April 14, 2015 / 5:28 AM / in 3 years

JetBlue earliest to cancel during storms, says fewer refunds result

NEW YORK (Reuters) - JetBlue Airways Corp (JBLU.O), the fifth biggest U.S. airline by passengers carried, consistently cancels flights sooner than rivals when storms pummel the U.S. Northeast, a tactic that may help its customers reach destinations more reliably, a Reuters analysis of flight data shows.

An airport worker leads JetBlue planes onto the tarmac of the John F. Kennedy International Airport in New York in this December 11, 2013, file photo. REUTERS/Lucas Jackson/Files

    Scrapping some flights hours ahead of a storm lets an airline re-allocate planes and crew earlier, meaning fewer flights and passengers canceled in total as a storm passes.

    Canceling early also spares travelers unnecessary trips to the airport and gives them more options to rebook, compared with cancellations that take place at the last minute. Early cancellations reduce requests for refunds, JetBlue’s Chief Executive Officer Robin Hayes told Reuters.

    The Reuters analysis found that 41 percent of cancellations by the five biggest U.S. carriers this winter occurred 12 or more hours before scheduled departures. JetBlue led the pack, with 74 percent of its cancellations this winter taking place in that time frame, followed by United Continental Holdings Inc (UAL.N) at 43 percent.

    At the same time, the four largest U.S. airlines - American Airlines Group Inc (AAL.O), Delta Air Lines Inc (DAL.N), Southwest Airlines Co (LUV.N) and United - including the carriers they contract, canceled more than twice as many of their New York flights as JetBlue did this winter, data show.

    “Since the flights end up being canceled anyway, it’s far better for consumers to know earlier,” said Charlie Leocha, president of consumer advocacy group Travelers United.

    JetBlue’s competitors attribute their later cancellations to different approaches they’ve taken and to the different routes they fly.

    Reuters reviewed non-public data from FlightView Inc, a flight information company, which showed how many flights U.S. airlines canceled 12 or more hours ahead of their scheduled departures, from December 2012 through March 2015. It also showed how many flights airlines scrapped in total during this time.

    The Reuters analysis focuses on New York and Boston because they are the U.S. cities exposed to winter weather where all five major U.S. airlines fly from across the country. By contrast, JetBlue flies to fewer destinations from Chicago and Washington than its peers do, making those cities less useful for comparisons.

    In the New York area, about 69 percent of JetBlue’s cancellations from December 2014 through March 2015 were made at least half a day ahead of the scheduled departure time, compared to 58 percent for United, 48 percent for Delta, 46 percent for Southwest and 40 percent for American, including its subsidiary US Airways.

    In Boston, about 83 percent of JetBlue’s cancellations were made at least half a day ahead of schedule, compared to 74 percent for United, 63 percent for Southwest, 59 percent for Delta and 58 percent for American.

 

    JETBLUE‘S STRATEGY

    JetBlue has canceled flights earlier than its peers for the past three winters, though the gap between the New York-based airline and the others narrowed in the first quarter of 2014.

    In 2014, the carrier blamed winter weather for a $35 million drop in first-quarter operating income. It then embarked on a review of its flight cancellation policy, JetBlue’s Hayes said.

    “By canceling in advance, you can deploy the crew onto other flights,” he said. “We can fly more people where they want to go, and we have to give less refunds, frankly.”

    JetBlue declined to say how much it pays in refunds and said it’s not possible to quantify the financial effect of its cancellation policy because margins are affected by many different things.

    But data from FlightView suggests that early cancellations have boosted revenue.

    JetBlue canceled 2.9 percent of its system-wide flights from December 2014 through March 2015, down from 3.9 percent a year earlier. The airline canceled fewer flights - and therefore captured more revenue - because it started canceling earlier, giving it more time to plan for takeoffs as soon as storms subsided. 

    The company has forecast passenger unit revenue growth of 4.5 percent this quarter compared to a year earlier, while most competitors expect passenger unit revenue to fall at least a percent.

    

    RUN ON SCHEDULE

    There is no concerted effort at American to cancel flights earlier than it already does, according to Scott Ramsay, managing director of American Airlines’ Integrated Operations Center, which oversees namesake and US Airways flights.

    “We try to run the flights that we have on schedule,” he said.

    Rather, its automation system lets American respond to storms with less lead time, he said. 

    American, United, Delta and Southwest also have more daily flights and U.S. hubs than JetBlue, which could explain why they wait longer to cancel flights.

    “That gives us a little more flexibility in terms of routing our customers, crews and airplanes,” said Jim DeYoung, United’s managing director of Network Operations Control.

    They also fly much more internationally, with the exception of Southwest. DeYoung said there is a greater “ripple effect” from canceling an international flight, which typically has customers that connect to other U.S. destinations.

    “We will try to prioritize operating international flights as much as possible,” he said, which could mean waiting longer to see if a weather forecast changes. “Our goal is to minimize the amount of disruption to our customers.”

    Travelers flying in and out of New York and Boston from December 2014 through March 2015 were least likely to have their flights canceled on JetBlue. The airline only scrapped about 3.0 percent of its total New York flights, compared to 7.1 percent for United, 7.3 percent for Delta, 7.5 percent for Southwest and 7.7 percent for American. JetBlue canceled about 4.4 percent of its total Boston flights, compared to 5.2 percent for Southwest, 6.1 percent for United, 6.2 percent for Delta and 7.2 percent for American.

Reporting By Jeffrey Dastin in New York; Editing by Joseph B. White and Eric Effron.

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