With JetBlue’s Arrival at Newark, ‘Snowbirds’ Can Bank on Lower Florida Fares

By Richard Newman, The Record, Hackensack, N.J.

Oct. 2–As soon as he found out JetBlue was launching service from Newark to Florida, David Sadek went online and booked a trip to Fort Lauderdale.

“This is great for me,” said the 41-year-old mortgage banker, who lives in Teaneck and has a second home in South Florida.

Sadek has been flying JetBlue Airways out of La Guardia and JFK for the past couple of years, figuring it was worth a trip to New York to take advantage of JetBlue’s low fares and above-average legroom. And what he likes most is the little TV sets on the back of every seat. He flips between CNN and ESPN during the flight while munching on the airline’s blue potato chips. “Hey, I’m a guy,” he said. “I like to channel-surf.”

Now Sadek and thousands of other Jerseyans will be able to fly JetBlue without crossing the Hudson.

Beginning Wednesday, the fast-growing, five-year-old carrier will begin service from Newark. The initial destinations are Fort Lauderdale, West Palm Beach, Orlando, Tampa and Fort Myers. Daily flights to San Juan, Puerto Rico, start Nov. 17.

The new competition at Newark promises to benefit the flocks of “snowbirds” who fly to Florida every year when the weather gets colder.

In recent years, it generally cost more to fly to Florida from Newark than from JFK or La Guardia. But “low-cost competition will definitely bring down the fares,” said Hugo Berge, president of Cheapflights.com.

JetBlue also is expected to present a serious challenge to Continental Airlines CEO Larry Kellner, who, like his predecessor Gordon Bethune, tenaciously defends Newark and the airline’s other hubs from competition.

When JetBlue first announced its Newark plans this summer, Continental moved swiftly to add eight daily flights on competing routes and match JetBlue’s introductory fare of $69 each way.

“We expected that,” said JetBlue CEO David Neeleman in an interview Thursday at his office in Forest Hills, N.Y. “We’re well aware that it’s Continental’s airport. They’re a fine airline, and they’ve done as fine a job as any of the major airlines.”

Two other low-cost carriers, Spirit Airlines and Delta Song, have recently tried to go toe-to-toe with Continental at Newark on non-stops to Florida. But they have since bowed out.

Spirit left to consolidate its New York-area operations at La Guardia. Delta Song, which stopped its Newark-to-Orlando non-stops last month, shifted planes to potentially more profitable transcontinental routes, a spokesman said.

Continental’s sprawling network is one reason it has been able to maintain its dominance on the New Jersey-Florida routes. Even if some New Jersey passengers opt for low-fare carriers, Continental’s hub-and-spoke system draws fliers from airports in the northern U.S. and abroad to Newark, where they switch to Florida-bound flights.

“These connecting passengers supply much of the traffic on our Florida and Caribbean flights,” airline spokesman Martin DeLeon said in an e-mail exchange. “We are not dependent on generating traffic solely from the local market.”

Continental had another advantage because the major low-fare carriers — JetBlue and Southwest — traditionally avoided major domestic hubs such as Newark.

JetBlue built its business largely by leasing space at less-crowded airports on the outskirts of the major markets. It flies to Long Beach instead of Los Angeles, and Oakland instead of San Francisco. Similarly, Southwest built its reputation in the Northeast in small airports such as Albany, Hartford, and MacArthur on Long Island.

But things are changing. Last year, Southwest took on US Airways at its Philadelphia hub. That move is somewhat of a threat to Continental, because many in Central Jersey are equally comfortable flying from Philly or Newark.

Also, since February, travelers who use Newark have been able to book flights to more than a dozen Western cities on Southwest.com, even though Southwest doesn’t fly out of Newark. Southwest and ATA have a code-sharing agreement that allows the carriers to book passengers on some of each other’s flights and share the revenue.

DeLeon wrote that Continental is accustomed to low-fare competition, and offers “competitive” prices and a higher level of service. He noted that unlike JetBlue, Continental has free meals. Also, Continental has first-class cabins, which are an incentive for frequent fliers who can cash in miles for service upgrades. But it doesn’t have TV.

And JetBlue, which boasts of 18 straight quarters of profitability, and spends less per passenger mile than Continental, is likely to be the toughest low-fare competition the carrier has faced at Newark.

“We’re not Spirit and we’re not Song,” said Neeleman. “I know we have the best product out there.”

Continental has reported more than $1 billion in losses since 2000 and is expected to lose money again this year.

Of course, JetBlue is not immune to high fuel costs and intense competition. Neeleman said at an airport managers’ conference in Toronto last month that the profitability streak is “in jeopardy.”

JetBlue reported that second-quarter profits fell 43 percent to $12.2 million, due to higher jet fuel costs. It was the sixth straight quarter of declining earnings. Standard & Poor’s said Sept. 21 that it may cut JetBlue’s debt rating.

Still the upstart is forging ahead with ambitious growth plans.

The first of 100 Embraer 190s was delivered last month. The introduction of smaller 100-seat aircraft into its fleet marks the beginning of a new phase in the company’s expansion. Previously the airline used only 156-seat Airbus A320s to control maintenance and training costs.

The airline will take delivery of nine of the Brazilian-made Embraers this year and will receive the rest by 2011. The smaller planes will allow the airline to expand to smaller, underserved cities, none of which have yet been identified by the company.

The company has options to order 100 more of the smaller jets.

The carrier, which started flying in February 2000 from JFK to Fort Lauderdale and Buffalo, N.Y., now serves more than 30 cities, with a West Coast hub at Long Beach, Calif. Its entry into Newark, with 16 daily flights, will be its largest ever debut at any airport, company officials said.

The growing legend of JetBlue is not exactly a Cinderella story.

Before ordering his first planes, Neeleman amassed a war chest from investors including George Soros.

With mostly non-union workers and a simple but effective business plan similar to Southwest Airlines’, JetBlue grew during the post-9/11 slump largely at the expense of the major airlines.

In the years after the Sept. 11 attacks — while traditional carriers laid off thousands of well-paid workers, parked planes in the desert, and, in several cases, filed for Chapter 11 protection — JetBlue acquired more planes and gained market share.

Now, with the competition again on the ropes with the latest spike in fuel prices, Neeleman has no intentions of letting up.

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