JetBlue puts LAX plans on hold

updated 3:22 p.m. ET May 13, 2008

NEW YORK - JetBlue Airways Corp. is suspending plans to start serving Los Angeles International Airport, saying Tuesday the skyrocketing price of jet fuel is making the cost of starting service at a new airport unaffordable.

JetBlue passengers who bought tickets to Los Angeles, where service was expected to start later this month, are being rebooked on flights to nearby Long Beach Airport, which JetBlue already serves.

While flying to Long Beach instead of Los Angeles won't save JetBlue much on fuel, it will save the New York airline many of the costs that arise when any carrier starts serving a new airport. And those are costs the carrier can't afford at a time when fuel has jumped to more than $3.50 a gallon from the $2.72 a gallon JetBlue paid in February, when it announced its Los Angeles routes.

"Those initial costs and projected investments would be in the millions of dollars," said JetBlue spokesman Bryan Baldwin via e-mail. "New routes tend to not make money in the first year as well."

Startup costs include leasing gates and mechanical areas, space for ticket counters and baggage claim areas as well as offices, said Bob Mann, an independent airline consultant in Port Washington, N.Y. Also, airlines have to spend big on advertising just to establish a presence in a new market.

"It just takes a while to build a customer base in each new market," Mann said.

Any kind of cost savings is vitally important at a time when the cost in fuel of flying from New York's John F. Kennedy International Airport to Long Beach has jumped to $15,000 a flight from $9,600 last year, according to Baldwin. That change makes adding Los Angeles International service unaffordable, Baldwin said.

"In order to start (Los Angeles) service without losing money, we would have had to raise the fares beyond what we believe customers would have been willing to pay," Baldwin said. "Losing significant funds in today's environment is not prudent, even for an important route like (Los Angeles). We'd rather hold off on launching service for a healthier economic environment."

JetBlue will continue serving the Los Angeles area on existing routes to Long Beach, Ontario and Burbank. The airline has no plans to drop any other announced routes.

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JetBlue is not alone in suffering from high fuel prices. Many airlines are raising ticket prices and imposing surcharges on fuel and luggage. Delta Air Lines Inc. and Northwest Airlines Corp. cited high fuel costs as one of the primary reasons for their combination, announced last month. The carriers hope to cut costs by eliminating redundant functions.

Many airlines, including JetBlue, also have recently said they are slowing some flights to conserve fuel. Southwest Airlines, for instance, started flying slower about two months ago, and projects it will save $42 million in fuel this year by extending each flight by one to three minutes.

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