JetBlue Airways (NASDAQ: JBLU) is making its way back into the air cargo space after a nearly four-year hiatus. The airline's first offering will be traditional air-to-air service in Fort Lauderdale-Hollywood International Airport (FLL), according to a media release from JetBlue.
The budget carrier announced a partnership with Miami-based Aeronex Cargo earlier this week. Aeronex has built its business around providing air cargo managed services to low-cost airlines.
"In my long professional career of more than 35 years in aviation, it is an immense satisfaction to partner with JetBlue in their decision to go back to the cargo business under this unique turnkey solution model and contribute to increase their bottom line," said Patricio Sepulveda, founder and CEO of Aeronex Cargo.
JetBlue's current cargo plans revolve around belly cargo, allowing the airline to bring in new revenue without impacting customer operations, according to Robert Martinelli, JetBlue director of customer experience effectiveness. The airline's fleet features more than 250 planes.
JetBlue's long break from air cargo was a financial decision. During its last foray into cargo, operations did not bring in enough money for the airline to continue. At the time of the 2015 shutdown, the airline was mostly operating aircraft with little to no extra capacity for cargo. Last year, JetBlue introduced several larger planes. This allows for more room to enter into the cargo space.
"The increase of Airbus A321s in Jet Blue's fleet will certainly provide more reliable capacity for cargo," FreightWaves Air Cargo Market Expert Jesse Cohen said. "Narrowbodies are well-suited to handling a lot of the products coming out of Latin America and the Caribbean over Miami, especially flowers, seafood, fruits and vegetables."
JetBlue's air cargo services will expand to a drop-off point a Miami International Airport (MIA), where Aeronex will move goods to Fort Lauderdale, according to the media release. By the end of 2019, JetBlue expects to expand cargo operations to John F. Kennedy International Airport (JFK), Los Angeles International Airport (LAX) and Boston Logan International Airport (BOS).
"Aeronex and JetBlue will have the challenge of an additional trucking leg to cover, presumably refrigerated, to feed Fort Lauderdale, adding transit time, more handling and costs to their operation," Cohen said. "Their initial focus on high-volume markets in their network like JFK, BOS and LAX makes sense to build up volumes on flights and get economies of scale on cargo handling and sales operations before expanding on to others. Still, they will be competing in those mature U.S. domestic markets against large established carriers with more capacity and larger aircraft in some cases."
Over the next few years, the airline is planning to evaluate the demand for cargo operations in almost 30 cities across its network. JetBlue has plans to enter the trans-Atlantic market in 2021, and getting back into cargo beforehand also may help bolster that goal.
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