According to the Hawaii Tourism Authority, Hawaii saw the volume of air arrivals increase by 4.1% in November 2018, growing from 739,672 arrivals in November 2017 to 770,126 arrivals in November 2018. Air arrivals from the USA grew by 10.2%, from 454,892 in November 2017 to 501,237 in November 2018, grew by 3.1% from Japan (to 133,521 air arrivals). Air arrivals grew by 0.7% from Canada (to 52,757 air arrivals). Tourist spending in November fell by 0.3% to $1.283 billion.
Through the first eleven months of 2018 Hawaii saw a 6.2% increase in the volume of air arrivals, growing from 8,409,513 arrivals in the first eleven months of 2017 to 8,933,763 air arrivals in the same eleven months of 2018. Air arrivals from the USA increased by 9.3% in the first eleven months of 2018, growing from 5,289,219 air arrivals in 2017 to 5,778,352 air arrivals in the same eleven months of 2018 but fell 1.5% from Japan (to 1,440,289 air arrivals). They grew by 3.4% from Canada (to 465,497 air arrivals). Total tourist spending grew by 8.0% in the first eleven months of 2018, from $15.02 billion in 2017 to $16.22 billion in 2018.
Global travel platform Expedia Group has shared the company's latest insight for the Caribbean based on data pertaining to star rated properties in the region. The findings, which analyzed data from resorts and hotels located throughout the Dominican Republic, Jamaica and The Bahamas, reveal that demand for five and four-star classified properties has increased year-over-year in the first three quarters of 2018; furthermore, four-star rated properties are the most popular category across the three island destinations.
Expedia analyzed various data points related to star-rating including growth, booking windows, mobile demand growth and length of stay.
Dominican Republic: Excelling in high-end vacations
According to the latest numbers released by Dominican Republic's central bank, the country's tourism sector is surging after receiving over five million international arrivals from January to September, further solidifying the country's position as the most visited Caribbean destination in the region. This popularity is reaffirmed among five and four-star properties in Dominican Republic, where Expedia recorded that these properties in Dominican Republic grew faster than the overall growth when compared to the same time period the year before, due to new lodging supply and rising demand for luxury lodging.
Moreover, package demand at four-star properties for travelers coming from Spain to Dominican Republic grew more than 380 percent year-over-year, almost 435 percent for travelers coming from Brazil and almost 2,250 percent for travelers coming from Chile.
The top five markets in Dominican Republic for four-star properties demand are: Bavaro, Macao, Uvero Alto, Cabeza de Toro and Puerto Plata.
Expedia data also revealed that booking windows tend to be longer for five and four-star properties, averaging 69 days, while three- and two-star properties averaged 61 days. Similarly, travelers tend to stay longer in Dominican Republic when booking an upscale or luxury vacation; the average length of stay for five-star and four-star hotels is five days.
The travel platform also reports that the all-inclusive category in Dominican Republic continues to grow faster than any other property segment.
Jamaica: Travel packages including four-star hotels increase in popularity
With over three million visitor arrivals in the first three quarters of this year per the Jamaica Tourist Board, Jamaica's four-star hotels have increased in popularity with travelers who search for packaged deals. Package demand at four-star properties in Jamaica has increased almost nine percent year-over-year from travelers coming from the US.
Additionally, Expedia recorded an increase of US mobile demand to the Caribbean destination with hotels of every rating reporting an increase above ten percent year-over-year.
Similar to Dominican Republic data, upscale stays tend to be longer averaging about four days.
Bahamas: Four-star properties leading the pack
The majority of demand to The Bahamas across Expedia Group sites is attributed to four-star stays, a segment which represents almost 75 percent of the package demand. This star rating is popular among travelers coming from the US, showing an increase of more than 65 percent year-over-year, for Canada, almost 160 percent, and for the UK almost 40 percent increase year-over-year.
Five-star stays represent a little over four percent of the package demand in The Bahamas.
As with the Dominican Republic, booking windows and length of stay averages tend to be longer for travel to upscale and luxury properties in The Bahamas. Five, four and three-star properties all reported booking windows that exceed 60 days. Similarly, these hotel categories averaged stays of four days.
Bahamian EP properties and all-inclusive properties are both growing at similar rates, which is four times more than the overall growth in the Caribbean.
By Amy Hinote - Editor in Chief, VRM Intel Magazine.
Over the last two decades, experienced vacation rental professionals have predicted market performance using a set of economic indicators, including real estate activity, consumer confidence, unemployment, hotel performance, gas prices, international travel behavior, and vacation rental awareness.
The effect of these indicators differs across destinations. What is a positive sign for ski markets can be a negative predictor for southeast beach destinations, and metrics that are positive indicators for destinations reliant on airline traffic can negatively affect drive-to markets. Additionally, in destinations with a major metropolitan market as the top feeder market, indicators perform differently than in drive-to markets whose major feeder markets are more heavily composed of mid-size cities and rural areas.
In the vacation rental industry, we are just beginning to establish definitive correlations between economic conditions and realized performance, but as the vacation rental industry matures, analysts are taking more time to research and create new sets of destination-based predictive economic indicators to adjust pricing and more adequately prepare for the future.
Now that the industry is starting to participate in and utilize integrated comparative data tools, vacation rental managers are beginning to get actual, real-time performance metrics, and several destinations are finding that realized performance during the 2018 summer months didn’t follow predicted trends. Although some vacation rental destinations saw record-breaking performance, other markets, most notably along the Gulf Coast, experienced a disappointing season—leaving destination analysts to wonder: Are predictive indicators holding, or is there a shift in consumer behavior?
For new vacation rental managers, the idea of monitoring economic indicators may also be new, so let’s look at an overview of common predictive sets widely used in the vacation rental sector.
REAL ESTATE MARKET
Vacation rental performance has been closely tied to real estate performance because, historically, destinations go in and out of favor among vacation renters and second-home buyers in parallel fashion. Approaching the 2018 summer season, the real estate boom was in full swing.
However, real estate analysts are already seeing signs that the peak of this cycle occurred in August, as early economic indicators are beginning to show a slowdown:
CONSUMER CONFIDENCE AND UNEMPLOYMENT
According to the Conference Board Consumer Confidence Index®, U.S. consumer confidence surged to 133.4 in August, a near 18-year high, as households remained upbeat on the labor market, pointing to strong consumer spending that should help to sustain the economy for the remainder of the year.
For many vacation rental managers, performance over the summer paralleled the index with small declines in June and July, followed by an upswing in August.
“Consumer confidence increased to its highest level since October 2000 (Index, 135.8), following a modest improvement in July,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current business and labor market conditions improved further. Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018. Overall, these historically high confidence levels should continue to support healthy consumer spending in the near term.”
Unemployment in the United States fell to 3.9 percent in August 2018, down from 4.4 percent in 2017, 4.9 percent in 2016, and 5.1 percent in 2015, according to the U.S. Bureau of Labor Statistics.
The value for vacation rental managers in looking at hotel data is the age-old question: “Is it travel, or is it us?”
STR Global reported that the U.S. hotel industry showed mixed results in the three key performance metrics during July 2018. In year-over-year comparison with July 2017, the industry posted the following:
Pro Tip: Experienced vacation rental revenue managers take a deeper dive into leisure travel versus business travel and into related individual markets.
Gas prices barely budged through the 2018 summer, with the national average for regular gasoline hovering around $2.85 a gallon since mid-June. That’s down slightly from a high of nearly $3.00 at the end of May, but it’s still about 43 cents a gallon more than drivers paid at this time last year.
However, compared to the 2014 summer when gas prices averaged $3.70, most vacation rental industry analysts looking at drive-to markets do not believe that changes in gas prices had a significant impact on consumer traveler behavior in 2018.
The 2018 impact from changing international travel behavior has two faces: Inbound travel to the U.S., and outbound travel from the U.S.
For destinations reliant on inbound travelers, incoming international arrivals to the U.S. were down 4 percent in the first three quarters of 2017. By comparison, international tourism arrivals worldwide in 2017 were up 7 percent, representing the strongest result in seven years, figures from the United Nations World Tourism Organization (UNWTO) show. In addition, the UNWTO says Spain is about to replace the United States as the world’s second most popular tourist destination, after France. And according to surveys conducted for the 2018 U.S. News Best Countries Rankings, the United States fell from the fourth best country in the world in 2016, to No. 7 in 2017, and down to No. 8 in 2018.
As a result, in 2018, the U.S. Travel Association launched a “Visit US” coalition with other U.S. industries to reverse declining U.S. competitiveness for international travel dollars.
However, many destinations have few non-U.S. travelers. For these markets, a decrease in international travel is a positive indicator as more U.S. travelers vacation domestically.
Nevertheless, despite a decrease in international travel to the U.S., American travelers are taking more vacations outside of the U.S. According to the U.S. Department of Commerce, National Travel and Tourism Office (NTTO), the number of U.S. citizens traveling to international regions increased 9.3 percent from 2016 to 2017. The NTTO reported the top two destinations for U.S. international travelers were Mexico and Canada. Travel to Mexico (31.2 million) was up 9 percent, marking a new record for the fourth straight year. Mexico now holds a 39 percent market share of all U.S. outbound travel. U.S. travel to Canada (13.9 million) was up 10 percent.
VACATION RENTAL AWARENESS
The awareness of vacation rentals as a lodging alternative has increased among consumers. According to Phocuswright’s 2017 study, “A Market Transformed: Private Accommodation in the U.S.,” “In 2015, nearly half of U.S. travelers either rented or considered renting private accommodation, compared to just 35 percent in 2014.”
A recent Booking.com survey showed, “One in three travelers (33 percent) say they’d prefer to stay in a holiday rental (a holiday home or apartment) over a hotel.”
Proponents of OTAs, including Booking, Airbnb, Expedia, and TripAdvisor, often point to the increase in awareness for vacation rentals as their biggest contribution to the industry. David Angotti, in his article, “Long Live the OTAs!” in the spring issue of VRM Intel Magazine, wrote: “The larger a listing site becomes, the more powerful the brand can become and, ultimately, the whole industry benefits . . . The economies of scale are bringing additional awareness for our industry and shifting the supply and demand curve in a way that benefits us all.”
THE FUTURE OF ECONOMIC INDICATORS FOR THE VACATION RENTAL INDUSTRY
Consumer behavior in the U.S. is quickly becoming a tale of two worlds, with economic conditions for inhabitants in major U.S. cities differing greatly from rural residents. In looking at these indicators, professionals in the vacation rental industry will find it increasingly beneficial to analyze economic and behavioral conditions in their feeder markets, rather than relying on macro-U.S. data.
Moreover, a positive indicator for urban markets might be a negative indicator in traditional, drive-to vacation rental markets.
Thankfully, the era of self-reported comparative data is coming to an end and is being replaced with real-time data that is integrated with property management software systems for apples-to-apples comparison. As the vacation rental industry matures, and comparative market data is available on a market basis, the correlation between economic conditions and actual performance will become rapidly clearer. And the best news is that professional managers will not have to wait as new market data platforms are able to pull in data from previous years.
Comparing monthly vacation rental comparative performance metrics for the last three to five years to destination and feeder markets—such as new construction permits, single and multi-family real estate performance, the Consumer Confidence Index, unemployment rates, in-market hotel performance, international travel behavior, and sector awareness—is likely to yield a strong trend pattern for a professional manager that will help to establish a strong set of predictive indicators.
As the vacation rental industry becomes more professionalized and comparative market data is more trusted and utilized, property managers will evolve in measuring how leading economic indicators aid in predicting performance for each individual destination and for specific traveler demographics.
In analyzing trends in the economy and in consumer behavior, the vacation rental industry is maturing rapidly. The most exciting part of being in this industry, at this time and place, is the opportunity as vacation rental professionals—including technology providers, marketers, and property managers—to be the first to identify and measure correlations between these shifts and company performance.
According to the Curaçao Tourist Board, Curaçao saw an 11.5% increase in stopover visitor arrivals in November, growing from 33,726 stopovers in November 2017 to 37,602 this year. Stopover visitors from the USA grew by 14.7%, from 5,389 visitors in November 2017 to 6,183 visitors in November 2018.
In the first eleven months of 2018 Curaçao has seen a 7.2% increase in the number of stopover visitors, growing from 358,868 visitors in 2017 to 384,633 this year. The number of stopovers from the USA has grown by 19.1% during the first eleven months, from 54,831 in 2017 to 65,293 through November 2018.
The number of cruise visitors grew by 2.6% in November, from 81,314 visitors in November 2017 to 83,400 visitors this year. Through the first eleven months of 2018 the number of cruise visitors to Curaçao grew by 23.3%, from 534,077 visitors in 2017 to 658,307 visitors this year.
According to the Cayman Islands Department of Tourism, the Cayman Islands saw the volume of stopover arrivals increase by 9.1% in November 2018, growing from 34,999 arrivals in November 2017 to 38,172 arrivals in November 2018. Stopover arrivals from the USA grew by 10.4%, from 28,320 in November 2017 to 31,274 in November 2018. Cruise arrivals fell by 18.5%, from 208,695 cruise visitors in November 2017 to 169,997 cruise visitors in November 2018.
Through the first eleven months of 2018 the Cayman Islands saw an 11.3% increase in the volume of stopover arrivals, growing from 369,400 arrivals in the first eleven months of 2017 to 410,984 arrivals in the same eleven months of 2018. Arrivals from the USA increased by 13.8% in the first eleven months of 2018, growing from 302,634 arrivals in 2017 to 344,396 arrivals in the same eleven months of 2018. The number of cruise visitors increased by 14.5% in the first eleven months of 2018, growing from 1,506,810 cruise visitors in 2017 to 1,725,629 visitors this year.
(Forbes Magazine – December 24 2018)
Travelers in 2019 see a series of exciting trends—thanks to changing consumer behavior and an emphasis on wellness. For those wondering what will be in store for next year, here are some of the top predictions shared by industry experts.
Planning a big, extended vacation can be extremely stressful. This is why “travelers are ditching weeklong summer vacations in favor of shorter, more frequent breaks,” said Loes Daniels, Founder of Flightgiftcard and Hotelgift. The rise of “serial short breakers” means more business for local economies, especially when more people opt for staycations in “more unusual accommodation options such as yurts, pods and Airstreams.”
WHAT TO TRY: According to Klook, a world leading travel activities booking platform with more than 800 experts in 16 global offices, there are ways to make a short break (or stay-cation) more meaningful. Try a Backstreet Walking Tour of Kowloon’s Mong Kok district in Hong Kong for an enticing look at the vibrant street markets and local delicacies, or check out the bird parks and butterfly gardens in a Half Day Tour of The Serene Gardens in Kuala Lumpur.
Like it or not, travel business is increasingly driven by a location’s Instagram-ability, according to Daniels. In a survey conducted by UK company Schofields, more than 40% of respondents under 33 consider “Instagrammability” the most important factor in choosing their holiday destination. Whether it is art-driven experiences such as Art Basel or beautiful locations that are snapshot-worthy, 2019 sees more social media-inspired tourism.
WHAT TO TRY: Setouchi Art Triennale 2019—a unique art festival held over a dozen islands in the Seto Inland Sea featuring more than 150 international artists; a trip to the Kintamani Jungle Swing in Bali with stunning landscape; or a Private Photo Shoot Experience in Phuket with your own professional photographer.
Driven by wellness
Wellness tourism is expected to grow more rapidly in the next few years—with the Global Wellness Institute projecting it to grow twice as fast as general tourism and reach $919 billion in 2022 from the $639 billion in 2017. From fitness-centric resorts and hotels with holistic spas to natural immersion getaways, these travel experience are geared to leave you rejuvenated and equipped with the techniques for a better lifestyle.
WHAT TO TRY: Go for a wellness getaway Aloft Miami Aventura, which has everything including weekly music events, pet programming, partnerships with Barry's Boot Camp, specialized crafted cocktails, and elevated pool deck; have an unforgettable trip fishing above the reef, scuba diving and snorkeling along the reef at Alaia Belize; or visit The Mandrake in London's Fitzrovia, which boasts a Spiritual Wellbeing Programme with regular Gong Baths, special guest sessions from Nordic Shamanic Fire Ceremonies, Lucid Dreaming Sleepovers and Arcturus Quantum Heart Activation Healing.
Forget business trips. One of the key rising trends in 2019 is “bleisure” travel, which sees people mixing business with leisure. According to a recent survey by Avis Car Rental, 87% of business travelers say that they are likely to mix business and leisure on the same trip. This is hardly surprising, considering that 92% of respondents admit to doing some work on dedicated leisure vacations, while 56% of travelers with children are likely to include the family on business trips. As a result, “the line between a business trip and a leisure vacation is increasingly blurry,” noted Beth Gibson, Experiential Travel Expert at Avis, with “business travel more often [involving] high-end amenities in desirable locations.”
WHAT TO TRY: Visit the brand new PuXuan Hotel and Spa adjacent to the Forbidden City—centrally located in Beijing’s main commercial and shopping district; or go to the Dolce CampoReal Lisboa—a business hotel-slash-resort that offers 23 event rooms, an 18-hole golf course, plus a nearby equestrian center.
According to the Bermuda Tourism Authority, Bermuda saw the volume of total air arrivals decline by 4.7% in November 2018, falling from 19,139 arrivals in November 2017 to 18,241 arrivals in November 2018. Air arrivals from the USA grew by 1.9%, from 13,202 visitors in November 2017 to 13,459 visitors in November 2018. Cruise arrivals grew by 186.1% however, from 6,946 cruise visitors in November 2017 to 18,620 cruise visitors in November 2018.
Through the first eleven months of 2018 Bermuda saw a 4.7% increase in the volume of total air arrivals, growing from 255,101 arrivals in the first eleven months of 2017 to 267,024 arrivals in the same eleven months of 2018. Arrivals from the USA increased by 8.5% in the first eleven months of 2018, growing from 187,939 arrivals in 2017 to 203,932 arrivals in the same eleven months of 2018. The number of cruise visitors increased by 14.2% in the first eleven months of 2018, growing from 417,231 cruise visitors in 2017 to 476,372 cruise visitors in 2018.
Hotel occupancy in December and January exceeds the expectations of the Dominican Republic's tourism sector.
Hotel occupancy for Christmas and New Year exceeds the expectations of the tourism sector, which this year has between 2,500 and 3,000 additional rooms.
According to estimates of the Executive Vice-President of the National Association of Hotels and Tourism of the Dominican Republic (Asonahores), Andrés Marranzini, the housing occupation at the moment exceeds 87%.
“The number (of new rooms) is 4,000, but some hotels have had soft openings, which have not been formally inaugurated but came into operation in December,” he explained.
Last Friday President Danilo Medina participated in the inauguration of the Hotel Presidential Suites Cabarete by Lifestyle, built with an investment of US $ 36 million. In this first stage, it has 105 units for 131 rooms. In its entirety, the hotel contemplates 163 units.
The Dominican Republic has around 80,000 hotel rooms, estimates Marranzini. The sector hotels, bars, and restaurants contributed on average 8.5% of the Gross Domestic Product between January-June of this year.
The high season between October-November and March-April is influenced by the winter season in the United States, Canada, and Europe, all territories from which the most significant flow of tourists come. “But, I tell you something, the seasonality of the occupation has not seen those fluctuations before, that is, we have a good occupation rate in what was previously called the low season (summer),” Marranzini observed. For December and January, very early reservations are made. “There has been little availability for months,” noted Marranzini.
Statistics compiled by Asonahores show that for just January and December 2016, the average hotel occupancy in the eight main destinations in the country was 88.3% and 76.5%, respectively, and for 2017 84.9% and 76.7%.
The preferred destinations are Punta Cana-Bávaro and La Romana-Bayahibe. In January 2016, they reached 90.3% and 92.4%, respectively, of housing occupancy, percentages above 85.7% and 86.8%, respectively, registered in 2017. The third destination is Boca Chica-Juan Dolio.
“This year an extraordinary effort was made and the number of Russians and Englishmen, increased a lot. In Germany, we have to strengthen for next year, combining our strategy with the Ministry of Tourism to work the European market. Due to special strategies, there have been significant increases in reaching the Latin American market, “said Marranzini.
Although this 2018 cyclonic season was less active, hoteliers had to face the arrival of Sargassum to the coast again. Last year they suffered a difficult September due to the passage of Hurricanes Irma and Maria through the Caribbean, just days apart.
Central Bank of Aruba announces tourism receipts for Aruba increased by 8.4% in the second quarter of 2018.
The Central Bank of Aruba recently released its Second Quarter 2018 numbers and announced that tourism receipts for Aruba grew by 8.4% in the first quarter, from 735.1 million AFL in the second quarter of 2017 to 796.6 million in the second quarter of 2018. During these same three months the number of stopovers to Aruba increased by 0.9% while the number of cruise visitors fell by 16.7% compared to the same three months of 2017.
During the first six months of 2018 tourism receipts increased by 9.5% compared to the same six months of 2017, growing from 1,691.7 million AFL in 2017 to 1,853.1 million AFL in 2018. During the same six months the volume of stopovers grew by 2.6% while the number of cruise visitors grew by 0.5%.
Tourism Receipts - Revised Series in Millions of AFL
(source Central Bank of Aruba)
Percentage change 2018/2018
Delta Air Lines has been solidly building up its presence at Boston Logan International airport during the past few years and characterizes Boston as an important focus city in its network. Its growth from the airport is continuing in 2019 as the airline adds flights to key business markets, upping competition with Boston’s largest airline, JetBlue, and other operators at airport.
But even as JetBlue works to compete fiercely, it has faced some headwinds in Boston as Delta has expanded in the market on both leisure and business routes. In order to continue competing effectively with Delta, JetBlue may need to finally solidify plans for trans-Atlantic routes from its second largest base.
Delta continually threatens JetBlue at its Boston stronghold
JetBlue has been building up Boston Logan for more than decade, and the airline represents nearly 30% of the airport’s departing frequencies. The airline has been working to shore up its roster of lucrative corporate customers in the market, and at one point declared that it had contracts with every company of reasonable size in Boston except for one.
Boston Logan International percentage of departing frequencies by airline as of mid-Dec-2018
In the recent past, Boston has been a star performer for JetBlue; during 2Q2017 Boston was the airline’s highest margin producer among its focus cities.
JetBlue Airways system top ten hubs/bases/stations by seats, as of mid-Dec-2018
As JetBlue has worked to shore up corporate share in Boston, Delta has been expanding in the market.
Previously, Delta's approach has been that there are markets outside its core US domestic hubs that are worthy of investment, and during 2017 the airline identified Raleigh-Durham and Boston as focus cities.
Delta Air Lines domestic hubs and focus cities as of late 2017
Delta has recently outlined expansion in 2019 from Boston to Cleveland, Washington National, Newark and Chicago OHare. All those markets are served by JetBlue – and other competitors, including American at National and O’Hare, and United in Cleveland and Newark. Delta is opting to restart flights to National from Boston after a six-year absence.
Delta is also continuing to expand internationally in Boston with its own flights and in conjunction with its JV partners. During 2019 Delta is launching seasonal flights to Lisbon and Edinburgh, KLM is introducing new flights to Amsterdam, and Korean is debuting service to Seoul. Delta already operates its own flights to Amsterdam from Boston, as well as other long haul service to Paris and London Heathrow.
As JetBlue works toward its goals of 200 daily departures from Boston, Delta is 152 planned daily departures in 2019 – by Delta itself and its partners.
JetBlue's reprieve from headwinds in Boston could be brief
JetBlue has experienced some headwinds in Boston during 2018, citing pressure in unit revenues on leisure markets from the airport during 3Q2018 and noting growth from a legacy airline. Some of Delta’s domestic leisure markets from Boston include Orlando, Tampa, Jacksonville and Fort Lauderdale.
JetBlue foresees some easing of competitive capacity in Boston during 1Q2019, but that relief could be short-lived as Delta plans its spool up at the beginning of 2Q2019.
Overall, projections from CAPA and OAG show Logan’s ASK growth should bump up at the end of Mar-2018, just when Delta starts its latest expansion from the airport.
Boston Logan International weekly system ASKs from 2015 through late May-2019
Source: CAPA - Centre for Aviation and OAG
* These values are at least partly predictive up to 6 months from 10-Dec-2018 and may be subject to change.
Pressure from Delta could provoke JetBlue to make a decision on long haul flights
As part of its marketing for Boston, Delta touts that it is the airport’s only global airline – which is correct. JetBlue has marked Boston as a launch pad for possible trans Atlantic flights but has yet to formalise any plans for expansion into long haul markets.
The long haul low cost model in the trans Atlantic market has produced mixed results.
Iceland's WOW Air and Norwegian have experienced challenges as they expanded rapidly. Both airlines have various financial issues, and Icelandair recently opted not to pursue an acquisition of WOW. The ULCC specialist Indigo Partners is now working to become an investor in WOW, a move likely to create a powerful competitor.
WestJet has been operating trans Atlantic operations for a number of years, first with one-stop service with narrowbody jets then with older Boeing 767s. After some teething problems with the widebodies, WestJet constantly stated that its widebody flights were exceeding expectations. The airline is preparing to take delivery of three Boeing 787s for long haul flights in 2019.
JetBlue would operate Airbus A321LRs on potential trans Atlantic flights from Boston, which presumably have a lower operating cost than a widebody and would afford JetBlue an opportunity to capitalise on potential revenue from offering its Mint premium product on the routes.
It's really not whether but when...
There is a growing consensus that it is no longer a question of whether JetBlue will inaugurate trans Atlantic service, but when. It remains to be seen whether those predictions will come to fruition.
JetBlue is working to eliminate USD250 million to USD300 million in structural costs by 2020, so it is evaluating a potential trans Atlantic launch through that lens.
However, with Delta’s growing network breadth in Boston, especially in long haul markets, JetBlue may need to make a decision regarding trans Atlantic service sooner rather than later.
2019 could prove a vital period for Boston's airlines - and its airport
Over the past few years Delta has been in a position to look outside its core hubs to identify opportunities in Raleigh-Durham and Boston that were worthy of return on investment.
In some ways Boston is more of a gamble for Delta, given JetBlue’s commitment to the region. But Delta has one important asset: it size.
Delta inevitably would have done its due diligence on Boston before opting to invest in creating a focus city at the airport and shows no signs of relenting in its plans for expansion at Logan. But its market power in 2019 could create a challenging time for Boston’s largest operators.
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.