Boston's Charm Offensive for Direct Flights Overseas

Page created by Erik Newton
 
CONTINUE READING
Boston's Charm Offensive for Direct Flights Overseas
WALL STREET JOURNAL
THE MIDDLE SEAT

Boston's Charm Offensive for Direct Flights
Overseas
How Logan Airport Attracted Connections to Tokyo,
Beijing, Istanbul, Dubai and Panama City

By
SCOTT MCCARTNEY
Updated Feb. 26, 2014 11:29 p.m. ET

Boston
If there's one U.S. airport punching above its weight right now, it's Boston's Logan International.
Logan has landed five new international airlines over the past two years, a remarkable number
considering the airport isn't a hub for a big airline with alliance partners. Boston has nonstop flights
to Tokyo and Panama City. Flights to Dubai are scheduled to begin in March, followed by Istanbul in
May and Beijing in June.

Winning new international service is highly lucrative for cities. Businesses and tourists follow, and
local travelers can cut five or six hours off long trips by avoiding connections. Cities try to win over
airlines with millions of dollars in incentives and lobbying by politicians and CEOs. The battles are
global, since airlines can send new planes in any direction: Munich may vie with Seoul, Boston,
Mexico City, Montreal, Chicago and Philadelphia for a new flight.

"It's wicked competitive," said Massachusetts Gov. Deval Patrick, who once served on the United
Airlines board and has taken to actively recruiting new airlines to Logan. "There are lots of
governors and cities out covering the same ground. I'm not the first one who's shown up," he said in
an interview.
Boston's Charm Offensive for Direct Flights Overseas
New airplanes from Boeing and Airbus are changing the international travel landscape. The much-
delayed and problem-plagued Boeing 787 has started to hit its stride, with more than 115 now in
airline service world-wide. The 787 is the first smaller widebody jet to have very long range and low
operating costs, letting airlines fly nonstop in markets that could fill a 200-seat jet but not a 350-
passenger plane.
Some foreign airlines have taken a new approach: joining with local low-fare airlines to feed them
passengers rather than teaming with big global competitors. JetBlue Airways, for example, has
grown to be Boston's biggest airline in terms of daily flights. JetBlue now offers connecting
Boston's Charm Offensive for Direct Flights Overseas
itineraries for carriers like Japan Airlines and Dubai-based Emirates Group. JetBlue does the same
with 28 foreign airlines at its home at New York's Kennedy International.
Plus, a plethora of "open-skies" treaties between countries has eliminated many restrictions on who
can fly where, fueling the route competition. This comes as the number of international flights by
U.S. and foreign airlines has increased 5.1% over the past three years, according to the Bureau of
Transportation Statistics. The number of passengers aboard international flights has jumped 12.1%.
Meanwhile, the number of U.S. domestic flights has declined 4.4%.

Miami International Airport and JFK will both have taken in five new international airlines in the 12
months ending this June. Chicago O'Hare, Dallas-Fort Worth, Washington-Dulles and Newark
Liberty have all seen major international gains over the past three years as well.

Courtships between airports and airlines can go on for many years. Yil Surehan, director of airline
route development for the Massachusetts Port Authority, which operates Logan, spent seven years
trying to entice Japan Airlines before Tokyo flights started. Wooing Emirates was a six-year effort.
And those are the successes. "You hear the word 'no' in many, many languages," Mr. Surehan said.

DFW will spend $40 million in airline incentives for new service to China, Australia and the Persian
Gulf over a five-year period ending in 2016—the most of any U.S. airport, said airport CEO Sean
Donohue. That includes waiving landing fees for new entrants for two years and funding major
advertising campaigns for airlines.
Money for incentives comes from airport concessions like parking, food and real estate development
on airport land. DFW also has the advantage of some natural gas production wells on its property.

Boston has spent only about 10% of what DFW has on incentives, according to Thomas Glynn,
Massport CEO. By pitching the large university and hospital communities plus high-tech industry
and New England tourism, Logan has been able to dramatically expand international service without
offering huge incentives or a big hub.

Massport, like other airport authorities, blitzes airlines with market data showing travel patterns and
projected profit-and-loss statements for direct flights. In addition, Massport has task forces of local
business CEOs court airline executives as future buyers of high-dollar business-class tickets. Once
committed, the airport gives airline sales teams lists of New England companies likely to be good
customers for a particular route.

In Dubai, Emirates is promoting its direct flight to Boston. The flight's fare has been competitive with non-direct routes. Emirates Airline

Boston boasts short wait times at Customs and Border Protection checkpoints. And the governor, of
interest to foreign airlines in part because of his friendship with President Obama, "adds to our
allure," said Mr. Glynn. "He's one of the things that's leveled the playing field."

Boston also tries to pitch two airlines on the same destination at the same time, raising the pressure.
A "first mover" in a market typically gets more traffic and customer loyalty.
So while talking to Japan Airlines about Tokyo, Massport was also pushing Delta Air Lines for
service to Tokyo. JAL bit first, launching nonstop flights with a 787 in 2012.

JAL said in a statement that the "Boston-Tokyo route has been meeting performance targets, but
there is still room for improvement, particularly during certain seasonal periods."

JAL's move prompted China's Hainan Airlines to make Boston its second U.S. city after Seattle, also
with a 787. The airplane has the range to make it to Boston nonstop from Beijing. Unlike larger
planes, it can take off from Boston's 10,000-foot-long runways with a full load.
Hainan's chairman had particular interest in Boston because he had spoken at Harvard University and
the airline had been the subject of a Harvard Business School case study, said Joel Chusid, Hainan's
executive director U.S.A. Boston's large Chinese student population and the governor's involvement
helped close the deal, he added.

Mr. Chusid says he gets blitzed by airports at industry conferences. At a major event in Las Vegas,
where airlines and airports engage in brief "speed-dating" meetings, tables emptied at the end of a
day but Hainan still had a line of airport executives, some offering cheap fuel costs, no landing fees
and other incentives.

"Everybody's courting," Mr. Chusid said.

Emirates begins flying to Boston from Dubai March 10 and JetBlue will begin flights the same day
between Boston and Detroit, which has a large Arab population and no direct Dubai flight. Existing
Emirates flights to New York have "a fair amount of JetBlue passengers" on board, said Adnan
Kazim, Emirates' divisional senior vice president for planning and research. With JetBlue's large
operation at Logan, Emirates expects Boston flights to perform well, too.

Scott Sample, who works for a financial services firm in Dubai, hopes Emirates is right. He flies
home to Concord, Mass., often—three times since November. Nonstop flights will slash at least five
or six hours off the trip, he said. He also hopes more friends will visit since the trip to Dubai will be
easier.

His biggest concern is whether nonstop flights will be more expensive than the $1,200 to $1,500 he
usually pays for flights through London on British Airways and American.

"It'd be definitely worth it to spend $300 more," he said.

He may be surprised. Emirates is currently offering nonstop Boston round-trip tickets as low as
$1,191 round-trip.

Write to Scott McCartney at middleseat@wsj.com
You can also read