JetBlue likely to spur Newark-Boston fare war

JetBlue likely to spur Newark-Boston fare war

FRIDAY, SEPTEMBER 10, 2010
BY  RICHARD NEWMAN
STAFF WRITER
THE RECORD

Steep last-minute fares on flights between Newark Liberty International Airport and Boston's Logan International Airport are expected to come down to earth next year when JetBlue Airways Corp. enters that market.

Continental Airlines Inc. — which plans to finalize its pending merger with United Airlines on Oct. 1 — is the only major carrier serving that busy route. Lately it has been charging as much as $906 round-trip in coach for the same travel dates on which JetBlue was charging $133 round-trip from nearby John F. Kennedy International Airport.

"Round-trip pricing for Newark to Boston is in the mid-800s inside of seven days, and the price drops below $200 outside of seven days," said FareCompare Chief Executive Officer Rick Seaney. "They really squeeze last-minute business travelers."

While leisure travelers tend to book well in advance, less-price-sensitive business travelers are more likely to buy tickets at the last minute and pay a premium, although that premium is often much smaller where there is competition from low-cost carriers. Seaney said Continental will have to match JetBlue's lower fares when the New York City-based rival begins flying the busy Newark-Boston route in the spring or lose a lot customers.

"It's going to be a boon for people on that route," he said. "This will spur a price war. Expect three to four months of ridiculously low prices, and then fares will creep up to some equilibrium."

The Newark-Boston route is one of the busiest for Continental with 11 daily departures — nine on Boeing 757s that seat about 115 people and two on Bombardier Q400 turboprops that accommodate 74 and are operated by regional affiliate Colgan Air Inc.

The company declined to discuss its ticket prices. "We've been competing with low-cost carriers in the New York market for years and will continue to do so," said Julie King, spokeswoman for Continental Airlines.

JetBlue said recently it will begin four flights a day between Newark and Boston in early May 2011. With the addition of Newark flights, JetBlue will fly to 39 airports from Logan, the carrier said.

JetBlue — which flies Airbus A320 jets with 150 seats and Embraer 190 regional jets that seat 100 — has been flying to Florida out of Newark since 2005 and competes with Continental there on routes to Fort Lauderdale, Fort Myers, Orlando, Tampa and West Palm Beach.

Searches done Thursday on JetBlue's and Continental's websites for flights to Fort Lauderdale and Tampa, departing Sept. 27 and returning Sept. 30 showed both were charging $168 round-trip, not counting taxes and fees.

Continental's dominance at Newark allows it to charge higher prices than it otherwise would if it faced more competition, industry observers say. The Houston-based airline carries seven of every 10 passengers at New Jersey's largest airport.

In the first quarter, Newark had the highest average domestic fare of any large airport in the Northeast, according to the Department of Transportation. Newark's average fare of $422.87 was the fifth highest in the country.

The other two major New York City area airports, JFK and La Guardia, ranked 37th and 55th, respectively, with average fares of $343.94 and $318.09, according to the most recent statistics from the Department of Transportation.

At those airports, no airline handles more than a 30 percent of the traffic, according to statistics from the Port Authority of New York and New Jersey.

The U.S. average fare was $328.12 in the first quarter, DOT said.

Some industry observers believe JetBlue's recent announcement of plans to start a Newark-Boston route was an attempt to preempt Southwest Airlines, which also may be contemplating a springtime Newark-Boston service launch.

"Southwest may be thinking about that, and [JetBlue] wanted to strike first," said Seth Kaplan, managing partner at Aviation Weekly. "For JetBlue, Boston is a big deal."

In a merger-related divesture, Continental and United agreed to give Southwest 36 takeoff and landing slots at Newark, enough for 18 daily round trips, to assuage regulators' concerns about a lack of competition. Southwest, which has a history of driving down fares when it enters new markets, has not said where it will fly from Newark.

Fare game

Newark Liberty International Airport is among the most expensive airports in the country for domestic travelers. It had the highest average domestic fare of any airport in the Northeast in the first quarter and was the fifth-highest in the U.S. behind Huntsville, Ala.; Charleston, S.C., and the Knoxville and Memphis airports in Tennessee
The following averages include both one-way and round-trip ticket purchases.

Airports	Average fare	Rank
Newark Liberty International	$422.87	5
John F. Kennedy International	$343.94	37
La Guardia	$318.09	55
All U.S. airports	$328.12

Source: U.S. Department of Transportation

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