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Interview: JetBlue CEO Hopes He’s Found a Balance Between Coach and Premium

@denschaal

Oct 01, 2013 7:08 am

Skift Take

JetBlue’s Mint service will be disruptive in that competitors will likely match the $599 to $999 one-way fares. Competition like this should shake things up.

— Dennis Schaal

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Dennis Schaal  / Skift

JetBlue CEO Dave Barger at a media event in New York City on September 30, 2013. Dennis Schaal / Skift


JetBlue is gambling that its new Mint premium service in the front of its new Airbus A321s on New York to Los Angeles and San Francisco routes in 2014 won’t alienate passengers in the rest of the plane.

For JetBlue, the rollout of Mint premium service marks an airline brand at a crossroads, similar to Southwest in a certain way when the latter unveiled an ad campaign earlier this year trying to portray itself as a grownup airline that’s more than “bags fly free.”

JetBlue realizes that it needs to evolve and better serve business travelers, particularly those from small-to medium-size businesses.

As JetBlue CEO Dave Barger puts it in the interview below, “what got us here won’t get us there.”

Balancing the tightrope between “what got us here” and getting to the next level, Barger tells Skift that he doesn’t want employees even using the term “coach.”

Indeed, at a press event at JetBlue headquarters in New York City yesterday, the “core experience” was the favored way to describe the passenger experience in the cheap seats.

While most of the attention about the announcement has been on the JetBlue Mint service’s 16 fully lie-flat seats, including four suites on each flight with closing doors, and 15-inch flat screens with up to 100 channels of DirecTV and another 100 SiriusXM radio channels, officials pointed out that the “core travel experience” on the A321s is slated for a 2014 makeover, as well.

Seatbacks in coach will feature 10.1-inch TV screens with up to 100 channels of DirecTV, up from the current 36, as well as the existing 100-plus channels of Sirius XM radio. There will be drink holders at each seat, as well as power outlets, and JetBlue’s souped up Ka-band Wi-Fi, which officials kept insisting brings more bandwidth to each seat than competitors’ Ku-band Wi-Fi delivers to their entire planes.

On the A321s that feature Mint service from JFK to LAX and JFK to San Francisco, coach customers will also have access to a new Inflight Marketplace, essentially a self-service kiosk for snacks and soda, and this will separate coach from Mint class instead of the use of a curtain.

In JetBlue’s view, Mint class is more egalitarian than first or business class on other airlines, and JetBlue hopes core customers notice the difference.

JetBlue is essentially playing a numbers game in hoping that the 16 Mint seats it is adding to the front of these A321s will more than make up for the revenue the airline is losing by removing 47 coach seats on each of the planes on these two routes.

“In these two markets we believe it is an absolute lay-up,” JetBlue CEO Dave Barger says, referring to the trade-off.

Barger spoke with Skift further about the implications of some of the changes.

Skift: Does the business traveler really want “elegance with a small ‘e’,” as you put it earlier?

Barger: I think business customers are looking for a large “E” in efficiency. Our core customer, really out of New York to L.A. and San Francisco, tends not to be the corporate customer. It is a small business owner, it is a high-end leisure traveler, it is someone making a special trip. We have seen a lot of that with JetBlue over time. I just like the term it is elegant with a small “e” because it is not stuffy. This is what is so important about what we are doing today: The Mint experience can’t compromise the core experience. I don’t even let our team use the word coach. As we were putting this together over the last two years, every time we start talking about premium, I’d say I want to hear you talk about core about twice as often as we talk about premium because that’s where most customers live.

And that’s why I think about this is elegance in the core cabin: the comfort of these seats, the big screen, the Ka-band Wi-Fi in the aircraft, and the Marketplaceas well. Where traditionally the curtain is, you have the Marketplace. If you want to get something to eat or drink, help yourself. You don’t need a flight attendant. By the way, the flight attendant will help you if you want. It is just really cool to be able to have the geography on an airplane to do that stuff.

Skift: Does Mint portend an even broader change in strategy regarding first-bag free or more international service?

Barger: Not yet. When I say not yet it’s interesting because we do believe what got us here won’t get us there. What do I mean by that? As we make our way into Latin America, there’s no doubt there is demand for a premium product. We are not ready to go down that path just yet. We are not afraid of it, either. When you start looking at flying from south Florida to Colombia or into Peru or into Mexico or into certain markets in the Caribbean, you don’t need a lie-flat product, but you can certainly put a premium product in. That’s the kind of stuff that is intriguing to us.

The brand is so sticky, we don’t want to lose customers, saying, “Hey listen, We really want to fly you guys, but we want a premium experience with someone else — with Wi-Fi.” We are really focused on these two markets [N.Y.-L.A. and N.Y.-San Francisco] to nail it, and maybe if anything to extend Mint to other transcontinental offerings. Even if we really wanted to do that, because of aircraft delivery, we couldn’t do it until 2015. Just because of the schedule of these 30 A321s that are arriving. The first one arrives tomorrow (October 1). We are really excited about it.

A further thought, too, on first bag. Things that have been so helpful to the brand are things like first bags are free. There is this other thesis that in a commodity business, will people actually pay a premium for the product? This is what we are saying: People are smart. The traveling public knows it is being nickeled and dimed for the first bag. We are not looking to change any of that type of offering. The core offering is not nickel and diming.

Skift: What do you say to people who say that if the American-US Airways merger doesn’t go through, then JetBlue is the next acquisition target?

Barger: We believe our independent plan — our internal organic growth plan — is a much better trajectory to improving our earnings over the short, intermediate, and longer term. As long as you have that model, and this is what we are projecting, we have support to do that.

More from Barger from CNBC/Yahoo Finance:

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