BD, first off thanks for putting this all down. I love the long form journalism and I completely agree with your assessment of JB and the industry.
Originally Posted by
Bluedriver
Moxy, on the other hand, could enter the West coast at year 1 start-up costs, for the entire airline. Everything at year 1, using the LOWEST cost CASM aircraft on the planet. DN, being a serial successful airline start-up guy, for the right return on investment (an agreement to buy Moxy for a great price after 5-10 years) or himself possibly having a return to JB plan would be able and willing to fund this West coast Moxy start-up as a JB partner. This would relieve JB of the cost and margin killing problem of creating a West coast network via low-fare stimulation as well as not burden JB with the additional CAPEX this network would require. This also allows JB to concentrate on it's trans-atlantic aspirations. JB could never do both a trans-atlantic expansion and a West coast expansion simultaneously, as you well know.
This is likely the biggest advantage for Moxy, low cost and being a startup. Huge benefit.
In addition to year 1 costs and the A220 industry leading CASM/customer experience, DN/Moxy would also benefit greatly by being fed traffic from JB's well established East coast network. That's a big advantage, and allowed by the pilots unlimited domestic codeshare scope clause.
There are no prefect solutions for a West coast focus city available, so Moxy would likely have to hub at ONT, SJC, LAS, PHX, SAN and/or PDX. Those aren't LAX or SFO or SEA, but those gates aren't (probably not) available to anyone. So it would be a secondary airport strategy.
Don't misunderstand me, as others have done. I'm not saying Moxy replaces JB on BOS-SJC or similar. But JB might fly BOS-SJC and connect that customer onto Moxy to get to ABQ or IDA or GTF. In other words, Moxy would start an intra-west coast network fed, in-part, by connections from arriving JB aircraft into Moxy's focus city(cities).
I like this concept of taking our non-Mint transcons and giving them a boost with west coast connecting traffic (even if that traffic would be low yield)
Probably to eventually merge with JB after the West coast network is established via ultra-low start-up CASM.
Would Moxy’s future network be viable with JB’s cost structure? I genuinely don’t know, but if so then would it also be compatible with other large players in the industry? Are we facing another VX situation where we get outbid, or wind up paying too much for Moxy? On a similar note, if we are looking to merge with a lower cost structure player then why not NK and get an instant fortress hub in FLL?
Or DN is gathering capital as we speak to take JB private and combine his A220 orders into JB's.
I really would like to see this happen for many reasons. Remove Wall Street from the board room, reinvigorate employee morale, implement more ambitious growth plans. Yes, Neeleman hates pilots and is a terrible day-to-day manager, and he brought us close to bankruptcy already. But I think those traits are well known by everyone now, including himself. His strengths have the potential to catapult JetBlue into a global brand, but only if he can understand and let his weaknesses be kept in check. We’d still need a strong Board of Directors to do this.
Or the unlimited domestic codeshare is intended for an Alaska partnership (the company demanded unlimited domestic codeshare for SOMETHING, I promise you that much).
I’ll get blasted, but that’s a good plan B (Or is it Plan A?). We need people on JetBlue planes, and we have zero market penetration on the west coast point of sale. Alaska has the opposite problem. We do very very well on transcons vs them.
What I do know is that JB and DN ordered the same exact model aircraft, at virtually the exact same time, firmed up the orders at virtually the exact same time, and all of this happened exactly when the pilot contract/scope clause was finalized and at the same time the company probably knew what it wanted to do with Europe. And as stated, I don't believe what DN has told us about his plans for Moxy (Moxy could just as well be symbolic of his plan to take JB private again).
Long post, sorry.
All my opinion, of course.
I still say that Neeleman is a shrewd businessman and always looking for opportunity. If he gets a nice buyout offer for his A220 orders before the airline even gets operational then I think he would take it, no matter who it is from. If he built a nice west coast network with Moxy and got a buyout from someone then he would take it no matter who it was from.
There is only one thing JetBlue can offer him that no other airline can.
/cdn.vox-cdn.com/uploads/chorus_image/image/63863964/game-of-thrones-poster_85627-1920x1200.0.jpg)