Jet Blue Airways Corporation
), the U.S.-based low cost passenger carrier, has decided to stop
its New York-Pittsburgh route from February next year. Air fares
are expected to go up following the exit of JetBlue from the
The company started its flight between New York and Pittsburgh
in 2006 and has been running four flights a day. JetBlue tried
different options including marketing initiatives, special
advertisements and shifting flight timings to make the route
profitable. However, despite these efforts the route between John
F Kennedy and Pittsburgh International Airport remained
unprofitable, which is the primary reason for exiting this
JetBlue's exit leaves
Delta Airlines Inc.
), American Airlines and
US Airways Group Inc. as the direct flight service provider
within the route, while
United Continental Holdings Inc.
) flies just between Pittsburgh and Newark, which is located in
After JetBlue entered this route in 2006, the round trip fares
between the Pittsburgh and New York route reduced by 20% due to
increased competition. Until now a round trip fares between the
two cities cost at least $116.
Now, with JetBlue's exit, there will be a demand-supply
mismatch due to less availability of seats in that route. This
has already resulted in a sharp rise in the future airfares. The
round trip fares within the route for March 2013 have skyrocketed
to as much as $600.
A similar rise in airfares was observed when
) dropped its Pittsburgh-Philadelphia route leaving US Airways as
the sole carrier in the route. Round trip fares jumped almost 6
times from $118 to $698 at that time.
Sealing the route will help the company reduce its losses and
employ its resources in the more profitable routes. Nevertheless,
we believe the ultimate loser with the closure of the route will
be the customers, who have to shelve out more money as their
We are maintaining our long-term Neutral recommendation on
JetBlue. Currently, the stock holds a Zacks #3 Rank, implying a
short-term Hold rating.
DELTA AIR LINES (DAL): Free Stock Analysis
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
UNITED CONT HLD (UAL): Free Stock Analysis
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