American Airlines and Delta Air Lines Inc. have cut New York-to-Boston fares after JetBlue Airways Corp. entered the market, in a sign of how discount carriers are squeezing traditional rivals.
American, controlled by AMR Corp., said it has cut ticket prices to as low as $25 each way on the heavily traveled northeastern U.S. route effective Nov. 8, spokesman Ned Reynolds said on Wednesday.
That matches JetBlue’s introductory fare for the route, starting on the same date with its new 100-seat Embraer jets.
Delta, one of two traditional “shuttle” operators between the cities, has also cut fares, to $40 each way, said Terry Trippler, an analyst at Cheapseats.com, said on Wednesday.
“The shuttle fare between Boston and New York will be whatever JetBlue wants it to be,” he said. “Wherever JetBlue goes, they set the price.”
For a November round-trip flight before JetBlue’s entrance, Delta, the fare was $292 on American and $286.90 on US Airways, an Internet travel site search showed.
Delta spokeswoman Chris Kelly said it was “not at all unusual for us to match something like that.”
“Delta has competitive fares in every market that we serve,” she said.
Competition from discounters contributed to bankruptcy filings by Delta and Northwest Airlines Corp. last month. JetBlue’s latest route announcements are a sign the pressure won’t let up any time soon.
'JetBlue Effect in real time'
“I’m not surprised at all — this is the JetBlue Effect in real time,” said Jenny Dervin, a spokeswoman for the airline, adding that typically, “all customers benefit” when the airline enters a new market.
JetBlue has ordered 99 Brazilian-made Embraer-190 planes through 2016 and will be taking more deliveries of its main jet type, the Airbus A320, giving it wide scope to take on traditional airlines on the few routes where they still fly without major discount competition.
U.S. Airways Group Inc., the other traditional shuttle flyer, has not cut fares because it flies out of New York’s LaGuardia airport, which is more convenient to the city, rather than JFK International Airport, where JetBlue will be flying from, said spokeswoman Amy Kudwa.
The airline recently emerged from bankruptcy protection through a merger with America West Airlines.
The Northeast shuttle market — traditionally linking New York with Boston as well as Washington — was once considered one of the gems of the U.S. market, said Susan Donofrio, an analyst at Fulcrum Global Partners.
But it has lost some of its luster as airlines including American and Continental Airlines Inc. took on the traditional duopoly on the routes, she said.
JetBlue does not fly to Washington from New York, but wasn’t ruling it out.
“Service between New York and Washington, D.C. is something we’re looking at very closely, but right now we’re deploying our aircraft to cities we feel are under-served and over-priced — and there are quite a few cities in that category, including Washington, D.C,” Dervin said.
JetBlue’s decision to use the planes on such a competitive route was a slight surprise, said Standard & Poor’s analyst Philip Baggaley. “It’s probably somewhat riskier than direct service to cities that have less service.”
But he added that the move made some sense since JetBlue already has a strong presence in both cities.
As for the established carriers, “there’s no doubt this will take a bite out of their business,” he said.
