JetBlue was all about giving passengers more choice when the airline introduced new fare families in June. But It came as a surprise to JetBlue that passengers decided to check more first bags than the airline predicted.
JetBlue attracts a different type of passenger than some of its lower-cost rivals such as Spirit and Frontier if the results of JetBlue’s first full quarter of fare options is a guide.
That’s because JetBlue officials reported today that in the third quarter more passengers chose to check first bags than the airline anticipated, and that led to higher incremental revenue of $40 million from its Blue, Blue Plus and Blue Flex fares choices than JetBlue envisioned.
JetBlue expects an additional $40 million in revenue from its fare options, which were launched very late in the second quarter, during the fourth quarter, but it’s difficult to assess the pattern because lots of people flying in the fourth quarter bought tickets before the airline introduced these new fares, said Marty St. George, JetBlue’s executive vice president, commercial and planning.
The introduction of fare families meant that JetBlue abandoned its prior policy of one free checked bag in favor of bag fees, leaving Southwest as the only U.S. carrier not charging bag fees. With Southwest, the first two checked bags are free.
Speaking during JetBlue’s third quarter earnings call today, St. George said JetBlue had forecast that fewer passengers would check first bags than actually occurred.
It’s another case of travelers behaving the way they want to — and not necessarily how prognosticators envision.
JetBlue’s stock price fell 7.5 percent to $24.23 around mid-day New York time on October 27 on the airline’s earnings news.
One perceived weakness was that yield per passenger mile in the third quarter was 14.02 cents, up just 0.5 percent year over year. Passenger revenue per available seat mile fell 0.6 percent year over year in the third quarter.
St. George characterized the deterioration in yield as a “one-time blip” that affected close-in yields, adding that yields already bounced back in the second half of September and first half of October.
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Photo credit: JetBlue's Airbus A320s may have been carrying more checked bags than expected in the third quarter of 2015 because passengers were checking more first bags than the airline had envisioned. JetBlue