JetBlue move signals more interest in West Coast

Company invests in private operator

With its latest investment, it appears that JetBlue Airways Corp. is thinking creatively about how to approach the West Coast — with smaller planes.

The airline has made a small investment in JetSuite Inc., a private jet operator led by two JetBlue founders. In April, JetSuite launched a public charter service, JetSuite X, that flies scheduled service on 30-seat Embraer 135 regional jets to seven destinations.

The terms of JetBlue’s investment weren’t disclosed; the airline said it was a minority investment that is not material. JetSuite will use the investment for expansion and plans to seek additional outside money in the coming weeks. JetBlue’s general counsel, James Hnat, will join JetSuite’s board.

“I think in terms of the JetSuite opportunity, we just see a great opportunity on the West Coast, in terms of offering customers a much more convenient alternative in terms of how to fly,” JetBlue Chief Executive Officer Robin Hayes said Tuesday during a conference call with analysts.

JetSuite, which is based in Irvine, California, was founded in 2009 by Alex Wilcox, the third employee recruited to JetBlue in the late 1990s by the carrier’s co-founder, David Neeleman, who also serves on the board of JetSuite. Wilcox is the CEO. Tony Hsieh, the chief executive of online retailer Zappos, is also a JetSuite director.

The company could figure into JetBlue’s future plans on the West Coast, although both companies said it was too soon to discuss how the relationship would evolve.

JetBlue’s top two revenue routes are its nonstop flights from New York to Los Angeles and San Francisco; it also has a focus city in Long Beach, California.

In April, the carrier lost a bidding war for Virgin America Inc., the centerpiece of Alaska Air Group’s California expansion; that deal is still under review by U.S. regulators.

Domestically, JetBlue has limited partnerships with just a few airlines, including Hawaiian Holdings and Silver Airways, to serve traffic in places it doesn’t fly, after an interline agreement with American Airlines ended in March 2014.

Nor does it have access to many smaller markets, the kinds of places JetSuite X could serve with small jets.

Wilcox said in a telephone interview on Tuesday that the carriers have not discussed transferring passengers and that JetBlue’s investment was not for that reason. Still, he said he could envision ways to make such an arrangement work, particularly “when you introduce a car into the equation.” That would mean shuttling passengers to and from JetBlue flights the way the big three U.S. carriers now transfer some first- and business-class passengers between flights in luxury cars.

“I’m an ideas guy,” Wilcox said. “I can think of a thousand ways to make it interesting and to work through the constraints” if the companies ever decide to transfer passengers.

JetSuite X passengers already earn JetBlue’s TrueBlue points for flights. The carriers serve three airports in common: Las Vegas, San Jose and Burbank, California.

Henry Harteveldt, an industry analyst with Atmosphere Research Group in San Francisco, said in an email that JetBlue’s investment probably has “a decent amount of unrealized potential,” even though JetSuite X isn’t prepared to connect passengers.

“If the changes needed to accommodate connections outweigh business benefits — namely profits — then we’ll probably see the relationship remain a loose affiliation based on TrueBlue,” he wrote.

Wilcox said the first area of cooperation for JetBlue and JetSuite will be testing mobile apps for JetBlue Technology Ventures, a startup incubator the airline launched this year to simplify customer bookings across an array of travel products.