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JetBlue enters Philadelphia to compete against US Airways and fares plunge

May 23, 2013 1:53 pm

Skift Take

Can JetBlue succeed on its Boston-Philadelphia route where other airlines have failed in competing against US Airways? Philadelphia is a US Airways hub, and that will make it tough-going for JetBlue.

— Dennis Schaal

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With a water cannon salute on the airfield welcoming the first JetBlue Airways flight from Boston Thursday, the popular low-fare carrier treated Philadelphia passengers and guests to cheese steaks, a Mummers band, pretzels, Boston creme pie doughnuts, Bassetts ice cream and peanut chews.

The inaugural flight taxied to Gate E-4 at Philadelphia International Airport at 9:12 a.m. Two hours later, the Embraer-190 jet was scheduled to head back to Boston with 76 on board.

JetBlue, which will operate five daily nonstops to Boston, hopes to succeed where Southwest, AirTran and Delta Air Lines could not successfully compete against US Airways Group, which operates an international hub here and 20 nonstop weekday flights between Philadelphia and Boston.

US Airways has lately been the only carrier offering nonstop Boston service, after Southwest pulled the route in February. Airfares suddenly skyrocketed.

JetBlue’s arrival has already sent ticket prices plunging.

A check on US Airways’ website Tuesday for travel to and from Boston on Wednesday, one day before JetBlue arrived, listed a $816 round-trip nonstop coach seat.

The same flights on Friday, a day after the new service, showed that round-trip fare was $308.

“JetBlue likes to find markets that have really high fares where we can make a difference,” said Marty St. George, JetBlue’s senior vice president of marketing.

If the Boston route proves successful, JetBlue would look to add flights to other cities, George said.

“The arrival of JetBlue is yet another accomplishment for Philadelphia International Airport in our quest to be the best airport in the nation,” said Philadelphia airport CEO Mark Gale. “We continuously strive to provide the highest standards of service to our customers. I am pleased that our ongoing efforts have brought to us an airline that also highly values customer service.”

Why does JetBlue think it can succeed where three other airlines failed?

JetBlue says it offers amenities that passengers want: the most legroom in the coach cabin of any U.S. airline, free live TV with 36 channels at every seat, and 100 channels of free XM satellite radio. And the first checked bag is free.

JetBlue is the dominant carrier in Boston, with 100 flights a day.

“Many of our corporate customers in Boston came to us and said, ‘Please, we need you to fly this route because our fares are too high.’ We’ve got a base of current business customers in Boston who are already committed to fly us,” George said.

“We’re not going to take anything for granted,” he added. “Even though we have a good base of corporate customers, we need a lot more customers. We recognize that US Airways is a very effective competitor.”

Travelers for the ninth consecutive year in 2012 gave JetBlue the top overall passenger satisfaction rating among low-fare carriers in North America, despite the airline’s on-time performance (arriving within 15 minutes of the scheduled time) lagging behind some competitors.

“It’s the way JetBlue handles the delays,” said airline analyst Helane Becker with Cowen Securities L.L.C. JetBlue rolls out food and drinks, and keep passengers updated. “JetBlue definitely handles it differently than the pier group,” she said.

JetBlue says its on-time record is “a major challenge” because nearly 70 percent of flights depart, arrive or pass through heavily-congested New York airspace. “We don’t have fair weather hubs, like Phoenix or Charlotte, to bring our on-time ratings up,” George said. JetBlue is based at N.Y.’s John F. Kennedy Airport.

New York area airports always have delays, Becker said. “On a clear day, not a cloud in the sky, 65-degree temperatures, New York could be delayed by an hour. It’s just a disaster.”

Becker said JetBlue’s strategy has been to “build out” Boston, which is a big business market. “They are looking at being relevant to the business traveler by serving as many business destinations as they can.”

The difficulty may be when US Airways matches JetBlue’s lower fares, will US Airways’ frequent fliers opt to fly US Airways in order to accumulate travel miles toward free tickets?

“History has proved that’s a pretty short-sighted decision,” George said. “Because fundamentally if you can’t support vibrant competition, ultimately flights will go away and fares will go back up again. The question for the customers is which do they value more? Do they value the miles, or do they value the money in their pocket?”

“We’ll find out,” he said. “Our experience in places like Newark and Washington is that we’ve been very effective competing with low fares, and we’re very optimistic in Philadelphia.”

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Contact staff writer Linda Loyd at 215-854-2831 or lloyd@phillynews.com.___

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