Back Door to L.A.

By Sally B. Donnelly/Long Beach

It wasn't long ago that Long Beach, Calif., was the place your luggage turned up when the airlines made a really big mistake. The working-class seaside city has been known as home to oil wells and refineries, the mothballed Queen Mary ocean liner and, until a few years ago, Howard Hughes' eight-engine flying monster, the Spruce Goose. Hardly anyone meant to fly there.

But that's changing fast. Long Beach is the unlikely scene of the airline industry's fiercest dogfight over passengers and landing slots. Upstart carrier JetBlue Airways cleverly identified Long Beach airport as a back door into the lucrative Southern California market--and a way around the luggage lines and traffic jams that afflict the bigger airports 22 miles north in Los Angeles and 22 miles south in Orange County. It's a fight that features the usual coast-to-coast fare cuts, but it's also one that suggests passengers are changing the way they think about air travel.

For years Long Beach begged major airlines to take advantage of its location, but it was only last summer that interest came from an unexpected quarter: JetBlue, the discount carrier based at New York City's John F. Kennedy International Airport. Like Southwest Airlines, JetBlue, with its low fares and aversion to plane-changing hubs, has proved increasingly attractive to passengers in the new era of fewer flights and tighter security--including business travelers, the 15% who provide 50% of an airline's profit. So when JetBlue CEO David Neeleman began seeking a way to capture some of the lucrative transcontinental business, he turned to Long Beach.

Landing rights there are less expensive than at larger airports but are relatively scarce because the city wants to hold down noise levels. Neeleman and his managers secretly met with city officials in May 2001 and persuaded them to lease JetBlue all the 27 remaining slots for large carriers (14 others were already being used by American Airlines, America West Airlines and cargo planes) and to let JetBlue wait an unprecedented two years to use those slots. JetBlue began service between J.F.K. and Long Beach last August with two arrivals and departures a day. And for a while the big carriers didn't notice or didn't care.

They care now. American is claiming the city of Long Beach acted illegally in awarding the slots to JetBlue and is threatening to sue. Long Beach has agreed to let American use some of the slots that JetBlue isn't yet using, and starting June 15, American will begin service between Long Beach and J.F.K. for just $159 each way (vs. $129 for JetBlue). Alaska Airlines, which pulled out of Long Beach in 1995, has also arranged for temporary slots there. And United Airlines, which dominates the Los Angeles-San Francisco route, is watching carefully as JetBlue begins flights between Long Beach and Oakland this fall. Late last month JetBlue announced it will begin flying from Long Beach to Las Vegas and Salt Lake City, Utah.

JetBlue's Neeleman wryly asks, "Isn't it ironic that there has been lots of room at Long Beach airport for years, but as soon as one little carrier comes in and develops a market, everyone wants a piece of it?" American defends its newfound interest as part of a push for more cross-country flights. "Our market research also shows high-revenue passengers want to avoid large, complex airports like Los Angeles," says spokesman John Hotard.

American is moving into Long Beach even though its slots could expire in October. Such temporary service is almost unheard of; money spent on logistics and marketing could go down the drain. But American can't afford to ignore the upstart anywhere. Last month JetBlue broke American's decades-long domination of lucrative flights between New York City and San Juan, Puerto Rico.

If there's a revolt against impersonal air travel, Long Beach may make a good battlefield. The airport is a throwback to the glamour era of aviation. Its Art Deco terminal dates to the 1940s. Airplane stairs and even some baggage carousels are out in the California sunshine. Parking is only $3 a day. And Long Beach is also seeing more of the limos of the Hollywood crowd. Says an airport spokeswoman: "There's a lot more black clothing in the terminal than last year."