JetBlue Looks to Latin America

JetBlue recently filed for authority to fly between Orlando and Bogota, Colombia, as well as Fort Lauderdale and Bogota. The daily flights, which JetBlue hopes to start next April for the Orlando route and next October (in just under a year) for the Fort Lauderdale route, would represent a change in the airline’s strategy, which has been to avoid the Latin America market. While JetBlue has expanded its presence in the Caribbean, offerings flights between New York and more than a half dozen destinations in the Caribbean, JetBlue hasn't made the leap to Central or South America, save for a daily flight or two to Cancun. JetBlue has done that in part because not only is Latin America a difficult region to break into, but the carrier that dominates traffic between the US and Latin America, American Airlines, is one that has a very significant presence in key JetBlue markets: New York and South Florida. American has near-monopoly status on many Latin American routes, and as a result, has been able to charge very high fares and drive away competition. However, with low-cost carriers searching for ways to diversify themselves, American will face a new round of competition on some of its Latin American routes. For example, American has been recently pressured by Spirit Airlines, which has discounted fares considerably on routes between South Florida and the Caribbean and Latin America.

JetBlue recognizes that a significant market opportunity exists to offer an intermediate standard between American and Spirit. JetBlue would offer lower fare service than American but with more amenities (though perhaps not with the generous loyalty program and other features that business travelers demand). Many businesss travelers would continue to fly American, but JetBlue could attract a significant share of the leisure market. If JetBlue is able to get the requisite slots, it could be a major boon for South Florida residents, who don't want to have to choose between Spirit's ultra-low-fare and even lower quality service or American's sky-high prices.  However, there are issues stemming from whether JetBlue can get the necessary authority, due to the fact that American holds the rights to some slots which it has chosen not to exercise until recently, and so it's not a sure thing that JetBlue will be able to fly these routes.

However, even if JetBlue doesn't get the necessary authority, this move signals that the company is serious about expanding into Latin America, and will likely continue to take more stabs at the idea in the future. If not Colombia, then Costa Rica, Panama, Ecuador, Peru, and even Brazil are definite possibilities for JetBlue, as these are all relatively high-yield markets dominated by American. American and Spirit will fight hard to keep JetBlue out of Latin America for as long as possible, and could likely succeed in the short term, but if JetBlue is able to enter these markets, it will enable the carrier to make substantial profits while diversifying itself away from lower-yield, competitive routes along the East Coast.