JetBlue bets on YVR airport despite higher cost base in Canada

JetBlue Airways Corp. is embracing Vancouver, nine years after minimizing the importance of Canada’s second-largest airport.

The low-cost carrier said it will offer flights between Vancouver International Airport (YVR) and New York’s John F. Kennedy International Airport (JFK) starting in the summer of 2022.

New York-based JetBlue will also add a seasonal route between YVR and Boston’s Logan International Airport.

The new routes will mark the airline’s first scheduled service into Canada.

JetBlue made the announcement in April as part of a broader set of plans to add various new destinations to its route map. Since then, the carrier has been tight-lipped about providing further details on the Vancouver strategy, but industry observers say the Airbus A321neo could be on the shortlist of planes envisaged for the Vancouver-JFK and Vancouver-Boston routes.

Adding service into Canada signals a dramatic change in thinking since JetBlue characterized Vancouver in 2012 as “insufficiently large,” when the U.S airline opposed plans by Air Canada to launch flights between Vancouver and Washington’s Reagan National Airport.

Back then, JetBlue criticized Air Canada’s proposal, saying Vancouver’s “local market is not large enough to support daily non-stop service” to and from Reagan. The U.S. Department of Transportation later rejected Air Canada’s quest for a slot, and instead awarded slots to four U.S. carriers — including to JetBlue for service between Reagan and San Juan, Puerto Rico.

Fast forward to 2021, and JetBlue is touting Vancouver as ideal for year-round, non-stop service to JFK.

Reagan is handy to downtown Washington and preferred by many corporate fliers domestically within the U.S. over Dulles International Airport in suburban Virginia. But JFK is a major hub that offers many more options for connections compared with Reagan.

JFK and Boston Logan are much busier airports than Reagan. That means JetBlue is positioning itself to target both business and leisure travelers to New York and Boston, and is also enticing them with connecting flights.

JetBlue is making the foray into Canada despite expensive landing fees for aircraft at YVR. Canada’s airline industry has long warned that such fees are a reflection of high operating costs for Canadian airports, whose expenses include paying Ottawa for ground rent.

With the notable exception of JetBlue, low-cost operations based in the U.S. have avoided setting up shop in Canada because they’re already able to poach Canadian passengers by enticing them with low airfares for travel within the U.S.

JetBlue, Southwest Airlines Co., Spirit Airlines Inc., and Allegiant Air are among the U.S. carriers that have had success over the years in luring Canadians to drive across the border to catch flights from American airports.

Another reason for the lack of a stampede into Canada is the higher cost base north of the border, said Robert Kokonis, president of airline consulting firm AirTrav Inc.

“In Canada, the taxes are higher, the fees are higher, cost inputs like labor and fuel taxes on aviation fuel are higher,” said Kokonis.

U.S. low-cost carriers in particular already have a good thing going in persuading Canadians to fly from places such as Buffalo and Pittsburgh. But JetBlue reckons that it will be worthwhile to take a calculated risk on under-served markets, including Vancouver and the U.S. Midwest.

“Almost since day one, both our customers and crew members have been asking us to add flights to the middle of the country and into Canada,” according to a statement from Scott Laurence, JetBlue’s head of revenue and planning. “We can’t wait to shake up the status quo in these markets currently dominated by high-fare carriers.”

Commercial airline entrepreneur David Neeleman founded JetBlue in 2000. In 2007, the carrier floated a trial balloon when it applied for scheduled service to Canada. The Canadian Transportation Agency granted approval to JetBlue, but the carrier opted not to launch transborder flights back then.

In 2022, however, JetBlue and YVR are counting on the stars to align in a hoped-for recovery in air travel.

“We’re delighted that JetBlue has selected Vancouver as its first Canadian destination with service from YVR to New York City and Boston,” Tamara Vrooman, CEO of the Vancouver Airport Authority, said in a statement. “As we move through the pandemic and prepare for a safe and healthy return to non-essential travel, this new service, scheduled for summer 2022, gives us all something to look forward to.”

While JetBlue is holding its cards close to the vest, AirTrav’s Kokonis said that if all goes well with the YVR experience, there could be at least one other Canadian destination potentially worth considering.

“Edmonton has a large catchment basin,” he said, noting that there isn’t any current non-stop service between the Alberta capital and New York. “I think a flight between Edmonton and JFK makes massive sense. It would be a flight that would be tapped into in earnest almost immediately, both by business and leisure travelers.”