OPEN CITY: THE BATTLE FOR BOSTON
By Joe Brancatelli
April 30, 2009 -- Awash in a swine-flu scare and spooked by low-flying government aircraft, what we need right now is a good, old-fashioned War of the Airlines. You know, the kind of war where the carriers invade new markets, fall all over themselves to add new routes, cut fares and generally promote themselves silly to win our business.
I am thrilled to report that we now have a War of the Airlines--in Boston, where Logan Airport remains curiously unconquered and defiantly welcoming to new carriers. With no incumbent owning as much as 20 percent of the market, New England's only major airport really is, with apologies to Roberto Rossellini, an Open City.
In the last two months, Virgin America and Southwest Airlines have invaded Logan, which handles about 23 million passengers a year. Virgin America launched daily flights to both Los Angeles and San Francisco on February 11. Its initial one-way coach fares were as low as $109, but subsequent sales knocked prices down to as little as $79 on some midweek days. And earlier this month, Southwest announced it would fly from Logan to Baltimore Washington International and Chicago's Midway Airport. Service begins on August 16 and one-way fares will be as low as $49 to BWI and $89 to Midway.
It only took a few days for JetBlue Airways, the putative Boston incumbent with about 17 percent of the market, to respond to Southwest's incursion. Last week, JetBlue announced its own Boston-BWI service starting September 9--and its introductory price is just $39 one-way. (JetBlue already flies to Chicago/O'Hare.) JetBlue isn't ignoring Virgin America's arrival, either. It'll resume flights tomorrow from Boston to San Francisco, a route dropped last year during the run-up in oil prices. Logan-Los Angeles runs begin on June 17, supplementing JetBlue's existing service to Long Beach.
When it's finished adding in Boston, JetBlue's 2009 summer schedule will have as many as 62 flights a day, up from 53 last year.
"The great thing about Boston is that it's diverse," says Robin Hayes, JetBlue's executive vice president and chief commercial officer. "There are students. There's some financial and medical business. And there's tourism. JetBlue does well in those kinds of environments.
JetBlue's rise at Logan, one of the few big-city airports that isn't a fortress hub, is relatively recent. Until well into 2007, both Delta Air Lines and American Airlines were Boston's big dogs. But Delta has refocused on New York's Kennedy Airport and its hometown of Atlanta since its bankruptcy in September, 2005. It is now fourth in the Boston market, with about 13 percent of the traffic. US Airways, which competes with Delta on traditional East Coast Air Shuttle runs to New York and Washington, is third in the field with about a 14.4 percent share.
American Airlines, which considers Boston a hub city, operates to California, Europe, the Caribbean and its other domestic hubs. After losing several high-profile battles to JetBlue in other markets earlier in the decade, American had quietly settled into the Number 2 spot at Logan and commands about 15 percent of Logan's traffic. It has been more animated since Virgin America's arrival, however, and unleashed a battery of frequent flyer promotions, bonus miles offers and a few new flights. It's also renovating its aging Admirals Club lounge at Logan.
As most of you already know, Virgin America's Boston service is almost accidental. The 20-month-old carrier originally announced it would fly to Chicago. But when it couldn't find take-off and landing slots at O'Hare, it hastily settled on the new service to Logan. Like everywhere else it flies, however, Virgin has had to discount heavily to fill its planes despite generally good reviews from passengers. And the convoluted "citizenship" issue before the U.S. Department of Transportation makes it difficult to predict Virgin America's staying power.
The arrival of Southwest is another matter. It's the nation's only consistently profitable airline (although it lost a surprising $91 million in the first quarter). It has proven extraordinarily nimble and successful in big cities that it once shunned. (It began flying to Northwest's Minneapolis hub in March and begins service at New York's LaGuardia Airport on June 28.) And it has spent a dozen years preparing for its Boston debut by pouring flights into secondary New England airports in Providence, Rhode Island, and Manchester, New Hampshire.
"I'm just glad I don't have to fight in Boston," one airline executive told me last week. "It is going to be very entertaining to watch."
Of course, turf wars were common after the 1978 deregulation of commercial aviation. The bloodiest was in the 1980s as United, Continental and the original Frontier battled for control of Denver's old Stapleton Airport. The fight led city officials to plan the new Denver International Airport with three terminals, one for each combatant. But long before the airport opened in 1995, Continental withdrew and Frontier had been sold to PeoplExpress, which was eventually absorbed into Continental. A new Frontier is back to harass United and Southwest started flying from Denver International in 2006.
Another brutal battle was in Detroit between Northwest and a grab bag of carriers (Southern, North Central and Hughes Airwest) that formed Republic Airlines. It ended in 1986 when Northwest bought Republic. Northwest and its commuter carriers now command about 70 percent of Detroit's traffic. Northwest, of course, is being merged into Delta Air Lines, which fought its own legendary war for control of Atlanta with Eastern Airlines. That ended when Eastern collapsed in 1991. But Delta lost a 25-year battle for Dallas/Fort Worth Airport to American Airlines, which also beat back a challenge from three separate carriers named Braniff. American even paid one of the Braniffs to relocate its hub to Kansas City.
Who'll win the battle of Boston? Delta and US Airways will to continue to shrink as travelers abandon the Air Shuttles. American will probably contract, too, since transatlantic flights are suddenly emptying out, Caribbean service is rarely profitable over the long haul and there's far too much capacity on the transcontinental routes.
That leaves JetBlue and Southwest to fight for control of Logan, and by extension, all of New England. And won't that be fascinating to track as it plays out?
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
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