months of operation it had a $4.5 million net profit for its first quarter ended March 31, according to Department of Transportation filings. It is one of the best-capitalized small carriers in U.S. history, with $160 million in funds from various institutions and billionaire financier George Soros.
Choosing New York as its initial destination out of Long Beach likely will help the bottom line, considering the transcontinental route is one of the busiest in the airline industry. With JetBlue's fares on that route ranging from $129 to $299 each way, flying to New York will be more affordable for passengers used to ticket prices that can reach as high as $2,400 roundtrip for coach.
"Long Beach is going to bode well for JetBlue," said Jon Ash, managing director of Global Aviation Associates in Washington, D.C.
Since JetBlue inaugurated its first flights early last year, the fledgling company has been shaking up a much-maligned industry. It has received top ratings from the Federal Aviation Administration for being on time. It was voted the No. 2 domestic airline for service and comfort in the 2001 Zagat Airline Survey. And it flies new fuel-efficient Airbus A320 jets that accommodate 162 passengers, have gray leather seats and provide individual TV screens with 24-channel satellite programming. All fares are available one way, all seats are assigned, and no Saturday night stay is required.
Meals are not served, but baskets of bagel chips and cookies are available with soft drinks. As a light-hearted reminder on its two daily flights from Ontario, Calif. to New York, a sign flashes: "Next food 2,500 miles.
A bigger issue than meal service is convincing customers to fly out of Long Beach Airport, which is 22 miles south of LAX along the congested San Diego (405) Freeway a stretch that can turn a 30-minute trip into a 90-minute ordeal. Other small carriers have come and gone from Long Beach with little fanfare.Numerous nosedives
In the early 1990s, Sterling Air flew to Chicago for a few weeks before it went belly up. WinAir Airlines offered 14 flights a day out of Long Beach before it was grounded in July 1999 after eight months of operations because it ran out of money. And Fresno-based Allegiant Air Inc., which flew from Long Beach to Las Vegas for more than a year, suspended its flights last December after filing for Chapter 11 bankruptcy protection.
Long Beach Airport, with its 41 allotted flights a day for large-passenger planes and 25 flights a day for commuter planes, hasn't operated at its maximum limit since the early 1990s, said Long Beach Airport Manager Chris Kunze.
American Airlines has four flights a day to Dallas and America West Airlines has five flights a day to Phoenix. JetBlue has bought up 27 slots for flights it expects to add in the next two years to as many as 15 destinations. Those would include Boston, Denver, Dallas, Ft. Lauderdale, Fla., Washington, D.C., Chicago, Oakland, Portland, and Sacramento.
And low fares, plus extra touches like free TV, could prove enticing to those fed up with the major carriers. "One thing JetBlue has been able to do is differentiate their product," said Mike Boyd, president of the Boyd Group, an airline industry consulting group in Evergreen, Colo. Usually, a low-fare carrier is a low-fare product. But they have a nice product."
Boyd cautions that Long Beach has its limitations. The city's noise ordinance curtails daily flights and hours of operation are 7 a.m. to 10 p.m. That could hamper JetBlue's operations if it has a late flight that needs to land after the curfew, forcing it to divert to Ontario airport and putting passengers on buses.
But Kunze noted that there is a waiver for flights arriving between 10 p.m. and 11 p.m. that have been delayed by weather, mechanical problems or air traffic. If JetBlue or other airlines are forced to divert to another airport, Long Beach would pick up the cost of the diversion and buses.
Neeleman sees no problem with Long Beach's limitations, or with its location. He encountered the same skepticism when he made Kennedy Airport the airline's hub instead of LaGuardia. "Everybody in Manhattan said, 'We're never going to fly Kennedy when we have LaGuardia.' We said, 'We don't need you. There are 5 million people who live closer to Kennedy than to any other airport.' Now people are driving in droves to take our flights out of Kennedy because the service is good and the fare is good."
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