JetBlue’s plan to introducepremium-class transcontinental service with first-class overtones next year marks its continued efforts to build its corporate business.
It will put 16 lie-flat beds, four of them in “Sweet Suites” that can be enclosed, in the new A321s that it expects to start flying on routes linking New York with Los Angeles and San Francisco in the second quarter of 2014.
And, because JetBlue CEO Dave Barger said that “we believe we can beat” current transcon premium fares, it also signals the potential for a price war over the transcon premium product.
Delta, United and American also offer or are about to offer lie-flat beds on their transcon routes.
“We expect to invigorate the market with our competitive price,” Barger said.
It’s a battle “over the Rolls-Royce crowd,” said aviation consultant Robert Mann. He pointed out that JetBlue began targeting the corporate market when it moved into the GDSs a few years ago, which put the airline on many corporate desktops.
“They have enough of that presence now that it makes sense to have a product to go with that presence,” Mann said.
It’s also a reflection of the state of aviation today. “Airlines are making their margins,” Mann said. “They’re investing where they actually make money, which is in premium inventory.”
Competition on transcon routes has heated up significantly in the past six months, said Mark Drusch, chief supplier relations officer for CheapOair.com.
Drusch predicted that JetBlue will come up with a creative marketing plan for its new service, adding that “as long as business-class demand is strong, there probably is enough [demand] for everybody with their new product.”
A broader rollout
JetBlue’s new premium product is part of a broader, fleetwide rollout of a new in-flight product throughout the plane. It includes new seats, bigger video monitors and WiFi service that Barger said will offer more bandwidth per seat than other carriers have on an entire plane.
JetBlue’s chief commercial officer, Robin Hayes, said in March that the lack of WiFi had hurt JetBlue in the corporate market, and that the carrier was doing something about it.
“Fly-Fi” satellite-based WiFi is coming by the end of the year, in partnership with ViaSAT.
The premium service will arrive next year on new Airbus 321 aircraft. These planes have more capacity than the A320s JetBlue currently flies. That means it can add lie-flat beds and still have more seats on the plane.
The Airbus 321s with lie-flat beds will have 159 seats as opposed to the 150 on the A320s JetBlue now flies; 16 of those seats will be higher-margin premium seats. JetBlue estimates these A321s will go into service in Q2 2014. Plans call for 11 aircraft to be dedicated to those two routes.
The first four A321s to be delivered will be the “core” JetBlue product with 190 seats.
Seats in the new planes will have 10-inch screens, compared with the current 6.8-inch seat-back screens. (When the premium product debuts next year, it will feature 15-inch screens.)
The A321s will have more of the higher-margin “Even More” seats that offer passengers more legroom for an additional fee. The new seats, which in videos appear to rival the current style-setter in domestic aviation, Virgin America, also save JetBlue more than 1,000 pounds per plane.
Henry Harteveldt, travel industry analyst with Hudson Crossing, said that he’d seen the new product and called it better than Virgin America’s current product and “fully on par, if not ahead of” the new business-class seats and in-flight entertainment from the majors.
Part of the move is JetBlue adjusting to consolidation in the airline industry. JetBlue initially succeeded by offering a unique product and low fares, competing against network carriers weakened by years of duking it out it with fare wars.
“Network carriers were kind of killing themselves fighting for market share and cash flow,” said Bob Herbst, founder of AirlineFinancials.com. JetBlue had a unique product that was cheaper than the network carriers, Herbst said.
But now, Herbst points out, six majors have consolidated into three and have focused their energies on creating their own unique product and in the process have upgraded their transcontinental service.
The majors have robust frequent flyer programs, meaning that flyers can use their frequent flyer miles for international travel.
But JetBlue’s partnerships with 25 international carriers means that its frequent flyer members can redeem miles for international travel, as well. The carrier says it has more partnerships in the works.
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