JetBlue to add new service from Boston
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Aeromexico and Delta JV: major uncertainty reigns after the DoT hits hard with slot divestitures
A transborder joint venture between SkyTeam partners Aeromexico and Delta is hanging in the balance now that the US DoT has required slot divestitures and other stipulations in order for the airlines to move forward with their proposed business agreement. Not surprisingly, Aeromexico and Delta believe limitations proposed by US regulators would diminish the economic benefits of the joint venture, and are warning they are reconsidering deepening their business ties.
Numerous airlines expressed concerns about Aeromexico and Delta’s concentration of slots at Mexico City Juarez, and the DoT responded by requiring slot divestitures at the airport along with the relinquishment of slots at New York JFK. The airlines have countered that the DoT’s analysis is flawed, and that a smaller number of slot divestitures at Juarez required by Mexico’s government should allay any concerns expressed by competitors. Aeromexico and Delta also argue another stipulation imposed by US regulators – limiting the joint venture to a five-year term – would create too much uncertainty for the viability of the business venture.
Delta’s plans to take its stake in Aeromexico up to 49% was contingent on the JV proposal succeeding. But with the stipulations imposed by DoT in order for the partners to establish their joint venture a dark cloud of uncertainty is hovering over Aeromexico’s future ownership structure.
jetBlue Airways keeps long-term cost performance in sight as US pricing trends start to stabilise
After outperforming the industry throughout most of 2015 in its unit revenue performance, jetBlue Airways has posted negative results throughout 2016, driven by a weaker pricing environment in the US market. Unlike other airlines, jetBlue does not provide much forward guidance about unit revenue, and is not venturing to offer a timeframe for a return to positive unit revenue. For 4Q2016 the airline is facing pressure from the timing of the Christmas holiday, and the effects of suspended operations due to hurricane Matthew in Oct-2016.
jetBlue is noticing similar trends to those at other US airlines – generally, close-in bookings and pricing began to improve in 3Q2016. Most US airlines are planning lower year-on-year capacity growth in 2017; these include jetBlue, which expects its supply to drop a couple of points below 2016 levels. jetBlue’s 2017 capacity will still run higher than that of some of the larger and more mature US airlines, but the company always stresses that it remains in growth mode, reflected in the introduction of eleven new routes from late 2016 through 1H2016.