The International <scp>JetBlue</scp> Effect: Consumer Gains From Entry in Transatlantic Air Travel Markets

ABSTRACT JetBlue entered transatlantic air travel markets at comparable prices to competitors, which resulted in an increase in the total number of travelers and a minimal reallocation of existing shares—a phenomenon we dub the “international JetBlue effect.” We estimate that JetBlue's entry into 13 transatlantic markets from its New York and Boston hubs has generated roughly $259 million per year in consumer surplus, with approximately 38% of the benefits accruing to the business class cabin. We simulate JetBlue's entry into 16 similar transatlantic markets and estimate that such entry would generate an additional $108 million per year in consumer surplus. We suspect that the international JetBlue effect could arise as other US carriers expand into international markets, such as Alaska Airlines' planned expansion into Asia from its US West Coast hubs.