Originally Posted by
sailingfun
What you forget Gloopy which has been shown time and time again and even has a name (SouthWest Effect) is that if your CASM is low enough you can generate traffic in markets that otherwise would not support service. Southwest has seen cost increases that price them out of a market that was named for them. JB however still has that ability. The lower the fare level you can offer and still make money in a specific market the higher the number of potential customers.
You also forget one other huge factor when you speak about Boston. AMR is coordinating schedules with JetBlue. They are giving them many very good routes that once were flown by American especially in the SJU and Caribbean Markets. AMR drops a BOS to SJU market and the next day JB starts up that flight at the exact same time. Net number of seats in that market does not change.
And a very large part of the BOS capacity reductions that have enabled massive, unchallenged JB dominance in that phenominal market is DL's surrender of much of it. IMO JB in BOS is even more vulnerable than AT was in ATL (even before the SW merger DL beat them back over 20% and since the merger they've went from 250 to 175 flights a day and falling), DL has just made an incredibly short sighted mismarketing decision to abandon the market (other than hub to hub and a small hand full of specialty routes). We're sitting on a severely underutilized Taj Mullin terminal and further funding JB dominance by taking all of UAL in addition to AS with suboptimal gate utilization for what we still do out of there. Meanwhile, JB keeps printing money out of that market and all we do is throw our hands up like there's nothing we can do about it. They're not just talking AA flying, they are growing like wild fire while DL, US and AA all mindlessly retreat to keep yields up. That stratedgy is pure amature hour and whatever little premium we reap from it now will be paid back with severe interest later in lost market share in one of the best markets in the country.
They have already reached critical mass with the business community there, despite the limited reach of their over all network (endless codeshares notwithstanding) that they have become a dominant choice for the localized network they've build there. People and businesses are flying them just because they fly so much out of there to so many places.
JB (and others like them) are especially vulnerable as the very quickly hit the back side of the power curve when they are ruthlessly competed against. When cornered, they will try to bleed you out with 25 dollar fare sales or whaver, and hope you blink before they do. So far its worked. Their costs are rising and they have big debt and MX payments coming up. Time to pounce hard IMO, but we'll probably just yield even more market share to them, keeping them in endless growth mode for many more years.
Their order book and the order books of those like them are for the most part a zero sum game, especially in a faltering economy. Someone will have to park planes and pull down regularly to accomidate their fantasy order book that is pure growth. Add VX into the mix, other ponzi scheme start ups and even balsy Allegiant moves and its war. All our generals have in their stratedgy book is to hide behind the Maginot Line of capacity reduction to enable them to continue to outflank us on their terms.