JetBlue Airways Corporation got its start in New York, but it has been working to diversify its network for the past five to 10 years. First, it built up Boston as a second focus city. More recently, it has been making inroads in Fort Lauderdale.
The ultimate goal of making Fort Lauderdale a third key base in JetBlue's network has remained a constant for the past few years, but the carrier's tactics have shifted. Let's take a closer look at JetBlue's growth trajectory there.
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Big plans in South FloridaJetBlue has publicly outlined a goal to grow its Fort Lauderdale operation to 100 daily departures by 2017. It overtook Spirit Airlines for the top market share position at Fort Lauderdale-Hollywood International Airport a few years ago.
JetBlue has surpassed Spirit Airlines as the market share leader in Fort Lauderdale. Source: Spirit Airlines.
Now JetBlue is distancing itself from Spirit and No. 3 Southwest Airlines . As of December 2014, JetBlue held 22% of the Fort Lauderdale market, compared to 18% for Spirit and 16% for Southwest. However, in the broader South Florida region, JetBlue remains a distant second to American Airlines, which operates a big hub in Miami.
The view from 2013Just two years ago, JetBlue operated a little more than 50 daily departures in Fort Lauderdale, but it was already working on its plan to reach 100 daily departures by 2017. At that time, JetBlue's Chief Commercial Officer (and now CEO) Robin Hayes projected that most of the growth would target international markets in Latin America and the Caribbean.
JetBlue's growth during 2013 reflected that line of thinking. During 2013, JetBlue added daily flights from Fort Lauderdale to San Jose, Costa Rica; Medellin; and Lima; and twice-daily service to Port-au-Prince. In contrast to all of these new international destinations, JetBlue added just one new domestic route in Fort Lauderdale: daily service to Worcester, Massachusetts.
JetBlue continued on its international growth path in early 2014. During the first half of last year, JetBlue added new daily flights from Fort Lauderdale to three destinations in the Caribbean: Montego Bay, Port of Spain, and Punta Cana.
JetBlue added lots of international flights from Fort Lauderdale in 2013 and early 2014. Source: JetBlue.
However, as 2014 progressed, JetBlue and other airlines ended up adding too much capacity on Caribbean and Latin American routes, weighing on unit revenue trends in the region. As a result, JetBlue had to rethink its aggressive international growth plans in Fort Lauderdale.
Going domesticIn the past year or so, JetBlue has executed a nimble 180-degree turn in Fort Lauderdale. Rather than adding more southbound flights, it has focused on adding domestic flights.
Thus, when JetBlue added five new daily departures to its schedule in Fort Lauderdale last fall, only one was an international flight (serving Cartagena). At the same time, JetBlue added daily flights to Pittsburgh and Las Vegas and twice-daily service to Jacksonville.
Thus far in 2015, JetBlue has continued to grow its domestic presence in Fort Lauderdale. New daily flights to Cleveland and Detroit are scheduled to begin next month. Last week, JetBlue announced that it will start flying twice daily from Fort Lauderdale to Baltimore in November. JetBlue is also expected to begin a daily flight from Fort Lauderdale to Albany in November.
Unpacking JetBlue's strategyBy orienting its recent growth toward the domestic market rather than international routes, JetBlue is flying where the supply demand balance is most promising.
Growing in the domestic market also means competing more with Southwest rather than Spirit. While both JetBlue competitors fly to many of the domestic cities JetBlue has added to its Fort Lauderdale route network, Southwest tends to have higher market share on those routes. By contrast, it has virtually no international flights, whereas Spirit flies to numerous international destinations from Fort Lauderdale.
Targeting Southwest rather than Spirit is important because JetBlue can afford to compete on price with Southwest, while it must compete with Spirit based on its superior service. Demand is very price-sensitive on many of the international routes out of Fort Lauderdale, which makes this more challenging.
Undoubtedly, JetBlue will resume its international growth in Fort Lauderdale in the future. (In fact, it has already applied to begin twice-daily service to Mexico City.)
In the meantime, adding domestic routes will enable more connections, broadening JetBlue's addressable market for flights to the Caribbean and Latin America. This should improve the profitability of its international flights in Fort Lauderdale and help JetBlue go head to head against Spirit Airlines' no-frills flights in new international markets.
The article What's JetBlue Airways Corporation Up To in Fort Lauderdale? originally appeared on Fool.com.
Adam Levine-Weinberg owns shares of JetBlue Airways. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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