JetBlue: We Don’t Need a Merger to Compete

Ever since the bombshell announcement Monday that Southwest will acquire AirTran, people have been wondering what this means for JetBlue. Now, the Associated Press has obtained a memo revealing what JetBlue thinks about the whole affair, or at least what JetBlue wants people to think it thinks. And that can be summed up as follows: “Everybody chill out, we got this.”

“Our plan has proven to be the right path forward,” Barger wrote. “We could easily double our size overnight but at what cost to our balance sheet, our culture and brand? We’ve worked too hard for those assets.”

Barger acknowledged that his airline will inevitably face greater competition in several markets, notably Boston and New York, but added, “[Carriers] that grow through merger may be bigger, but they’re also distracted by their own integration issues, and they usually take their eye off the customer. This gives us another opportunity to win by playing our game even better.”

If this sounds like nothing more than putting a positive spin on disconcerting news, there’s probably some truth to that. That said, I agree with Barger’s sense that JetBlue’s path so far is the right path for the future. But he’s likely underestimating Southwest if he thinks it will take its eye off the customer. Southwest is nothing if not intensely focused on its customers, both as a business model and in its marketing, and will likely place a high priority on both as it incorporates AirTran.

Which is exactly why Barger is correct to focus on his brand’s core strengths—customer service, top-notch amenities, and financial stability—rather than the need to keep pace with Southwest. Southwest already dwarfs JetBlue in nearly every measurable way, and the addition of AirTran will only widen that gap. The Airline Biz blog estimated Southwest’s eventual (post-acquisition) size, revenue, and income, and in most cases the airline ranked third or fourth in the country, well ahead of JetBlue. Following the merger, Southwest would bring in four times as much net income, carry nearly six times as many passengers, employ four times as many people, and fly almost five times as many aircraft.

Without a merger, JetBlue simply can’t expect to match Southwest’s traffic or financial performance. And with a merger, JetBlue runs the risk of diluting or destroying its most valuable asset: its brand and product.

Which is not to say that a merger is even a possibility. The CrankyFlier blog featured a lengthy post today detailing the long list of reasons American, which is often speculated as a potential merger partner for JetBlue, would be insane to merge at all. Alaska has been tossed around as a possibility, considering both airlines are of roughly equal size. US Airways? Anyone?

I’m going to go with no one, and agree with Barger’s implied “slow and steady wins the race” approach. Stick with what works, and try not to worry about what other carriers are doing, at least for now. After all, Southwest was the little guy once, too.

Readers, what do you think Southwest’s acquisition of AirTran will mean for JetBlue?