Should Jet2 order the A321XLR?

Jet2 is currently the UK's third largest scheduled airline in the United Kingdom and second largest tour operator in the UK (behind TUI), but has rapidly grown its reputation and presence across the United Kingdom - offering flights and holidays from the United Kingdom to leisure destinations across Europe. Until 2019, Jet2 faced competition with Thomas Cook until the Thomas Cook Group entered compulsory liquidation - allowing Jet2 to grow operations. Yet this collapse has presented an opportunity - long haul leisure routes.

TUI grew long haul operations following the collapse of Thomas Cook - shifting operations from Orlando Sanford to Melbourne/Orlando to be closer to Port Canaveral where TUI's Marella Cruises sail, as well as adding Varadero to its network - entering the Cuban market. However, Jet2 focussed on growing its European network, but with capacity in excess of pre-COVID levels in many markets, should Jet2 look to the underserved leisure long haul market to grow?

The carrier has recently entered an agreement with Airbus for up to 75 A321neo aircraft, of which 60 are confirmed. This was a major move for Jet2 who have long been a Boeing customer. This aircraft will allow Jet2 to modernise and expand its fleet but with 15 options remaining - should Jet2 look to convert these into Airbus A321XLR orders.

The Airbus A321XLR has a range of 4,700 nautical miles (nmi) - approximately 700nmi further than the Airbus A321neo. This is sufficient range for flights to operate from Manchester (Jet2's largest base) to former Thomas Cook destinations including Florida, Barbados and Cuba. These markets remain underserved from the United Kingdom since the collapse of Thomas Cook, with certain cities including Holguin still unserved from the UK. Whilst new carriers such as Aer Lingus UK have formed to try and fill the void, a number of markets remain down on seats and flights compared to pre-COVID and this presents an opportunity for Jet2.

Many hotels in the Caribbean and Florida markets have lost their largest customer following the collapse of Thomas Cook Group. This again presents an opportunity as tourist boards and hoteliers may seek to improve relationships with the UK leisure market to the potential benefit of Jet2.

Jet2 has gained a positive reputation over its handling of flights and holidays during the pandemic, with customer service being a key focus for the airline. This reputation will allow the airline to grow its customer base - which in turn will seek new destinations to its network. The UK - Florida & Caribbean market is highly leisure focussed (as is Jet2's current European operation), yet has delivered some sustainable yields to many carriers over the years. Some logistics would need to change for Jet2 such as crew staying overnight away from their home base - which would increase costs, but with the A321XLRs economies of scale - the aircraft demonstrates an opportunity for Jet2 to test new markets.

The evolving Jet2 fleet will become more Airbus led in the coming years, with the A321neo and A321XLR having many similar features including capacity - allowing Jet2 to have uniformity between its short haul and long haul operations. Whilst Jet2 have been hesitant on long haul growth - with the European network growing past pre-COVID capacity, looking at new markets will allow Jet2 to keep growing and boost competition against other scheduled and chartered airlines.

Images:
https://www.ifn.news/posts/jet2-places-its-first-airbus-order/
https://worldairlinenews.com/2022/06/15/airbus-a321xlr-makes-its-first-flight-today/