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.
Subscribe to Skift Pro
Subscribe to Skift Pro to get unlimited access to stories like these ($30/month)Subscribe Now
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
JetBlue-American Partnership Draws Scrutiny of U.S. Senator Over Airfares
An increase in airfares could contribute to reducing airline passenger numbers. That would be another blow for an industry still suffering from damage caused by Covid variants.
Diane Bartz and David Shepardson, Reuters | 3 days ago
Despegar’s Strength in Mexico and Colombia Helps Blunt Pandemic Impact
Argentina-based Despegar has broadened its geographic reach through acquisitions, and that has enabled the company to boast that seasonality factor has been eliminated from the business. While that statement is a stretch, it will be great for the company to take advantage of Mexico summers while Brazil winters.
Dennis Schaal, Skift | 1 month ago
Airbnb’s Record Shows the Third Quarter Is the Charm
While you have to toss out Covid-ravaged 2020 as any kind of a barometer for a company's trajectory, during the last two-and-a-half years, Airbnb has only made a profit during its third quarters. If remote working becomes entrenched in coming years, then that can indeed help with Airbnb's seasonality issues.
Dennis Schaal, Skift | 1 month ago