JetBlue sees little threat from Southwest’s acquisition of AirTran

Washington DC
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Management at JetBlue believes the carrier has ample opportunity for organic growth, and sees no perceived threat from Southwest's planned acquisition of AirTran.

Southwest's announcement on 27 September that it had reached an agreement to purchase AirTran results in the first merger of two US low-fare carriers.

The tie-up led to questions about how the combined entity would affect the other major US low cost carriers - JetBlue, Spirit and Virgin America.

But JetBlue chief executive Dave Barger doesn't believe the combining the carriers will create a lot of competitive pressure.

"When I look at this combined entity of Southwest and AirTran, our models are so different," Barger told analysts and investors today during an earnings call. Citing JetBlue's unique presence at John F Kennedy International airport in New York, Barger explains JetBlue's strategy is to leverage its partnership traffic while seeking organic growth.

JetBlue plans to unveil its seventh interline partner by the end of the month. JetBlue currently has interline agreements with Aer Lingus, Lufthansa, Cape Air, American Airlines and South African Airways. The carrier recently added El AL to the list. JetBlue also has a one-way codeshare with Lufthansa in some markets.

Barger believes JetBlue's diverse network concentrated in New York, Boston, the Florida destinations of Fort Lauderdale and Orlando, the Caribbean and the US transcontinental market is a source of strength as consolidation continues to evolve in the USA.

"I think we feel very, very strongly abut how we're positioned in terms of what's happening," says Barger.

He also stresses that "consolidation at a high level is something we support. It is stripping out some of this unnecessary capacity".

Using the Boston-Baltimore pairing as an example for the elimination of some of that capacity Barger states: "That bodes really well for the industry, but specifically for us."

JetBlue competes with both AirTran and Southwest between Baltimore and Boston. Schedules in the Innovata database show AirTran offers 57 weekly flights on the pairing, followed by Southwest at 52 and JetBlue with 34 weekly flights in the market.