MIAMI — Back in July, JetBlue Airways announced intentions to begin serving Atlanta’s Hartsfield–Jackson International Airport (ATL) starting in September 2017. The New York-based airline says it plans sixteen daily flights, provided it can gain access to two gates at the airport, suitable for larger aircraft.

At the time of the announcement, David Clark, JetBlue’s vice president of network planning, championed the move as a win for consumers, claiming that the Atlanta market “is currently overpriced and [suffers] from insufficient competition.” Airport spokesman Reese McCranie also expressed excitement to welcome the new carrier, stating that JetBlue’s letter of intent “underscores our commitment to attracting new service to Atlanta and increasing competition.”

This will mark a return to Atlanta for JetBlue, which previously served the airport back in 2003. However, the airline pulled out only six months later, citing competitive pressures from Delta and AirTran (which has since merged into Southwest Airlines).

The letter of intent left the destinations to which JetBlue plans service a lingering question. So what exactly might JetBlue have in mind from Atlanta? Furthermore, why is JetBlue really interested in re-entering Atlanta, still a hub for Delta and now a focus city for Southwest?

JetBlue will likely target its other focus cities with initial service

Without providing specific destinations, JetBlue’s letter of intent stated that it plans a total of sixteen daily flights from Atlanta. This tells us a couple of things. Firstly, JetBlue is making a relatively serious investment in the Atlanta market. Assuming the airline operates all of its flights with 150-seat Airbus A320 aircraft, it will add a total of 2,400 seats per day to the market – a significant amount of capacity.

Secondly, with sixteen daily flights, it is clear that JetBlue envisions flights to several destinations. JetBlue is unlikely to swamp its Boston and New York hubs with a heavy dose of frequency. According to schedule data from Diio, Atlanta-Boston already features sixteen daily flights. Meanwhile, the broader New York City metro area (LGA, EWR, and JFK, taken as a whole) shoulders a whopping fifty-three flights per day. This doesn’t leave JetBlue much room to grow without overburdening the market with capacity.

Probably, it hopes to serve several destinations with two or three daily frequencies – with at least a morning and evening flight to capture business traffic, and for its more leisure oriented markets perhaps a mid-day flight.

In addition to Boston and JFK, JetBlue also maintains domestic focus cities at Fort Lauderdale, Orlando, and Long Beach. JetBlue will probably aim to connect Atlanta with each of these focal points within its network with some degree of capacity. Particularly with Long Beach, flights to Atlanta may represent the most attractive option to better utilize its slots, which have come under fire from Southwest Airlines. JetBlue needs a more long-term solution in Long Beach, rather than simply filling its slots with short-haul service – a game is it bound to lose with the ensuing Southwest-Alaska turf war.

The airline also operates a focus city in San Juan, Puerto Rico. Instead of initiating service directly connecting Atlanta with San Juan, however, it seems more likely that JetBlue will try to flow traffic through either its Orlando or Fort Lauderdale operations, rather than overfly these two bases.

It’s also doubtful that JetBlue gets adventurous right off the bat in Atlanta, experimenting with service to markets where it doesn’t already have a decent presence. The airline will want to gauge Atlanta’s performance for some time before venturing out with further growth.

My prediction for JetBlue’s destinations and corresponding frequencies is as follows:

    • Boston (BOS): 4x daily
    • New York (JFK): 4x daily
    • Fort Lauderdale (FLL): 3x daily
    • Orlando (MCO): 3x daily
    • Long Beach (LGB): 2x daily

In wake of Alaska/Virgin merger, JetBlue looks to strengthen its East Coast game

On more broad terms, JetBlue’s announcement raises the question: why does it actually care about Atlanta? What strategic value might Atlanta offer the airline?

It is one of the worst kept secrets that JetBlue seriously pursued Virgin America as a merger partner, only to lose a bidding war with Alaska Airlines (which paid a heart-stopping price of $57 per share). Virgin America would have wonderfully complemented JetBlue’s transcon game, adding big assets in Los Angeles (LAX) and San Francisco (SFO) to its network.

However, Virgin is ultimately bound to join the Eskimo, leaving JetBlue needing an alternate plan to grow. What Atlanta may signal is a renewed focus on the East Coast by JetBlue, as the new Alaska tries to become a West Coast titan. JetBlue may notice a similar niche opportunity for itself in the east. It, like Alaska, is generally well-loved among fliers, a reputation off which it can build among a customer base which already recognizes its brand.

Despite the rhetoric the airline may toss out, this is in no way about addressing a competitive need in the Atlanta market. Perhaps if the clock were turned back a few years, JetBlue’s arguments would have some merit. The market was indeed suffering from some unusually high airfares, perhaps caught in the wake of the Southwest-AirTran merger.

However, as Department of Transportation data clearly shows, airfares in Atlanta have been on the decline recently, and are now about in line with the national average. Furthermore, the local market has benefited tremendously from the entrance of ultra-low-cost carriers (ULCC’s), namely Spirit and Frontier. Both airlines have expanded aggressively in Atlanta, and during peak season this summer offered over 30 flights per day collectively to a myriad of markets (true to their ULCC form).

B6 ATL_DOT airfare data

And although Frontier recently unveiled some drawbacks in Atlanta, their moves – not JetBlue’s – have quenched the market’s competitive thirst. Furthermore, assuming JetBlue does indeed plan to link just its current focus cities with Atlanta, the competitive benefit to local consumers will be in fact relatively small.

The Boston, New York, and Los Angeles markets already feature significant competition. The same can be said about the Florida market, particularly with Spirit recently announcing additions there and Southwest’s continued presence. And so long as JetBlue sticks with its hybrid model, positioned between the legacies and the ULCC’s – there is absolutely no way the carrier will undercut the likes of Spirit, on the basis of price at least.

JetBlue’s flights will certainly never hurt the competitive landscape in Atlanta, and no one can really fault their executives from trumpeting the competition card at the end of the day. Nonetheless, it would be misleading to take this explanation simply at face value.

JetBlue appeals to Wall Street with more unit-friendly growth

Another factor which may explain JetBlue’s interest in serving Atlanta is Wall Street’s demands for the airline to grow in a friendlier way to unit revenues. Shares of JetBlue stock have been on the decline, suffering from hits in a key industry metric known as PRASM (passenger revenue per available seat mile). Although JetBlue has not been alone in facing revenue headwinds, its trends have certainly been concerning, leading the company to cut full-year capacity growth estimates.

B6 ATL_JBLU stock

At the end of the day, Atlanta represents one of the primary business markets on the east coast. Growing in an environment with a significant mix of business travelers may help slow revenue declines, as compared with leisure-oriented markets which accompany more headwinds until the routes reach maturity. JetBlue probably believes it can achieve good yields in Atlanta, especially with its more premium product that business customers will enjoy.

It’s important to note that PRASM is not an end game in and of itself. But so long as Wall Street continues to pay the metric attention (arguably more than it should), JetBlue has no choice but to take steps to please investors. Atlanta certainly seems consistent with that mission.

Hartsfield-Jackson set to add another carrier, routes likely to be announced by year end

JetBlue is a major catch for Atlanta’s Hartsfield-Jackson, already the world’s largest airport. For the first time last year, the airport became the first to reach 100 million passengers. It looks to keep on building with the addition of JetBlue and its sixteen daily flights.

Atlanta is an equally big move for JetBlue, as it marked one major hole in the airline’s route map. We may not learn JetBlue’s exact intentions for several more months, as the airline generally releases flight schedules with less lead time, about eight months in advance.

In the meantime, Atlanta-area travelers have a new airline on the way. JetBlue is finally bound for ATL.