It's somewhat amusing that JetBlue states its mission is to "Inspire Humanity." As the airline's revenue initiatives highlight, JetBlue's latest mission actually is to win over skeptical shareholders and increase the bottom line.
JetBlue lowered the boom today, revealing that its upcoming revenue initiatives will include bag fees for travelers who choose the cheapest fare option in its upcoming branded fares, and 15 more seats in coach on its A320 aircraft, meaning 1.6 inches of reduced seat pitch.
Some of the changes, including bag fees, had been expected given previous announcements that JetBlue would implement a new merchandising platform in 2015, and airline president Robin Hayes’ upcoming assumption of the CEO role, taking over from David Barger early next year.
JetBlue plans on offering three branded fares, which would generate more than $200 million in incremental operating income, the airline detailed in an investor presentation.
The cheapest fare family would include the usual free TV and snacks, but would also come with bag fees, including for the first checked bag, which currently is free.
During its investors’ day presentation, JetBlue reportedly didn’t detail what the fee would be for a first checked bag, adding that it would fluctuate based on demand and other factors.
The Even Better fare would come with the first checked bag included in the fare, and a third, more expensive fare family would have the first two checked bags included for no additional charge.
Less Legroom in Coach
JetBlue also detailed plans to add 15 seats in coach, bringing the total to 165 “core seats” on its A320s. In this “cabin refresh,” seat pitch will be reduced 1.6 inches to 33.1 inches.
The airline argues that even with the reduced seat pitch its average fleet-wide seat pitch would be the largest among U.S. airlines.
JetBlue stated that it will begin to install the additional 15 seats in its A320s in the third quarter of 2016, and it would take two years to complete. The change would generate $100 million in incremental operating income by 2019, JetBlue estimates.
JetBlue Comes of Age
JetBlue’s series of revenue initiatives, including the fare families with bag fees, as well as the additional seats with less legroom and other changes, would boost annual operating income by more than $400 million starting in 2017.
It’s all part of JetBlue’s drive to improve its financial results as it tries to juggle these changes with its self-described “service-oriented culture.”
In a bid to contain costs, JetBlue also announced that it would reschedule the delivery of 18 Airbus aircraft, which had been due to arrive from 2016-2018, to 2022-2023.
“We believe the plan laid out today benefits our three key stakeholders,” said JetBlue president Robin Hayes. “It delivers improved, sustainable profitability for our investors, the best travel experience for our customers and ensures a strong, healthy company for our Crewmembers. As we focus on executing this plan, JetBlue’s core mission to Inspire Humanity and its differentiated model of serving underserved customers remain unchanged.”
Whether JetBlue’s customers believe that the airline’s mission is unchanged remains to be seen.
In a related development, Expedia Inc. announced yesterday that it will begin to give customers the ability to book airlines’ branded fares — such as the ones envisioned by JetBlue — through a partnership with Amadeus, beginning in 2015.
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Photo Credit: While passengers in JetBlue's premium Mint service seats will remain comfy, coach passengers on the airline's A320s will get 1.6 inches of reduced seat pitch starting in 2016. JetBlue