Additionally, JetBlue is now seen as a customer service-oriented carrier, not just a low cost one. For example, almost every airline in the United States charges for checking bags, and even Southwest Airlines Co. (NYSE:LUV) charges if a passenger has more than two bags. But, that service is still free on JetBlue. Another example, JetBlue has no flight change fees, plus free satellite radio and satellite TV at every seat. No other carrier offers all these things. Southwest Airlines Co. (NYSE:LUV) has just the no flight change policy.
Expansion in key geographical markets
As US Airways and American Airlines began to reduce flight frequencies at Boston’s Logan International Airport, JetBlue started increasing its presence there. Now, it has become the most prominent carrier at Logan. Solid presence at Logan is a boon for JetBlue, as Boston has a high proportion of corporate travelers and business fares. As the company expands in Boston, its yield per mile and average ticket price both increased 10% in 2012, compared to the previous year.
Additionally, the company has boosted its presence in Caribbean markets, especially in San Juan, which now account for 27% of total seating capacity. The Caribbean operations are at break-even, and should contribute to income in 2014.
JetBlue plans to double the number of flights at Ft. Lauderdale to 100 per day. Though it will require some investments, it’s another big opportunity. JetBlue’s operations at the Florida hotspot are already income-positive.
March traffic shows solid growth
JetBlue Airways Corporation (NASDAQ:JBLU) reported that its March 2013 traffic increased 8.6% from March 2012, while capacity increased by 7.5%. The carrier’s PRASM (preliminary passenger revenue per available seat mile) increased 7% in March year-over-year, and load factor jumped 0.8% to 87.1%.
Let’s compare that to Southwest, whose traffic rose just 4% in March, while PRASM was stagnant. Southwest reported a capacity growth of just 3.8% compared to JetBlue’s 7.5%. The percentage of seats filled, or load factor, rose to 82% from 81.8%, but that’s still far lower than 87.1% of JetBlue.
Bottom line
JetBlue has certainly been reducing its long-term debt load, while growing the aircraft fleet. If economic growth and fuel environments remain favorable, earnings are highly likely to grow, thanks to improving revenue-per-available-seat-mile and occupancy.
Even a soft economic environment would benefit low-cost carriers like JetBlue because the company would then be able to target corporate travelers who usually fly business class, but have had to cut travel expenses.
The article Is It Time To Get Bullish On JetBlue? originally appeared on Fool.com and is written by Jeremiah Feliciano.
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