Jaunted: Can you fill us in on what's happening with the congestion situation at JFK? Most of the stories we read about it focus on how miserable it can be for passengers. How did things get so bad, and what is the government proposing?
Fred Reid: It comes down to the fact that we're dealing with an aging airport infrastructure and more and more people traveling. We're talking about an air traffic control system basically developed in the 1940s. Although it is incredibly safe, in terms of scheduling the system we are dealing with is so retro it is almost cool. It would be like if we hadn't expanded capacity on our highways for the last 40 years. So, as a result all airlines are facing the same constraints with more and more people traveling, scheduling and, of course, weather complicating the situation.
At the direction of the President, the Department of Transportation is currently formulating a plan for how to address the congestion issues at JFK. We're pleased that the issue is being addressed and that we've been at the table and asked to weigh in. That said, some of the proposals that are being considered, including one to "cap" airlines at their 2007 flight levels could be devastating for new entrant airlines and potentially shut us out of the market. Schedule reductions would hurt all the airlines, but because we are still very small, flight caps measured against our existing schedule would be totally arbitrary.
Jaunted: The thing about these proposals is that some (bigger) airlines want to lock out other (smaller) players, right? How would that change the way you do business?
Fred: Well, as you can imagine no one wants to give up highly coveted slots to new airlines. And some of the proposals floating around could actually cut us out of the market all together. But we want to work with the DOT to find solutions that work for all parties.
We've been accused of asking for a special set aside--but it is important to note that without "set asides" for new entrant airlines at congested airports there would be no JetBlue today. Historically, when slot allocations have been made, the government has wisely decided to allow for some slots for new entrants--and that is the case we are making here.
JetBlue for instance was given 70 slots at JFK as a new carrier. The DOT has always given consideration to consumer choice and competition in the market. This has long been a fundamental policy consideration.
We account for less than 2 percent of all daily scheduled operations at JFK. Two incumbent carriers alone have added over 350 daily flights over the past 3 years at JFK (we're at 7 round trips, on average, daily now). So, yes we're urging the DOT to look at the cause of delays and think about the profound impact of shutting out new entrants.
If capacity is frozen across the board at JFK, it will likely happen at other major airports going forward, resulting in less competition, higher fares and no more new entrants like Southwest, AirTran, Frontier and JetBlue who are known for great service and low fares.
Jaunted: From the sounds of things, there are multiple airline industry trade groups. Yet they don't work together? That sounds a little strange--shouldn't you all be lobbying for safe, on-time flights, decent passenger service and, heaven forbid, a passenger bill of rights?
Fred: Well, the industry is one of the most competitive out there, so it's not surprising that we all aren't always holding hands and singing kumbaya! We are also strictly regulated by anti-trust laws. But you are right--we actually do have much in common.
We all face the same air traffic control capacity constraints, we all provide an important service to the public and we certainly are all obsessed with making air travel the safest mode of transport out there. But when it comes to guest service, fares, routes/frequencies, the in-flight experience and other things the public cares about--I truly believe that more competition in the industry is the answer to many of our issues. We just know that having more airlines at the table, rather than fewer, does lower fares, improve service and make the travel experience better.
When more competitors serve a market, consumers usually win--with lower fares, more choice, greater amenities and increased competition (see The Virgin Effect). If capacity is frozen at JFK and for other major airports going forward, it will mean less competition, higher fares and no more new entrants like Virgin America or others that may follow us in the future.
Jaunted: Some of the bigger airlines at JFK have invested lots of money in turning the airport into a hub. Shouldn't they get to protect their investment?
Fred: Sure--although the historical investments that have been made are not on a straight pay-as-you-go basis. Also, many carriers have come in and been allotted hundreds of slots with no investment. The key is we just want to maintain a very modest place at the table. We want to get a fair shot at competing. Let the people decide!
Jaunted: Some folks--James Fallows, Michael Boyd and Susan Gurley to name a few--say President Bush's temporary Thanksgiving fixes didn't do much to help the situation in New York. What did you think of his plan?
Fred: The Thanksgiving steps were temporary, so not surprisingly the positive impact was also limited and temporary. This is a huge and complex issue, and we need longer-term solutions that increase capacity like satellite-based flight navigation, better use of air-space, more runways, etc.
Jaunted: I know airlines aren't allowed to cooperate on flight planning. Since that's the case, who but the feds should step in to help keep flights on schedule?
Fred: That is right--we welcome it. We just want to make sure that a solution takes into account the longer-term impact on consumers and competition.
Jaunted: If you could wave a magic wand, what steps would you take to reduce congestion at JFK?
Fred: A magic wand, eh? Well then... special air traffic control priority for Virgin America flights, the best available gate parking, you get the picture! But seriously, the main issue is that we need to take the big step forward to update the air traffic control system for the 21st century and increase capacity, coupled with regulatory fixes that take into account the free market and value of competition in improving the air travel experience for travelers.
Jaunted: With all the headaches involved, why did Virgin America want to break into the New York market? I mean, you could've focused on the West Coast for the first few years before diving into this JFK mess, right?
Fred: Three words: Demand, demand, demand. The transcontinental market was starving for competition and we were ready to supply it--but with cool planes, 25 movies, in-flight text messaging, mood-lighting and all that other cool stuff.
Jaunted: You're leaving Virgin America soon. I heard you're planning to spend your time at your apple orchard in Sonoma County. You mean you don't grow grapes?!
Fred: Grapes are so 1997!