The Rise of Cheap Airlines

BreakingViews has launched its Poor Getting Poorer index, complete with predictable members such as Walmart and pawnbrokers EZCorp. But there’s also JetBlue:

Though leisure travel will take a hit, discount carriers like JetBlue will attract those willing to take 3 a.m. flights from obscure airports.

I’m not sure that JetBlue really fits into the euro-style "3am flights from obscure airports" category; for one thing, its hub is at New York’s JFK, where it has a very shiny new terminal complete with massage service, a steakhouse, and free wifi.

But with oil prices in the $40 range and an enormous number of airplanes being mothballed by downsizing major airlines, there would seem to be an opportunity for someone like Ryanair CEO Michael O’Leary to start up precisely that kind of discount airline.

JetBlue isn’t really a discounter: I just asked Orbitz for quotes for non-stop flights from New York JFK to San Francisco SFO leaving on Saturday and coming back a week later. Virgin America and Alaska Airlines will both do it for $665; Delta is $745; JetBlue is in fourth place on $755. American is more, at $1,050, and US Airways and United don’t seem interested in competing at all: they both charge $1,825.

And more generally, JetBlue has never offered the ultracheap flights which built the businesses of the likes of Ryanair and Easyjet. Could it happen here? I don’t see why not, especially if the big airlines continue their long and seemingly inevitable decline. Once the frequent fliers lose their loyalty — something which has already started — I can’t see why a bunch of smaller, nimbler mammals shouldn’t be able to see off the dinosaurs once and for all.

Already JetBlue and Virgin America are trying to position themselves at the high end of in-flight service and quality, with mixed results. They’re more likely to want to stay there than they are to go downmarket and compete with bucket shops.

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