JetBlue Airways

Spirit Airlines posts consistent profitability despite rapid-fire new route introductions

Spirit Airlines’ rapid growth during the last couple of years has not compromised the carrier’s profitability. During a time when it is not uncommon for the carrier to introduce 20 new route pairs during a half-year period, Spirit has maintained and grown its profits while undergoing a fundamental shift in its business.

As it continues to turn its attention to the US domestic market, Spirit seems unfazed by JetBlue’s moves into some of Spirit’s Latin American markets, as JetBlue by YE2013 will compete with Spirit on all its markets from Fort Lauderdale to Latin America. But Spirit’s US domestic growth remains unabated, and will account for the bulk of the roughly 22% capacity increase Spirit plans during 2013.

Spirit also declares that it has one of the most enviable cash positions in the industry, which at YE2012 was nearly 32% of the last trailing 12 months revenue. But the carrier’s relatively young status in some ways diminishes the prospect of cash dispersion or other shareholder reward, as Spirit continues work to prove its business model has staying power.

It will be interesting to see how long it is before other airlines feel the need to head off Spirit's growth.

JetBlue Airways continues to exploit Fort Lauderdale with new flights to Lima

JetBlue plans to introduce its first destination south of the equator in Nov-2013 with new daily service from Fort Lauderdale in South Florida to Lima in Peru. The move is consistent with the carrier’s plan to use Fort Lauderdale as a springboard into Latin America as JetBlue indicates more international service from the airport is in the pipeline.

JetBlue is also seizing a prime opportunity to introduce low-cost competition in market where the only LCC presence is a single weekly flight operated by Spirit Airlines. Other carriers operating in the South Florida-Lima market are oneworld partners American Airlines and LAN and Star Alliance member TACA Peru.

Services JetBlue has launched from Fort Lauderdale to Latin America appear to have a short maturation time, which results in the carrier looking to harvest more of those opportunities to balance out new market introductions that take longer to mature. JetBlue has identified about 20 potential new markets in Central America, South America and the Caribbean that are viable from Fort Lauderdale.

Airlines in Transition part 7: What keeps CEOs awake at night?

Have you ever wondered what it is like to run an airline? In the closing session of CAPA’s Airlines in Transition conference in Dublin, CNN’s Richard Quest grilled a panel of CEOs on their chief concerns. Conference delegates were treated to a thought-provoking, revealing and sometimes surprising discussion that provided a rare insight into the airline CEO’s brain.

Airline CEOs Christoph Mueller of Aer Lingus, Willie Walsh of IAG, Dave Barger of JetBlue and Montie Brewer (formerly) of Air Canada were joined by James Davidson of technology company Farelogix. Topics discussed included how to balance a wide range of issues, the impact of industry consolidation, the acceptance of return on capital as a key measure and why restructuring is enjoyable.

Aer Lingus looks to partnerships and new smaller aircraft across the Atlantic for long-haul future

Having gone through a restructure in recent years, Aer Lingus is now focusing on growth, organic and virtual, CEO Christoph Mueller stated on the sidelines of CAPA's Airlines in Transition conference in Dublin. Long-haul of course is the focus for a European carrier given its profitability, and Aer Lingus is looking to expand frequency and overall capacity in North America by using smaller aircraft than the carrier's all-A330 long-haul fleet. Aer Lingus will target new destinations as well as look for where it can gain synergies with key codeshare partners JetBlue Airways and United Airlines.

Ireland's geography makes it a conducive hub for North America-Europe flights, but less so for flights east of Europe. Asia and Australia are home to a large but diverse Irish diaspora, which Aer Lingus will actively target for the first time through its partnership with stakeholder Etihad Airways. These destinations are locations Aer Lingus could not and would not be able to serve independently. Aer Lingus is also looking to leverage its low operating cost and seasonal demand by expanding its wet-lease portfolio, which includes short-haul flights for Virgin Atlantic and long-haul flights for Novair.

Airlines in Transition part 4: Bridging the gap between full service and low-cost or hybrid airlines

Our previous report on CAPA’s Airlines in Transition conference (Airlines in Transition part 3: How full service airlines are reshaping models to be more competitive) looked at how full service carriers are responding to the challenges of a weak global economy, high fuel prices and growing competition from LCCs on short-haul and Gulf carriers on long-haul. The low-cost sector is also going through a period of change, characterised by features summarised at the conference by Professor Rigas Doganis.

Like the FSCs, the LCC sector has seen concentration and consolidation and the two sectors have established a growing number of linkages. Moreover, the relaxation of the pure low-cost model of simplicity and the adoption by FSCs of LCC pricing strategies has narrowed the differences between them. Have the differences been eliminated? What are the challenges faced by LCCs/hybrids? What is the right number of fares to offer? We examine these questions and more in this fourth conference report.

CAPA Airlines in Transition report, Part 1: The natural history of airline alliances

From the first US Open Skies agreement with the Netherlands in 1992, and the subsequent granting of antitrust immunity to the KLM-Northwest joint venture in 1993, the evolution of airline alliances has been rapid and far reaching. Bilateral codeshares, immunised JVs, multilateral branded global alliances, the Etihad equity alliance: why are there so many models? In the first of a series of reports based on CAPA’s recent Airlines in Transition conference in Dublin, we examine the history and evolution of airline alliances and partnerships.

After decades of strict regulation of international traffic rights post WWII, which controlled destinations, capacity, frequencies and prices, a campaign for more liberal air services agreements (ASA) between nations began to gather pace in the US from 1977. In the words of Jeffrey Shane, General Counsel, IATA and a former senior US aviation regulator, any attempt to modify an ASA was characterised by a "highly calibrated, tit-for-tat mode of negotiation".