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JetBlue and Porter Signed Interline Agreement (Updated)

 JetBlue and Porter Signed Interline Agreement

This post was originally reported on October 6, 2014 and updated on November 11, 2014 to include additional marketing information from Porter Airlines.

JetBlue Airways (B6) and Porter Airlines (PD) announced on October 6, 2014 that they have reached an interline agreement to expand their route network effective immediately.

Introduction

We will use this post to examine what this partnership means to both airlines and their competitors.

Airlines at a Glance

Airlines at a glance. Information retrieved as at October 6, 2014.
Airlines at a glance. Information retrieved as at October 6, 2014.

Both JetBlue and Porter are both considered as low cost carriers where they use a common aircrafts and similar configurations to serve passengers*.

The hub cities for JetBlue are New York JFK International Airport (JFK) and Boston Logan International Airport (BOS).  For Porte, its main operations are located at Billy Bishop Toronto City Airport (YTZ) in Toronto.

* JetBlue is expanding into the business traveller market with the introduction of its MINT product.

Interline Agreements and its Benefits

An interline agreement is one which allows two airlines to cross sell tickets to destinations served by each other and has the following benefits:

  1. Passengers would receive only one ticket between flights marketed and operated by JetBlue and Porter.
  2. Passengers would have easier connections between each airlines’ hub (Boston for JetBlue and Toronto for Porter)
  3. Route network is expanded for both airlines.
  4. Both airlines would contribute feeder traffic which would increase load factor and profitability.
  5. There is no cost to set up new operations at different cities.

Analysis

What this Means to Porter Airlines

  • Porter currently uses Q400 Turboprops in its operations which only has a range of 1,567 miles. This agreement will allow Porter to provide passengers with new destinations to farther destinations like Las Vegas, San Francisco and Los Angeles without any airport expansion or new jet purchases.
  • Within the next three weeks, Porter would expand its route network by 200% (from 6 destinations to 18 – refer to map below). It will serve a total of 28 destinations by the end of the October which is a new increase of 466%.
JetBlue and Porter Interline Agreement - Porter Perspective (network expansion)
JetBlue and Porter Interline Agreement – Porter Perspective (network expansion)

 

  • Porter is continued to face price and capacity pressure from its main competitors Air Canada and Westjet. This partnership will provide additional feeder traffic to YTZ which will assist in keeping load factor as high as possible.

What this Means to JetBlue Airways

  • JetBlue would be able to market and sell seats to Canada which it has no access to previously (refer to map for the potential marketed cities)
JetBlue perspective on marketed flights to Canada
JetBlue perspective on marketed flights to Canada

 

  • JetBlue can use the passengers being feed by Porter to build a bigger network out of Boston.
  • Since YTZ is a smaller airport compared to the Toronto Pearson International Airport (YYZ), JetBlue passengers would have shorter connection times and also benefit from a convenient location to downtown Toronto.

Key Success Factors

In order for this partnership to be successful, the following should be considered:

  1. Prices must be competitive as Canadian passengers would have to connect in Boston and American passengers would have to connect in Toronto for onwards flights. This will add to connection times.
  2. Porter might want to consolidate either its New York flights from EWR flights to JFK. This will benefit both airlines with shorter travel times (given Boston is located in upper northeast US, it will add an hour or more travel time for passengers).  Additionally,  JFK is JetBlue’s home base which has more flights available for further expansions.
  3. Marketing is key as both airlines would have to sell to passengers that flying a one connection itinerary is better than flying direct.

What about the Competitors?

Air Canada – There may be pricing pressure on routes being marketed between these two airlines. It will have to differentiate itself by stating the convenience nature of direct flights, audio-video on demand aboard many flights and the Star Alliance connections.

Westjet – There is an opportunity to expand its partnership with Delta Airlines. This will ensure that any feeder traffic would not be transfer to JetBlue/Porter. Also, Porter only operates from Ontario eastward, Westjet can market itself as the leader on lower cost flights to central and western Canada.

US Based Airlines – Unprofitable or marginal routes may be monitored and eliminated. United Airlines may transfer routes to Air Canada to operate. Delta Airlines might expand its codeshare arrangement with Westjet. American Airlines is only serving major Canadians to its hub cities of Miami(MIA), New York (JFK), Chicago (ORD) and Dallas (DFW) from YYZ and might not

Updates on November 11, 2014

Porter Airlines started emailing its subscribers and members to promote its partnership with JetBlue Airways. 22 additional destinations were cited in the emailed as served by this boutique airline.

Marketing from Porter Airlines (PD) on its new partnership with JetBlue (B6)
Marketing from Porter Airlines (PD) on its new partnership with JetBlue (B6)

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