Will JetBlue’s arrival begin airport resurgence?

'Once service starts, we expect to see expansion.'

Not long after JetBlue Airways first took to the skies in 2000, Rhode Island officials hoping to bring it to T.F. Green International Airport began a courtship of the low-cost carrier that would last more than a decade. More

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TRANSPORTATION

Will JetBlue’s arrival begin airport resurgence?

'Once service starts, we expect to see expansion.'

BLOOMBERG FILE PHOTO/VICTOR J. BLUE
JETBLUE AIRWAYS president and CEO Dave Barger.
Posted 7/30/12

Not long after JetBlue Airways first took to the skies in 2000, Rhode Island officials hoping to bring it to T.F. Green International Airport began a courtship of the low-cost carrier that would last more than a decade.

In July, those efforts finally came to fruition when JetBlue announced it would add the Warwick airport to its list of destinations with three daily round-trip flights to Florida starting in November.

So now that Rhode Island has finally landed JetBlue, airport leaders are hoping it will mark the beginning of a resurgence for T.F. Green after years of post-recession declines in passenger numbers.

“There is anticipated to be a bump – having available seats to fill is one way to increase our numbers,” said Peter Frazier, interim president and CEO of the R.I. Airport Corporation, about the impact of JetBlue on traffic at Green. “Anytime you have a new entrant and competition, there is historically an increase. And it causes the incumbent carriers to remind people they are still here.”

To kick off its arrival in Rhode Island, JetBlue is dangling special offers – $75 one-way tickets to Florida during two weeks in early December – raising the possibility that the new competition will lead to deals from other carriers.

But the long-term impact of JetBlue’s arrival at Green will depend on whether the new planes taking off from the airport are filled and trigger more new flights.

While JetBlue is starting with three roundtrips, state and airport leaders see those flights as a jumping-off point for expansion and additional routes from Green in the near future.

At the same time it enters Rhode Island, JetBlue is also expanding its destinations in the Caribbean and Latin America, leading to speculation that service from Green to places like Puerto Rico and the Dominican Republic could be next.

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richard@langseth.com

The key to T.F. Green's proposed expansion is EDC's ability to bring in financing at a reasonable cost. Investors are eager to snap up bonds that might be floated for this venture -- but at what price?

The financing theory that was put forth in 2005 was that new levels of passenger fees (PFCs) would pay for the expansion. These fees were never approved by Congress in the ensuing six years and the future looks bleak for them. This leaves two potential sources for paying for the bonds: the airlines and the general public through a bond referundum.

Airlines continue to cut back on full size jet service at Green at rather dramatic levels. More and more regional jets and some turboprops have been put into the mix. And most of the full size jets -- especially those used by Jet Blue are newer models that are happy as fish on the existing runways. Jet Blue does not need a longer runway.

The only airline that wrote a letter of support for the runway expansion was Delta during the time when it was using very small regional jets. These small planes have been retired now due to operating costs. Delta is now closing its own regional jet operation and relying on independent operators who focus on new planes that don't need a longer runway.

This leaves air freight as the only true potential sponsor of the longer runway concept. And with Kevin Dillon moving over to Bradley with its extensive but underutilized air freight infrastructure in the Bradley Industrial Park it is unlikely that there will be any new air freight carriers coming into Green.

Although Mr. Dillon says there is no direct head-to-head competition between Bradley and Green, that is clearly not true when it comes to air freight. In fact over at Bradley his job duties include handing out tax incentives for over 1,000,000 square feet of empty industrial space in the airport's industrial park.

It's easy to get all excited about visionary projects. Look at 38 Studios. Especially when the financing companies want to sell you more bonds. But the price to support the same goes way over the top making success all but impossible.

As far as a general election bond referundum -- we all know the answer to that one!

We will not be seeing a longer runway at Green for many years to come, if ever.

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