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Posted 04.13.06 Caribbean Destinations Spur Sales, Competition Among Airlines (Hardbeatnews.com) By Gergana Koleva Hardbeatnews, NEW YORK, N.Y., Fri. Mar. 3, 2006: Air travel to the Caribbean has reached a five-year peak since the September 11, 2001 terror attacks as the region's proximity to the U.S. has spurred an increase in travel with demand pushing major airlines to tame fares in the face of head-to-head competition from low-cost carriers entering the Caribbean market. But while the demand has allowed airlines to add new routes and gather increased revenues, the new hot spots have also fueled fierce competition between legacy carriers such as American Airlines, US Airways, Air Jamaica, BWIA and Continental Airlines, and low-cost rivals JetBlue and Spirit Airlines, among others. Bryan Baldwin, a spokesman for six-year-old New York upstart JetBlue, says, "There are a lot of opportunities in the Caribbean for low-cost service." JetBlue's newest destination, which the company is slated to begin servicing May 4, is Bermuda. Among the several factors JetBlue considers when looking for new markets is how well they are being serviced by other airlines, according to Baldwin. "Bermuda did not have low-priced service. Fares tended to be fairly high. We like to stimulate traffic and grow the market by out low fare, because it really will benefit everyone," he explained. A price comparison between fares for some of JetBlue's other Caribbean destinations and those of a major airline show that as of this week, JetBlue offers a round-trip from New York to the Bahamas for an average of $300, and from Boston to Puerto Rico for $312. For the same travel period, US Airways, which had the fastest growing Caribbean service in 2002, charges an average of $487 and $446, respectively. JetBlue's advantage over traditional carriers apparently lies in its simplified reservation process and direct sales, which put it in control of the customer experience. The company sells only one-way tickets, eliminating "sticker shock" -- the penalty for purchasing one-way fares at some legacy carriers -- as well as reducing the risk of long layovers that comes with two-way arrangements. Finally, JetBlue's in-flight experience includes 36 channels of satellite TV, satellite radio, free snacks, and all leather seats -- seemingly small adjustments that are still missing at most domestic and short-distance international flights. JetBlue currently flies from select U.S. cities to San Juan, Ponce, and Aquadilla (Puerto Rico), Santiago (Dominican Republic), and Nassau (Bahamas). Plans for more Caribbean getaways seem inevitable as the company prepares to add a new aircraft every 10 days this year. "There is an important link between the U.S. and the Caribbean," said Baldwin. "What got us in the Caribbean market was the huge population base in New York and Puerto Rico, but now we've discovered there're a lot of other opportunities in the Caribbean for low-cost service." The pioneer in discount Caribbean air travel is 26-year-old Spirit Airlines, which services more than a dozen destinations in the region and is the largest privately owned airline in the U.S. The current average fare from its hub in Fort Lauderdale to Punta Cana (Dominican Republic) is $261, an attractive alternative to American Airlines' $473 price tag. Like JetBlue, Spirit relies as much as possible on its own website for sales, which eliminates the transaction fees travel search and commerce engines Travelocity, Expedia, and Orbitz charge customers for selling airline tickets. The search engines rely on the transaction charges for the bulk of their revenues. And as with airlines, Caribbean destinations account for a large portion of those proceeds as well. "Spring break is important as it is this year's first major travel time period. So far, the outlook is good and travel is looking strong. The Caribbean is a definite highpoint," said Andrea Collins, a spokeswoman for Travelocity. Collins noted travel to the Caribbean in the first two months of 2006 was up 29 percent over 2004 at the same time period and up 12.4 percent over last year. According to Travelocity's ranking of the top five Spring Break destinations, Puerto Rico and the Bahamas hold the top two spots in the non-contiguous U.S. The other top destinations are Cancun, Los Cabos, and Puerto Vallarta in Mexico. Other popular spots in the Caribbean also include Jamaica, U.S. Virgin Islands, Aruba and the Cayman Islands. Despite the lower costs and improved customer service that smaller carriers tend to offer, some traditional airlines still have the advantage of convenience, due to the larger number of U.S. cities they fly from. Ulysses de la Torre, a visiting research fellow at the Autonomous Technological Institute of Mexico in Mexico City, said the only carrier he has ever used to fly between Newark, where he resides, and Mexico is Continental. "It is consistently cheaper than the other airlines and they have a hub at Newark Airport, which is a 20-minute drive from my parents' house. If I could save $50 by flying to JFK or LaGuardia -- regardless of the airline -- I still wouldn't take it. I'm not sure how much savings I would need to use JFK or LaGuardia, but $50 definitely would not do it," he said. But another frequent flier to the Caribbean, Paul Colbourne, said he avoids Continental because of their tendency to overbook flights and to charge customers for the smallest delays. "If you arrive at the airport less than two hours early, there's a big chance they won't let you on the plane, and if they do, they will charge you extra," said Colbourne, an associate at Kramer Levin Naftalis & Frankel LLP in New York. He takes frequent trips to his native Antigua, as well as to Trinidad and Tobago for Carnival and during vacations, every year. New York's John F. Kennedy International Airport is the main U.S. hub for a number of airlines, including American Airlines, United Airlines, Delta, Air Jamaica, BWIA and JetBlue. LaGuardia Airport, also in New York, operates mostly domestic and Canadian flights, and serves as a connection stop for others. -- Hardbeatnews.com |
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