New York, New York. And slots, slots. Vale JetAmerica


WEEKLY REFLECTIONS WITH RON KUHLMANN & THE CENTRE. Due to its market size, its affluence and its strategic location, New York and its airports figure into many aviation networks and business plans. In the past week or so, two stories regarding New York service have bounced around the media and internet; one predictably absurd and the other a bold vision in hard times. One involved a serial failure team; the other a good idea, but at the wrong time?

Another failure for the team

The first was the announcement of a delay, and then termination, of JetAmerica’s pending service. See our earlier report on JetAmerica. Spawned by promoters and planners best known for past failed attempts at organizing an airline, they have added another gem to their collective mismanagement crowns.

The official stumbling block was described as an inability to get slots at Newark, one of the key destinations in JetAmerica’s fledgling network. The story was that initially the promoters were told they would not need slots as they were a charter operation. Makes sense. A sports team with a one-in, one-out operation should be accommodated with little fuss. Somehow, the fact that this “charter” would operate six days a week at scheduled times was not seen by JetAmerica as a significant difference, so plans, as well as ticket sales, moved ahead.

There are so many things wrong with this picture. First, anyone who has even a cursory knowledge of US aviation is aware of the ongoing contentious battle over access to New York’s airports. The now-dead FAA proposal to auction slots in order to change the mix of airlines in New York became a subject debated in the US Congress. Consequently, access to JFK, LGA or EWR is a closely guarded and valuable asset. Astonishingly, all of this somehow evaded the radar of the “aviation professionals” involved in the JetAmerica start-up.

There was further amazement on the part of these entrepreneurs when they realized that a) incumbent carriers were reluctant to sell slots, and b) they wanted lots of money for them. Apparently payment for New York access had not been a line item in the start-up budget and the inevitable expense was what caused the carrier to shelve, for now, its current business plan and post the following message on its website:

"We are reluctantly suspending our public charter operations effective today," said John Weikle, CEO, who has been with the company since April. "Finalizing the slots required to support our charter program at Newark has taken longer than expected and we have decided to suspend our operations in order to refocus on different markets. We still strongly believe that there is an unmet need for affordable air service to secondary markets and we look forward to offering this option again in the near future," concluded Weikle.

Aviation in the US has enough problems with its image. While few industry observers ever believed that JetAmerica was viable, the company did manage to sell a considerable number of tickets to consumers who focused on the deal rather than the reality of the situation.

It also highlights the incredible ease with which airlines – or at least the promise thereof – can be established. None of what happened in this debacle was unknowable and the fact that money was invested and tickets were issued is a damning indictment of the regulatory oversight that is being exercised in the market. Perhaps they sneaked under the radar as a charter product. Operationally, there was no problem, as the carrier engaged to do the actual flying was in full compliance with regulations. That however is of little concern to those who made plans based on ticket purchases.

The fact that “professionals” were able to actually sell a product with such poor planning and oversight is not good for its would-be customers nor for the overall industry that continues to be seen, domestically at least, as being less popular than the Internal Revenue Service.

Any attempt to “offer this option again in the near future” should be scrutinised by regulators if further damage is to be avoided in a consumer sector with already severe image problems.

A Bold Experiment

Quite at the other end of the spectrum is the announcement that British Airways (BA) will go ahead with its plan to offer Business Class service to/from London’s City Airport (LCY) as of late September. The flights will be operated by A318’s configured for 32 Club passengers and, with LCY’s short runway, will be operated westbound via Shannon. While adding time to the journey, the stop will also be used to pre-clear passengers for the US, making arrival at JFK a far simpler process. Clearly designed for a specific market niche, it was ideally suited to the pre-recession environment when high value tickets were seen to be the norm.

Unfortunately, as has been reported here and elsewhere, the premium travel sector has taken a gigantic hit, with BA being especially impacted. Consequently, the introduction of any additional premium capacity must be viewed as a bold move. That this coincides with BA's announcement thatr its OpenSkies Paris-based venture is likely to be sold reflects the hard times.

However, it is even more interesting when fares between various New York and London airports are compared. Table 1 shows the fare differentials found between flights to/from Heathrow and London City. A number of weeks in October were searched and the fares, unlike those found for the summer, were generally consistent with no “super” premium deals in evidence – yet.

Table 1

Prices and Premiums


























Source: BA Website


Nonetheless, for travelers restricted by a “lowest available” travel policy, the new service presents a bit of a fiscal challenge. The premium for LCY’s convenient access is fairly steep, especially from New York for those paying in dollars.

The other question that remains is the possible operational limitations that may apply to the use of the A318 on such a routing. There is no doubt that BA has done extensive studies on the route’s feasibility and operational integrity and found it acceptable.

However, especially on the US end, JFK has been the site of increasing delays and congestion. The flights’ operational times are ideal for passengers and, for that very reason, fall into a period of very intense usage at JFK. This summer has been exceptionally rainy and stormy on the US East Coast, resulting in substantial and almost daily ATC delays. A few fuel-stop diversions could significantly affect the service’s reputation amongst its exclusive, and probably limited, clientele.

Whether or not it is successful, it remains a bold initiative and worthy of recognition. When asked what BA might do if the experiment fails, CEO Willie Walsh noted that the aircraft could be used to Dubai or other Middle East destinations that also have had strong premium demand. At the very least they get credit for an innovative plan. That stands in stark contrast to the jumbled and ill-advised mess that was JetAmerica.

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More