“Long Beach Airport and JetBlue have much in common — we’re both customer-friendly and low cost. We’re looking forward to our relationship and to the expanded flight offerings and destinations. I am personally very excited about JetBlue’s brand new, neighborhood-friendly fleet of aircraft.”
Long Beach Airport Manager Chris Kunze 5/23/2001
When this week’s news broke that JetBlue was leaving Long Beach Airport (LGB), loyal Long Beach JetBlue customers took to social media to vent their anger and place blame for the airline leaving Long Beach.
Typical of the social media outcry are posts from the Long Beach Politics Facebook page. In one such post, Nicholas Mercuro blamed residents in neighborhoods under the flight path calling them “NIMBYS”:
On the same page, city leaders were blamed for the airline departure. Don Sutton posted:
Former Fourth District Councilman Del Roosevelt was also among those blaming “the city” for JetBlue leaving:
Since landing in Long Beach in 2001, JetBlue has been admired and admonished by both residents and elected city leaders. Even the response to JetBlue’s announcement was met with a mixture of emotions by current local leaders who represent the neighborhoods that have been embroiled in 19 years of controversy with JetBlue.
Assemblyman Patrick O’Donnell was the Long Beach 4th District Councilman during the fight over the size of the promised upgrades to JetBlue of the LGB terminals. O’Donnell released this statement to THE Sunday REVIEW:
“I am saddened that Jetblue is leaving the Long Beach Airport. However, I understand the economic reality they are facing. Their move to LAX comes at a time when the airline industry is facing great turmoil and possible consolidation, so it makes economic sense for them.
I fly in and out of Long Beach Airport regularly and for the last few months have seen firsthand the impact of COVID-19 has had on the airline industry. On any given day, there are several JetBlue planes parked Off to the north side of the airport, apparently taken out of service.
It is my hope that Jet Blue will one day return to Long Beach Airport when we get back to whatever our new normal may be. “
Councilman Daryl Supernaw who now represents the 4th District was involved in JetBlue’s International Terminal controversy and led the effort to update Long Beach’s late flight fine violations and eliminating the slot squatting practice invented by JetBlue. Ending slot squatting eventually led to Southwest coming to LGB.
Supernaw’s released this statement to THE Sunday REVIEW:
“It’s the end of an era for LGB airline travel and for 4th district residents living under the flight path. JetBlue’s Long Beach operation was often incorrectly described as a “hub”, but that is not how the airline functioned. Instead, JetBlue depended on cross-country flights that were often subject to delays and late-night violations. It was an inherent operations flaw dictated by their business model that could not be corrected.
I agree with our airport director that there will be strong interest in the JBL flight slots. I would go further to say there are multiple airlines waiting for the slots that will be picked up immediately through our lottery process. We have a great opportunity for much more balanced operation with no single airline overly influencing policy.
The pandemic has brought extreme financial challenges to the airline industry and to our own airport. A question asked during the international terminal debate was, “who will pay for the customs facility if JetBlue decides to pull out of Long Beach?”. Thankfully, our airport will not have to answer the question or deal with that financial challenge.”
Councilman Al Austin represents the 8th District airport impacted neighborhoods. The Councilman emailed this statement to THE Sunday REVIEW:
“I am confident that our airport will be able to secure new airline partners who will embrace opportunities to thrive at LGB and respect our city. Long Beach will continue to be a great regional airport and a convenient alternative to LAX.”
Today THE Sunday REVIEW revisits the 19-year controversy-filled relationship between JetBlue and Long Beach and examines the impact JetBlue had on the cities politics.
Long Beach’s jet blues:19 years of airport controversy
Everyone in Long Beach has an opinion about JetBlue. Regardless of that opinion, one thing is certain no other corporate entity in the past 19 years has made more of an impact on Long Beach than JetBlue. From the Long Beach Airport to Long Beach’s neighborhoods, to the current City Council and Long Beach’s economy, even after JetBlue is gone the airline’s impact on Long Beach will be felt for years to come.
JetBlue’s supporters and detractors might also agree that through all the local controversy surrounding the airline, JetBlue’s number one concern has been the company’s economic bottom-line.
Since being founded in 1999 by airport mogul David Neeleman, JetBlue has found sustainable long term profitability allusive. That economic viability problem has kept JetBlue’s business model in a state of almost constant flux. As the nation’s sixth-largest airline, JetBlue is a relatively small player in the American airline industry. The airline’s relatively small size has continued to force JetBlue to reinvent its business model to achieve sustainable profitability in the highly competitive airline industry.
Local news and social media has focused on the most recent JetBlue controversy- the rejection of the airline’s request for an international terminal- as the main factor in JetBlue’s announced exit from LGB and consolidation to LAX. However, airline industry analysts and watchers see the announced move as basic economics leading to JetBlue’s decision to concentrate its West Coast operations at Los Angeles International Airport.
Long Beach was JetBlue’s first west coast “Focus City” (JetBlue does not use the dominant airline industry “hub” model). Long Beach city leaders, airport staff, and airport impacted neighborhood leaders are very familiar with JetBlue’s economic interests coming first. Both O’Donnell and Supernaw acknowledged that in their statements. That economic interest of JetBlue at the expense of Long Beach and its neighborhoods was a driving concern of neighborhood leaders too. Long-time Long Beach neighborhood leader 5th District resident Joe Sopo who has been part of the leadership of both LBHUSH2, and Neighborhoods First told THE Sunday REVIEW “JetBlue is a business. It makes decisions based on profit. I have always enjoyed their flights & service. In every situation their employees were delightful. If I had lived under the flight path I would not be happy with JetBlue. Their late-night flights were unprofessional and harassing to the neighborhoods. A perfect example of the two faces of JetBlue.
The neighborhoods fought twice with JetBlue and the City of Long Beach. Once to keep our airport a smaller Municipal Airport and not quadruple the size to “Industry Standards”. It’s the airport we know & appreciate today.
Secondly, we fought to stop our airport from becoming an International Airport. The neighborhoods saw no benefit in that change and were left out of the initial planning. That’s always a bad sign. Both times the neighborhoods won, but it took much effort and developed mistrust in our elected officials that continues today.
I am happy to see JetBlue go. I wish them the best.”
Mint by JetBlue is the airline’s cash cow
JetBlue’s current transcontinental business model’s profitability depends heavily on the airline’s super-premium Mint Service.
JetBlue’s premium service started in 2014 when it first introduced the upscale premium service Mint by JetBlue. The airline once again found a niche not being served and quickly filled the void. Mint service is available on select transcontinental and Caribbean flights.
JetBlue retrofitted some of its Airbus A321 aircraft with 16 Mint lie-flat seats and Mint’s signature premium service for a very premium price. Four of the 16 Mint seats are “mini-suites” with partitions. The Mint configured A321 aircraft have 143 economy seats compared to JetBlue’s regular A321 configuration with 190 seats. The retrofitted Airbus’ provide service to both JetBlue’s low-cost travelers and the elite highly profitable upscale business and luxury traveler.
The Long Beach airport consumer profile compared to the LAX consumer profile does not support the highly profitable Mint Service where seats start at over $600 for a one-way ticket.
Below are screenshots for available bookings on the JetBlue website. Traveling from LAX to New York, a ticket for the Blue Basic economy seat is $149. On the same plane for the Mint Service, the price is $949.
The cost of the Blue Basic seat on the return from New York to LAX is $144 while on the same plane the Mint Service seat is $699. The total round trip Blue Basic cost is $293. On the same plane, the Mint Service round trip price is $1648.
Within two years of its introduction, the Mint service program was paying big profit dividends to the airline and its investors. In 2016 JetBlue reported to its investors that Mint had provided a 17% improvement in profit margins in flights between LAX and New York City. In San Francisco to New York flights the profit margin grew 18%.
Reporting on JetBlue’s 2016 Investor Day Meeting, financial market content service Seeking Alpha reported:
“JetBlue announced the financial impact of its Mint service during its recent investor day. With the help of this premium offering, JBLU has been able to show remarkable improvement on key routes. Its NY-LA route has seen 17 percentage point and NY-SF route has seen an 18 percentage point improvement compared to the system average. Newer routes having Mint service are also showing similar improvement.
JetBlue is now going all-in with its Mint service and is looking to expand to new routes and have greater flight frequency in the next two years. It is also eyeing key transatlantic routes for Mint service once delivery of A321LR starts. This gives the company a long runway for growth and should help to give better margins compared to other peers.”
–Seeking Alpha 12/16/16
JetBlue started as a small low-cost airline competitor with a nitch business model: using smaller regional airports for transcontinental flights while offering superior service and free extra’s. As competitors started to play catch-up, JetBlue added Mint Service to now lead the competition for the highly profitable transcontinental high-end business and high-end pleasure traveler. The Mint Service model does not fit with the passenger demographics of LGB.
According to the airline industry review The Watch Guy, in 2019 JetBlue’s transcontinental route capacity had grown 7% over 2018.
JetBlue’s announcement to leave Long Beach included plans to increase its LAX daily flights from 20 to 70 within 5 years.
The typical Long Beach Airport traveler is the target traveler of JetBlue’s much larger competitor Southwest Airlines. When JetBlue was forced to give-up LGB flight slots it was not using, rival Southwest was the primary benefactor. JetBlue had tried to prevent completion in Long Beach with a practice dubbed “slot squatting” which hurt the Long Beach Airport’s bottom line by preventing other airlines from using JetBlue’s unused flight slots (more information below). When Long Beach officials changed the rules to prevent JetBlue from holding unused slots, larger rival Southwest was able to enter the Long Beach market.
At LGB, JetBlue quickly lost market share to Southwest. The latest figures for March 2020 show JetBlue has 53% of the market share at Long Beach Airport and Southwest has 32%. A year earlier in March of 2019 at LGB, JetBlue had 67.44 market share at LGB compared to Southwest’s 20.63% share. In June 2017, when Southwest started at LGB, JetBlue controlled 72% of the market share as Southwest began with a base of 11.96%.
19 years of the JetBlue & Long Beach love-hate story
In May of 2001, Long Beach was still recovering from the economic turmoil caused by the closure of the Long Beach Naval Station on Terminal Island in 1997. The last part of the closed Navy yard on Terminal Island was transferred to the Port of Long Beach in 2001.
On May 15, 2001 the Long Beach City Council voted 8-1 to relax the rules for when an airline had to use an allocated LGB flight slot. The old six-month deadline was replaced with a new 24-month deadline. The move was done under the pretense of helping to recruit airlines to fill the 27 (67%) of the LGB flight slots that were not being used. Only 4th District Councilman Dennis Carroll voted against the change in the 8-1 vote. Carroll had wanted to give the chance for public comments on the new proposed rule but was voted down by his colleagues.
Unknown to the residents of Long Beach was that the city had already reached a secret agreement with JetBlue for all of the 27 available remaining LGB fight slots. The agreement however was conditional on JetBlue getting the needed change in the airport allotment rules because the airline would not be able to gear up to use the slots within the current 6-month rule.
A week after the allotment rule change, Long Beach officials announced that all 27 available slots would be allotted to JetBlue. It was later uncovered that JetBlue had actually received the 27 flight slots just hours after the council vote to increase the slot use deadline. The widely perceived backroom deal would become the first in a string of JetBlue controversies in Long Beach. Leaders in airport impacted neighborhood and LGB’s other airline tenants blasted JetBlue’s backroom deal.
The May 23, 2001 press conference/ceremony announcing the airline deal featured JetBlue executives and the whos-who of Long Beach government. Then Airport Manager Chris Kunze stated: “Long Beach Airport and JetBlue have much in common — we’re both customer-friendly and low cost. We’re looking forward to our relationship and to the expanded flight offerings and destinations. I am personally very excited about JetBlue’s brand new, neighborhood-friendly fleet of aircraft.”
When JetBlue arrived in Long Beach as an upstart airline in 2001, 27 (65%) of the 41 available airline slots were unfilled at the Long Beach Airport. When JetBlue took all 25 available slots, the airline was seen by many as the economic savior of the Long Beach Airport and economy.
However, by the time JetBlue arrived in Long Beach in 2001, the city’s neighborhoods in the 4th and 8th Districts most impacted by the aircraft noise had already been working together for 20 years toward limiting the times and numbers of flights into Long Beach. Led by then 8th Distinct Councilmember Ed Tuttle, the original HUSH (Homes Under Stress and Hazard) neighborhood activist organization was formed. In the early 1960s, HUSH had filed an airport lawsuit and was eventually able to get the Long Beach Airport Noise Ordinance passed in 1981. The Long Beach Noise Ordinance was one of just a handful of municipal noise restrictions grandfathered in under the 1990 federal Airport Noise and Capacity Act (ANCA) to establish a federal program for review of airport noise and access restrictions.
Eleven months after the JetBlue slot agreement announcement, American Airlines, and Alaska Airlines threatened to sue the City of Long Beach. The airlines accused city officials of violating federal law by assigning all 27 slots to JetBlue. The airlines alleged that the allocation process was done in secrecy and without a competitive response from the other airlines at LGB. This was the first of what would be almost 20 years of controversies with JetBlue in Long Beach.
Ten months later in February 2003 with the FAA mediating, a final settlement agreement was reached between the City of Long Beach and JetBlue and the plaintiff airlines – American and Alaska. The agreement settled the allocation of operating slots at LGB.
JetBlue wants terminal upgrades
In its deal with Long Beach, JetBlue not only received all 27 remaining flight slots but also a promise for improvements to the Long Beach Airport.
In May 2004 JetBlue went before the Long Beach Airport Advisory Commission and requested new terminal facilities be built for a future forecast of upwards of 7 million annual travelers. JetBlue wanted the new terminal to be in the 110,000 square feet range. Opponents called the proposed size an expensive “Supersizing” that was unnecessary for an airport with a 41 daily flight cap. The opponents led by 8th District neighborhood leader Rae Gabelich formed LBHUSH2 to battle the supersizing of the airport. JetBlue supporters led by the Long Beach Chamber of Commence leadership formed the Long Beach Alliance.
That same year Gabelich and 4th District neighborhood leader Patrick O’Donnell would be elected to the City Council by ousting their district’s sitting councilman.
Three years later in April 2007, in a split 5-3 vote, the City Council voted to approve an 89,995 square-foot terminal. A lawsuit was eventually filed by the Long Beach Council of PTAs against the new proposed terminal’s EIR.
After legal and construction delays, the $45 million new departure lounge terminal opened in December 2012. The “compromise” terminal would become an award-winning “boutique airport: consistently appearing on top ten airport lists. LGB’s lack of passenger boarding bridges (aka jetways) and its walk-on-the- tarmac-to-board experience would become a major feature for the historic airport.
The International Terminal controversy
In June 2014. as JetBlue President Robin Hayes rolled out JetBlue’s new Mint Service in Los Angeles, he also revealed that the airline was in talks with Long Beach to develop an international terminal. Those talks had been going on since 2013 before being first made public.
Jet fuel prices and competition from other airlines directed at JetBlue’s niche market and service model made Long Beach less profitable for JetBlue. The airline now envisioned a new business plan using its near-monopoly at LGB to its advantage by having basically a private international terminal for service to what it hoped would be expanding its service to Mexico City.
Again the perception of Long Beach leaders not being transparent with airport stakeholders galvanized the new LBHUSH2 and its spin-off Neighborhoods First to fight against the international terminal.
Now the Long Beach City Council had a new batch of Councilpersons most of whom had no experience dealing with the last 13 years of airport controversies.
The City Council opted to conduct an expensive FIS (Federal Inspection Service) Feasibility Study by Jacobs Engineering to study the viability of an international terminal. Jacobs and the airport staff conducted pre-study and post-study public sessions. At the first meeting, the Jacobs representatives tried to conduct a small group rotating type meeting. That plan was greeted by an uproar of disapproval from the hundreds of residents in attendance who demanded a townhall style meeting so everyone could hear the same information. Taken aback by the crowd revolt, the Jacobs representatives and the staff agreed to hold all the meetings townhall style.
Three years after the initial announcement the international terminal vote took place on January 24, 2017. The night before, 5th District Councilwomen Stacy Mungo (LGB is located in the 5th District) held her last community meeting on the international terminal. Overwhelmed by an angry crowd, Mungo became very emotional. The next day at the City Council meeting, a still emotional Mungo tells the story of what happened after the community meeting. Mungo tells the audience that she left the meeting she went to meet Councilwomen Price and Mayor Garcia. She then tells the 500 people at the meeting that she had decided to oppose the International Terminal based on financial considerations. The final vote was 8-1 against the international terminal with only Sixth District Councilman Dee Andrews voting Yes.
Minutes after the vote, Mungo’s office emailed out the following statement:
This is an investment the City would make if it felt it were in the best interests of the Airport financially, after taking into consideration a full review of the associated issues, and in this case, the financial investment the City would make in this endeavor does not outweigh the potential benefits. The potential economic impacts to the region, and more importantly to the Airport itself, do not justify the investment. The Airport is one of the City’s biggest economic drivers, and we need to ensure it is financially sound. Our Airport is functioning well today, and the City should not proceed with a new project while we have so many other important priorities.
JetBlue did acquire landing rights in Mexico City in 2015. In January 2020, JetBlue pulled out of the Mexico City market unable to compete with the local airlines.
JetBlue’s late flight fines and slot rotation
JetBlue does not operate hubs, it has “focus cities”. Airline hubs are where the larger airlines keep extra planes and crews to dispatch them based on scheduling, maintenance, and weather needs.
JetBlue’s focus city system does not have spare planes. JetBlue uses the same airplane to go back and forth on the same route, thereby saving the costs of extra aircraft and crew. A focus city may have a new crew waiting to return with the same aircraft with new passengers. This system is why JetBlue boasted that it never canceled flights. It could not cancel a flight (regardless of the delay) because no other aircraft were available to fly the route.
JetBlue’s focus city model caused serious controversy in the infamous February 2007 Northeast blizzard. In New York, JetBlue had refused to cancel a flight keeping the passengers on the aircraft waiting for clearance for 11 hours. The clearance never came and after 11 hours JetBlue returned the passengers to the gate and finally canceled the flight. JetBlue’s whole route system collapsed. Within days as Congress threatened to act, JetBlue had issued a new Passenger Bill of Rights.
A major problem with the focus city model occurs when something happens to cause a plane to be late (scheduling, maintenance, or weather), the timing of the aircraft’s whole route schedule is thrown off.
Long Beach City Prosecutor Doug Haubert took legal action against JetBlue for its continued Noise Ordinance Violations. The airline was forced into a Consent Decree that increased late fines, Under the agreement, the fines went to the Long Beach Library Foundation.
With Long Beach’s Noise Ordinance fines for late flights, JetBlue yearly racked up hundreds of thousands of dollars in fines even at the original low fine structure in the Noise Ordinance. JetBlue just paid the fines as a cost of business. One year the airline accumulating a million dollars in fines.
During the three-year battle over the international terminal. JetBlue refused to return flight slots it was not using to LGB. Instead, JetBlue played a shell game by “rotating” the unused slots through its schedule. Critics dubbed the practice “slot squatting” because JetBlue was essentially prevented competitors from accessing LGB by acquiring JetBlues unused slots. The practice also severely impacted airport finances negatively.
After the vote denying the international terminal, Councilman Daryl Supernaw started work to update the fine structure in the Noise Ordinance and close the slot squatting loop-hole. Supernaw met criticism from both JetBlue supporters and airport activists. JetBlue and its supporters said that the move to correct the problems as targetting JetBlue. On the other side, some long-time Airport activists feared that changing anything in the Noise Ordinance could open it up to being challenged in court.
The City Attorney’s office used the same expert law firm that drafted and updated the Orange County John Wayne Noise Ordinance. The city also worked with the FAA. The Noise Ordinance fine structure was updated and the slot squatting loophole was closed.
The end result was JetBlue had to relinquish flight slots that it was not using. Hawaiian Air and Southwest then started service from LGB. The competition that JetBlue had spent 18 years trying to prevent had finally come to LGB.
JetBlue’s political impacts
JetBlue’s entry into Long Beach also resulted in starting the careers of neighborhood leaders from the airport impacted neighborhoods.
In 2004, Patrick O’Donnell from the 4th District’s Los Altos Village Neighborhoods and Rae Gabelich from the 8th District’s Greater Los Cerritos Neighborhoods were both elected to the City Council on campaigns focused on airport issues. Both defeated incumbent councilmen, O’Donnell defeating Councilman Dennis Carroll and Gabelich defeating Councilman Rob Webb.
During both Assemblyman O’Donnell and Councilwomen Gabelich’s council years the two dealt with JetBlue’s late night flights and the proposed expansion and updating of the Long Beach Airport.
City Prosecutor Doug Haubert was the 4th District’s representative on the Airport Commission during years of JetBlue controversy.
Following O’Donnell when he was elected to the Assembly is 4th District Councilman Daryl Supernaw. The Supernaw family also had deep ties to neighborhood airport advocacy with Cheryl Supernaw being an active member of the original HUSH. After dealing with the JetBlue’s international terminal request, Supernaw was instrumental in getting changes to the original fine structure and closing the slot-squatting loophole.
The JetBlue political legacy also includes uniting the neighborhoods on either side of the airport with one common goal. First as HUSH, then LBHUSH2, then Neighborhoods First. Those neighborhood organizations eventually lead to the reincarnation of the Council of Neighborhood Organizations (CONO) that comes back just in time to lead the Land Use Element fight using many of the same techniques that LBHUSH2 and Neighborhood First developed in the JetBlue battles. All of those earlier grassroots organizations eventually led to the development of neighborhoods political coalition called the Long Beach Reform Coalition.
The staff at LGB has 30 days to allocate a slot that becomes available.
Currently, three airlines are on the waiting list for permanent flight slots at LGB: Southwest, Hawaiian, and Delta.
A total of 8 of Southwest’s 17 slots are temporary Supplemental Slots that are annual renewed.
In addition to writing for the LB Tribune, Joe Mello is Chair of LACAN and a Board Member of LBRC.