AA Recognizes JetBlue's Transcontinental Progress

Reversing the traditional scenario of low-fare carriers attacking incumbent majors on specific routes, American Airlines this past weekend launched double daily nonstop service between New York JFK and Oakland, Calif., a route previously operated solely by JetBlue Airways. However, JetBlue will remain the only carrier flying nonstop between JFK and Los Angeles suburb Ontario, Calif., now that American canceled plans to launch competing service this summer.

Upping the ante, JetBlue later this week will boost JFK-Oakland frequency to thrice daily, add a fourth in May and also launch two new transcon routes this spring from its growing operation at Washington Dulles.

American, eager to expand its West Coast presence, said, "There is a strong demand for additional transcontinental flights from Oakland." It already serves San Francisco, San Jose and Los Angeles from New York, but opted to cancel JFK-Ontario after "re-evaluating plans and determining we could not generate the revenue needed to operate that service." Of course, other carriers fly nonstop cross-country routes from the New York area to both the Bay Area and southern California, including Continental, Delta and United, but American and JetBlue will split passengers to the less-congested airport in Oakland.

"JetBlue will win this one," said Terry Trippler, airline analyst and president of Trippler & Associates in Minneapolis. "The only way American can keep up in this situation is to exert pressure through sweeter corporate contracts in exchange for an increase in transcon business."

JetBlue's advantage lies in its inflight service—leather seating with live television at every seat—all the more important on lengthy cross-country flights.

Goldman Sachs airline analyst Glenn Engel said JetBlue's increasingly positive reputation will make the battle "less clear," but noted that the majors generally are very price competitive against low-fare competitors. "Big corporations probably would have stuck with American anyhow," he said, adding that AA's powerful AAdvantage frequent flyer program always helps the carrier secure passengers.

Indeed, some New York-area corporate travel managers told BTN their transcontinental needs primarily are filled by large network carriers with more flight options for time-sensitive business travelers, even if JetBlue is used on other routes. But Tim Claydon, JetBlue vice president of sales and distribution, said four nonstops a day to Oakland will attract business travelers. "American coming in is good for the Bay Area, but our increased frequencies will give us a better schedule than theirs."

Some companies on both coasts already have found ways to place travelers on the lower-fare alternative, which also offers the only nonstop service between JFK and Long Beach, Calif.

"It certainly is a great fare reduction and it adds up to a lot of money throughout the year," said a travel manager at a Los Angeles-area company that uses JetBlue, acknowledging that fulfilling contractual obligations with major carriers "may be an issue for next year."

JetBlue on May 1 will initiate double daily nonstop service between Washington Dulles and both Long Beach and Oakland, two routes delayed due to Sept. 11. United had planned to offer Dulles-Oakland service beginning last October, but also shelved the route after Sept. 11. JetBlue also operates long-haul flights from JFK to Denver, Salt Lake City and Seattle.