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Bijan Vasigh is a professor in the Department of Accounting, Economics, Finance, and Information Sciences at Embry-Riddle Aeronautical University’s David B. O’Maley College of Business, and he said it’s quite common for carriers – especially newer airlines – to add and cut routes regularly as part of their growth plans.
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“About four or five years ago, Daytona Beach gave some incentive to JetBlue to inaugurate service from Daytona Beach to New York City,” he said. “JetBlue came to this market, after two years they recognized that this market does not generate the amount of revenue as they can generate from other destinations,” so the airline cut the route and reallocated the planes.
service out of Wilmington, Delaware, on Feb. 1, even the airline’s CEO admitted there was some trial and error involved in inaugurating new routes.
“It’s too early to know if this is going to work,” Avelo CEO Andrew Levy told USA TODAY. But he added that early indications gave him a reason for optimism.
“I feel even better now as we see three months of sales data,” he said.
How common is it for airlines to cut routes?
Vasigh said that it’s very common for airlines to tweak their networks, and while there is some cost to pull out of a city, it’s relatively easy to do if a place just isn’t profitable.
“If that market does not generate enough revenue for them, they can take their assets, which are highly mobile, their assets are aircraft, they can use that in another market,” he said.
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Now that demand for flights has largely returned, carriers are poised to grow and test new markets.
Established carriers, Vasigh said, already tend to have high aircraft utilization, but newer airlines often need to grow rapidly, both to make the best use of their planes and also to achieve the economies of scale necessary to make the numbers work in the aviation business.
“New airlines need to have aggressive growth to reach a size that is the optimum size to reduce costs,” he said.
A big part of that growth can often be trial and error, because newer airlines don’t always have as much market data available as established carriers do, although even more established carriers sometimes start new flights only to find that the demand never quite materializes as expected.
Zach Wichter is a travel reporter based in New York. You can reach him at zwichter@usatoday.com