Does Jetblue Enjoy Higher Yields from New York Kennedy Than from Newark or Laguardia?

Does JetBlue enjoy higher yields from New York Kennedy than from Newark or LaGuardia?

Abstract

This mini research analyzed fares for JetBlue Airways flights from New York metropolitan airports [New York Kennedy (JFK), Newark (EWR) and LaGuardia(LGA)] to four selected destinations; Orlando (MCO), Fort Lauderdale (FLL), Austin (AUS) and San Francisco (SFO). The objective was to establish if JetBlue enjoys higher yields for flights from JFK than LGA or EWR. The result was that fares for flights from JFK and LGA are similar and consistently lower than flights from EWR. The reason could be that JFK is JetBlue Airways hub and by proximity LGA could be considered to have similar hub factors. This research explored the hub effect on fares. However, other factors should be explored and analyzed to establish and pin down the specific reasons behind the fare differences between the NY metropolitan airports.

Introduction

JetBlue is a low cost carrier with its headquarters in Long Island City. It uses JFK as its hub and operates to 75 destinations in multiple cities. It is the largest airline in the Northeast of United States. It flies to different destinations out of the three major airports (JFK, EWR and LGA) serving New York/New Jersey metropolitan area. Given the relative proximity of these airports, one would assume that JetBlue has similar fares to same destinations. After deregulation of 1978, airline pricing increasingly became complicated as opposed to the CAB pricing system based on cost per available seat mile. Factors affecting airline pricing strategies can be grouped into five factors; costs, demand, supply, competition and rates and taxes. Therefore any factors affecting these group of factors can potentially affect the fares of a particular flight or the pricing in a specific market.

JFK

It is the largest of the three major airports serving the NY/NJ metropolitan area. It is the primary hub for JetBlue as well as the principal international gateway airport for the northeastern United States. In 2010, it handled 46.5 million passengers.

EWR

It is the gateway to the second largest metropolitan area in the world, being only 14 miles from Manhattan. EWR is 36 miles from JFK. It serves a crucial role in the NY-NJ-Pennsylvania area as well as international destinations. In 2010, it handled 33 million passengers.

LGA

It is the smallest of the three New York airports and mainly handles domestic flight. It is closest to Manhattan and is only 12 miles from JFK. It served 24 million passengers in year 2010.

JetBlue Pricing Strategy

According to JetBlue CEO, JetBlue does not only consider traditional airlines like Delta and United as the only competitors but takes