MIAMI — JetBlue Airways inaugurated its newest aircraft type, the Airbus A321, late last year. The 190 seat aircraft operated flight 3 from New York JFK International Airport to Luis Munoz Marin International Airport in San Juan, Puerto Rico. Soon after, Flight 661 bound for Bridgetown took off from New York JFK, while two other A321 flights (1103 bound for San Juan and 1601 bound for Fort Lauderdale) took off later in the day. Airways went along for the ride on the inaugural flight to San Juan.

To date, JetBlue has taken delivery of three A321s, all of which are configured with 190 seats, including 41 “Even More Space” seats featuring between 37 and 41 inches worth of seat pitch, as well as 149 standard economy class seats featuring 33 inches of seat pitch. It has orders for an additional 50 A321s in place, 39 more standard A321s, and eleven aircraft configured with the premium configuration for trans-continental flights including the new Mint premium cabin product.

The A321’s American Awakening

JetBlue is not the only US carrier for whom the A321 is currently in favor. Having entered service in 1994, the Airbus A321 is certainly not a new aircraft. It has long been a top seller in Europe (where it was an early Boeing 757 replacement) thanks to its improved fuel burn and operating costs. The 757-200 is more capable from a payload-range perspective, but on an operating basis (excluding financing costs), the A321 is roughly 20% cheaper to operate. There are currently 864 A321s in service worldwide, overwhelmingly with full service carriers (low cost carriers tend to stick with just the smaller A320 for cost purposes). However, despite its advantages, the A321 has never really taken hold in the US, until now.

(Credits: Airbus S.A.S.)
A US Airways A321 takes off from Boston Logan in 2006. (Credits: jplphoto)
A US Airways A321 takes off from Boston Logan in 2006. (Credits: jplphoto)

Early on, it made sense for the A321 to be passed over. In the 1990s, Northwest Airlines (now Delta), United Airlines, and US Airways all switched from Boeing narrowbodies, but save for US Airways (now American), the two other carriers opted to stick with their large fleet of Boeing 757-200 aircraft instead. Of course it made little sense for 737NG operators Continental, Delta, and American to buy the A321 at the time. On the part of United and Northwest, opting for the A321 at the time would have made little sense. They still had unfilled 757-200 orders at the time, and given that fuel prices were extremely low at the time (with oil prices never rising above $28 per barrel during the decade), it would have been pricier for them to operate A321s given the higher capital costs. For their part, Boeing also introduced the 737-900 series to bracket the A321 on the lower end, and thus the A321’s American future seemed bleak.

Fast forward to the early 2000s, when growth in emerging markets pushed oil prices way up, thereby making the A321 a more attractive value proposition. Unfortunately, at that point, the US carriers were in no position to buy. In the middle of a dog fight with American low cost carriers such as JetBlue and Southwest, US full service carriers were too unprofitable to be able to afford the A321 financially – they couldn’t afford to take on additional capital expense to their already ballooning debt loads. Meanwhile, the low cost carriers such as Frontier, Spirit, and JetBlue who operated Airbus A320 family aircraft, mostly opted to stay with the smaller A320 for fleet commonality purposes, choosing the aggregate cost advantages of having a single fleet over the cost per available seat mile (CASM) advantages of the A321.

By early 2008, with the US airline industry teetering on the edge, the A321’s future in the US looked bleaker than bleak. But then, a bunch of things changed, creating a unique confluence of factors that made the A321 attractive for American carriers again.

The first was consolidation. Consolidation brought together airlines with Airbus and Boeing split narrowbody fleets, illustrating that the benefits of fleet commonality were not as relevant so long as the size of each sub-fleet was large enough. Thanks to monetary stimulus from the US Federal Reserve, credit became extremely cheap, while simultaneously, tighter regulations made financing aircraft one of the most attractive investments for banks (and aircraft increasingly became seen as a safe investment). After low cost carriers increased their presence on heavily trafficked trunk routes domestically, US full service carriers realized that in order to compete, they would have to use an aircraft with lower seat mile costs thanks to increased seat capacity (given that they had higher labor and structural costs).

The first AA A321, recently delivered, arrives to NY JFK. (Credits: Jason Rabinowitz)
The first AA A321, recently delivered, arrives to NY JFK. (Credits: Jason Rabinowitz)

First to jump was American Airlines, who realized that it needed to turn over its aging fleet of Boeing 757-200s, whose high operating costs were a significant factor driving the carrier towards its eventual bankruptcy, though the order preceded the filing by roughly four months. American also saw an opportunity to replace its aging fleet of Boeing 767-200ER aircraft, which plied the premium trans-continental routes between New York JFK and San Francisco/Los Angeles, and thus its premium A321 transcontinental fleet was born. Today American has 62 A321s on order (with 3 already on property) and it will inherit an additional 17 A321 orders from pre-merger US Airways (these aircraft are being used to replace 737 classics).

Delta’s purchase of the A321 classic comes from a different place, as cheap incremental lift for a carrier that is always looking to reduce its aircraft financing load. Meanwhile, as Spirit Airlines evolved into an ultra-low cost carrier, it realized that it could use the A321 for high density routes thanks to the aircraft’s low CASM, which would allow it go even further with its strategy of offering low base fares to entice passengers before collecting massive ancillary fees.

The A321 clearly will not be able to replace every route that the 757 flies. For several routes into so-called hot and high airports in Latin America, as well as for trans-Atlantic routes, the A321 simply cannot provide the required payload-range capability, while the 757 can. But for 90% of routes in the US, the A321 is the wave of the future. And indeed the A321neo, which JetBlue has ordered 30 of (and American and Hawaiian have ordered 130 and 16 respectively) will likely have trans-Atlantic and improved hot and high capability, which will likely mark the death knell for the 757 as a passenger aircraft in the US.

Photos from the A321 first flight. (Credits: Airbus S.A.S.)
A321 first flight. (Credits: Airbus S.A.S.)
A321 rollout. (Credits: Airbus S.A.S.)
A321 rollout. (Credits: Airbus S.A.S.)

A321 reflects strategic evolution at JetBlue


For JetBlue, the A321 is just the latest in a series of steps that has seen the carrier evolve from an upstart low cost carrier to a hybrid network/low cost carrier. With moves such as building up a corporate base in Boston, shifting more growth to high yield Latin American markets, and putting more emphasis on premium ancillary products like FlyFi, Even More Space, and Even More Speed, JetBlue has made significant advancements in its revenue generation capabilities and strategies. This has become important as JetBlue’s overall cost base has risen, especially due to the benefit costs of an aging workforce, the added complexity of a widespread, multi-base network, and a fleet that is rapidly aging and beginning to come up for heavy maintenance checks (which are a significant expense). To offset these rising challenges, JetBlue needed to improve its revenue streams and reduce its CASM.

jetBlue A321 tail. (Credits: jetBlue)
jetBlue A321 tail. (Credits: jetBlue)

The A321 is the first lynchpin in achieving those goals. Seating 190 passengers versus 150 in the A320 with similar overall trip costs, the standard A321s offer JetBlue 15% lower CASM versus the main fleet of A320s. Meanwhile, the premium trans-continental A321s are the first step in JetBlue’s experimentation with premium cabin travel. The new Mint product is certainly bold and aggressive, and success in the Transcon Wars might cause the product to spread across the JetBlue network to other trans-continental routes domestically, into Latin America, and eventually across the Atlantic. With regards to the standard A321s that I flew, these aircraft will be used for high volume, lower yield destinations across the JetBlue network, especially on the trunk runs from the Northeast to Florida and the Caribbean. The San Juan hub in particular should be a major base for the type.