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How JetBlue Is Hoping to Expand

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Jul. 19 2017, Updated 6:39 a.m. ET

JetBlue eyeing transatlantic market

JetBlue Airways (JBLU) has long been eyeing the transatlantic market. In December, last year, JBLU said that it doesn’t fly to 11 of the top 50 destinations from Boston. Four of these 11 destinations are to Europe.

However, almost 80% of the transatlantic market is controlled by Delta Air Lines (DAL), American Airlines (AAL), and United Continental (UAL). This area is where JBLU’s premium Mint service can give it an advantage.

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Premium Mint service

JetBlue’s premium Mint service provides seats that can be turned into flat beds. Sixteen seats on JetBlue’s Airbus A321 fleet have been converted to premium seats. Four of these can also be turned to mini-suites. JetBlue offers this premium service at cheaper rates than legacy carriers’ business and first class tickets. As a result, the service has been hugely successful.

JetBlue is targeting the premium market on the new transatlantic routes. Thus, JetBlue has also converted its 2019 A321 orders to the long range A321LR, which can fly from Boston to Europe.

JetBlue CEO Robin Hayes said one of his regrets has been not adding more premium seats on the current A321s. He hopes to correct this on the A321LR, which means the transatlantic market will have a higher mix of premium seats.

Necessary move

Mint’s success has already been proven on the transpacific routes. An additional advantage is that it has higher margins than the normal economy seats. Starting the transatlantic service with a higher mix of premium seats seems like a good option, as it will also help negate some of the increasing competition from Delta. DAL is aggressively expanding in Boston, JBLU’s major hub.

Investors can gain exposure to JetBlue stock by investing in the First Trust Nasdaq Transportation ETF (FTXR), which invests 4.1% of its portfolio in JetBlue (JBLU). It also invests 8.4% in American Airlines (AAL), 7.6% in United Continental (UAL), 4.3% in Delta Air Lines (DAL), 2.7% in Southwest Airlines (LUV), and 1.7% in Alaska Air (ALK).

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