Analysis, Interviews, Opinions

JetBlue earliest to cancel during storms, says fewer refunds result

JetBlue Airways, the fifth biggest US airline by passengers carried, consistently cancels flights sooner than rivals when storms pummel the US Northeast, a tactic that may help its customers reach destinations more reliably, a Reuters analysis of flight data shows.

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

Cancelling early also spares travellers 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 per cent of cancellations by the five biggest US carriers this winter occurred 12 or more hours before scheduled departures. JetBlue led the pack, with 74 per cent of its cancellations this winter taking place in that time frame, followed by United Continental Holdings at 43 per cent.

At the same time, the four largest US airlines - American Airlines Group, Delta Air Lines, Southwest Airlines and United - including the carriers they contract, cancelled more than twice as many of their New York flights as JetBlue did this winter, data show.

"Since the flights end up being cancelled 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, a flight information company, which showed how many flights US airlines cancelled 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 US cities exposed to winter weather where all five major US 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 per cent 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 per cent for United, 48 per cent for Delta, 46 per cent for Southwest and 40 per cent for American, including its subsidiary US Airways.

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

JETBLUE'S STRATEGY

JetBlue has cancelled 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 cancelling 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 cancelled 2.9 per cent of its system-wide flights from December 2014 through March 2015, down from 3.9 per cent a year earlier. The airline cancelled fewer flights - and therefore captured more revenue - because it started cancelling earlier, giving it more time to plan for take-offs as soon as storms subsided.

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