Yeah Mon, JetBlue Adds Jamaica to Expanding Caribbean Options

by Kyle St. Romain
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JetBlue Airways (NYSE:JBLU) continues to add routes servicing the Caribbean market. Most recently, JetBlue announced its plans to add twice-daily nonstop flights from Fort Lauderdale, FL to Kingston, Jamaica squaring the airline off against competitors like Air Jamaica, Caribbean Airlines and Miramar-based Spirit Airlines (NASDAQ:SAVE). The small number of competitors and increasing demand for Jamaican air travel makes this an ideal niche market for JetBlue to expand into. Compared to its main competitors including Delta Airlines (NYSE:DAL), American Airlines (NYSE:AMR) and Southwest Airlines (NYSE:LUV), JetBlue’s low cost-structure, young fleet, positive customer satisfaction and strong balance sheet should keep the company well positioned for strong future growth.

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Expanding to Jamaica in Time for 2012 Celebration

In March 2010, JetBlue added four daily flights from New York’s JFK to Jamaica (Kingston and Montego Bay). In addition to its New York and Ft. Lauderdale routes, JetBlue offers daily flights from Orlando to Montego Bay as well as bi-weekly service from Boston to Montego Bay. According to Scott Laurence, vice president of Network planning for JetBlue Airways, the expansions have come from strong support from Jamaican travelers who continue to ask for more flights. [1] These additional routes reflect the strength of the Jamaican air passenger market.

JetBlue’s timing is almost perfect as Kingston’s Norman Manley International Airport (NMIA) expects a spike in tourism to Jamaica as travelers come to participate in Jamaica’s 50th Homecoming (marking 50 years of independence) in 2012. [2] Full seats on new routes should help boost earnings throughout the upcoming year. For long-term growth, investors should look to continued expansion into the international markets. Currently, JetBlue’s international routes amount to roughly 20% of JBLU’s share price. Consider how added international market share affects JBLU’s stock price below.

While high energy prices continue to burden the airline industry, JetBlue manages its exposure by hedging its fuel costs with a combination of crude call options and collars, jet fuel swaps, and heating oil collars. [3] Approximately 45% of JBLU’s projected fuel requirements are hedged through Q4 2011. [3]

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Notes:
  1. JetBlue Reiterates Commitment to Jamaica, JetBlue Airways []
  2. JetBlue Airways Announces Expansion Plans, Miami Herald []
  3. JetBlue Announces Third Quarter Results, JetBlue Airways [] []
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