Sure, airlines are mostly still cutting capacity, but every now and then a new route crops up on the schedules. This week it seems that Ft. Lauderdale is the winner of two such announcements in a big way. The first announcement came from Virgin America, indicating their plans to offer up four daily flights to California (two each to San Francisco and Los Angeles). Not to be outdone, jetBlue announced a couple hours later their intention to offer the “first nonstop service” between San Francisco and Ft. Lauderdale. And, while they are first, they are really only alone in the market for a day; the Virgin America service starts the day after jetBlue launches theirs.
The moves are certainly interesting and for several reasons. First, who knew that there was such a pent up demand for travel between South Florida and California? Right now there are seven daily flights between Miami and Los Angeles and another three from San Francisco to Miami, all operated by American Airlines. The represent a lift of some 1500 seats across the country. The introduction of these five flights will increase that capacity by about 35%, albeit from Ft. Lauderdale, not Miami. That is a huge increase in a market that has long been seen as questionable in terms of revenue. Oh, and jetBlue flies Ft. Lauderdale – Long Beach daily, too.
Beyond that, why Ft. Lauderdale? For jetBlue it makes a lot of sense. The New York-based carrier already has significant operations in Ft. Lauderdale and this is actually sortof bringing back a route they used to operate (Ft. Lauderdale – Oakland) that disappeared a few years ago when it wasn’t making any money. jetBlue can offer onward connections to the Caribbean and the rest of their network. For Virgin America, however, it is a strange choice. Operating out of Ft. Lauderdale is cheaper, and it also means they don’t really have to compete against American. After the heavy duty fare and bonus points wars in the Boston market earlier this year I’m sure that they’re pretty happy about that. But the smaller carriers are rarely too concerned about going for the jugular against incumbents. Is it possible that Virgin America sees the Ft. Lauderdale area as able to deliver better yields than Miami can? Lots of things have left downtown, including a lot of the wealthier residents, heading north along I-95. It seems that Virgin America is gambling that the business travel market is desperate to make a similar move.
The new schedule from jetBlue also has them removing their one-stop service via Austin, Texas. The good news there is that the San Francisco – Austin flights will now be at much better times for the locals on those routes.
Adding this much capacity to any market seems like revenue suicide for those involved; seeing it happen on transcons (more expensive to operate) in a market that has historically been very much focused on leisure travel is even stranger. Still, look for plenty of promotions and bonuses to be coming out in the weeks ahead as these new routes look to build up loads.
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Interesting move by Virgin America. Do you think Jetblue would a LAX flight too or continue (at least at the moment) to believe their single daily flight to Long Beach is competitive. Also, do you see Spirit responding as they seem to be protective of their only major base of operations? Perhaps they could add an additional LAX flight or crazily, add SFO service (I think they used to serve SFO-DTW on a seasonal basis before they went Ryanair on us.)
Hey Zack…
I cannot imagine that jetBlue will compete with themselves on the Southern California – Southern Florida routes, at least no until fuel costs drop another $10-20/barrel and demand picks up a ton. It just doesn't make sense for them to do so.
And I honestly have no idea what Spirit is going to do. They're really quite the wildcard in terms of service offerings these days. They have several routes that seem to be rather profitable and they've managed to add on a whole bunch of fees that their customers don't mind paying. Still, transcons are expensive to operate and they generally don't have the yields, especially not down the back of the plane. That being said, they do already operate a redeye from Los Angeles – Ft. Lauderdale daily that I missed before because they don't publish it in the GDS. Oops. But I'm guessing they won't do too much in terms of defending their turf there. The fares can't come down too much and I think that most folks, when given the option, would choose against Spirit if they do try to compete solely on price.
Maybe you need to check some facts before spouting garbage.
Calling South Florida-California questionable in revenue is idiotic. The average fare for Miami-Los Angeles in 2008, quarter-by-quarter, frequently was higher than even Boston-Los Angeles.
Furthermore, if the wealth has moved north, why is MIA-LAX an 85% larger market than FLL-LAX, even though MIA-LAX commands a 46% fare premium over FLL-LAX?
My favorite thing about statistics is that they often can be used to prove just about any point.
For example, the ATPI, a metric of how much fares have changed over time, suggests that FLL is actually increasing in average fare as a market faster than MIA is. In other words the money is moving north.
As for the LAX-MIA market demanding higher fares than LAX-FLL, a significant part of that can be attributed to the fact that there is only one airline operating the route non-stop so they can set the prices as they see fit.
And it is a bigger market because there are non-stop flights – 7 of them daily. Folks appreciate non-stop convenience. There is a decent chance that the new seats showing up in FLL will change things a bit.
Finally, it is entirely possible that VX and B6 will show up, have lower fares than AA from MIA and still make more money on the routes than AA does. It will take some time to figure out, but it is possible.
I certainly don't have all the answers but I'm also not completely off-base. At least not statistically speaking. 😉