JetBlue Takes Another Step Toward Expansion at JFK Airport

get.com/media/uploads/thumbnails/gt-thumbnail-1261...

JetBlue Airways (NASDAQ: JBLU) is already one of the largest airlines at New York’s JFK International Airport, thanks to its savvy moves to stake out a big claim there while other airlines were retreating in the aftermath of 9/11. Now it’s looking to pave the way for future growth.

JetBlue recently selected Vantage Airport Group and RXR Realty to lead its effort to redevelop the defunct Terminal 6 — the carrier’s original home at JFK — and potentially even the adjacent Terminal 7. If successful, this project will enable JetBlue to cooperate more closely with its international airline partners, while giving it space to expand its own operations if the FAA relaxes JFK Airport’s slot controls.

Nearly a decade ago, JetBlue opened its new Terminal 5 facility at JFK Airport. Whereas its previous home in Terminal 6 was cramped and outdated, Terminal 5 is spacious and modern.

After the opening of T5, Terminal 6 was demolished. However, JetBlue retained an exclusive right to redevelop that site. (JFK Airport is unusual in that most terminals are controlled by individual airlines, rather than having the airport authority own and manage everything.)

Last summer, JetBlue published a request for qualifications as the first step toward building a new or expanded terminal on the Terminal 6 site. It is also interested in taking over Terminal 7 — currently controlled by British Airways on a lease that expires in 2022 — to enable a second phase of terminal development. This announcement sparked a competition between 10 companies interested in working with JetBlue to develop the additional terminal space.

JetBlue, Vantage Airport Group, and RXR Realty still need to get approval from the Port Authority of New York and New Jersey, the airport operator, to go ahead with any development plan. The Port Authority is looking to expand the airport’s capacity as quickly as possible while also fostering greater integration between the terminals to improve the passenger experience.

The preliminary plan for the Terminal 6 site is to build a new terminal with 12 gates suitable for widebodies. The terminal would be connected to JetBlue’s T5 facility both before and behind security.

As of now, JetBlue doesn’t need any extra space for its own operations. The 29 gates in T5 are more than enough for JetBlue’s roughly 175 daily departures at JFK. And unless the carrier acquires more slots, which are quite scarce, it can’t add more flights at JFK except between 11 p.m. and 6 a.m., when its terminal is mostly empty anyway.

Instead, JetBlue’s main goal in the near term is probably to provide space for its dozens of airline partners in a terminal that is connected to T5. This would make it far easier for customers to connect between JetBlue flights and partner flights.

Today, three of JetBlue’s partners — Aer Lingus, Hawaiian Airlines, and TAP Portugal — share space with JetBlue in T5. The others are spread across several other terminals, and while JetBlue could probably accommodate a few more in T5, it needs more real estate to make the most of this co-location opportunity.

It will probably take at least five years to win approval for a terminal development project and then design and build the new facility. By then, it’s possible that the FAA will have relaxed its slot constraints at JFK Airport. In that case, JetBlue would be able to use the extra terminal space to expand its own flight schedule — potentially including trans-Atlantic service — in addition to accommodating partner airlines.

While JFK Airport suffered record levels of congestion and delays during 2017, the perennially delayed NextGen GPS air traffic control system will eventually enable more tightly spaced arrivals and departures. This may reduce delays such that the FAA would be willing to relax its slot controls, as it did in 2016 at nearby Newark International Airport.

Even if slot restrictions are still in place in the mid-2020s, controlling additional terminal space would position JetBlue to capitalize on growth opportunities whenever they become available. With this new terminal project, JetBlue is doing its best to get a leg up on rivals in its hometown market.

10 stocks we like better than JetBlue Airways

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and JetBlue Airways wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Source Article