It is earnings season again for airlines with most reporting their quarterly results this past week. As has been typical for the past several quarters, most airlines are showing up with less money than they had three months ago. In many cases the loses are staggering, though not nearly as bad as a year ago when fuel costs were roughly double today’s prices.
Still, there are a few airlines that showed up reporting profits. In the case of jetBlue the profits were actually a decent size. More importantly, however, is that they were stacked on top of profits from previous quarters. It seems that they’re really doing something right there and the numbers are reflecting that. Unlike other carriers that are shrinking their route maps and capacity, jetBlue is growing. Capacity in 2009 will be roughly level with that of 2008 and will actually be up significantly – about 35% over 2008 – in the Caribbean. Apparently that’s where the money is these days and jetBlue is going after it with great gusto.
One of the numbers that jumped out as I listened to the quarterly earnings report was the ancillary revenue reported per passenger. With the unbundling of services and a shift towards incremental charges for everything from pillows to pets in the cabin the ancillary revenue number is one that can make or break an airline these days. For the past quarter jetBlue reported an average of $17.50 in ancillary revenue per customer enplanement. Not too shabby but lower than expected. Why? Because there are fewer change fees coming in. The advance booking curve is shrinking so it is more likely that customers know when they are going to travel, not just booking early, hoping for the best and changing when the actual date gets closer.
There were a couple other interesting bits that came out of the earnings call. One is that jetBlue still appears to be operating like a feisty startup, not like a staid legacy carrier. They’ve got growth on their mind, with lots of planes scheduled for delivery in 2011 and beyond. And they actually seem a bit excited by the prospect of competition with other carriers. CEO Dave Barger had this to say on the topic:
Where there are competitive skirmishes we’re certainly going to defend our turf.
That sort of attitude definitely explains adding additional frequencies on the new and highly contested Boston – Baltimore route, for example.
And there were a number of “never say never” types of things that the carrier was asked about, including charging for the first checked bag. It is not going to happen now but reading between the lines I wouldn’t be surprised to see it come about shortly after the Sabre system goes live in Q1 2010, along with exceptions for full-fare and other similar things that can only be logistically managed with a complex booking system like Sabre offers.
And the best news of all, at least to me, is that the All You Can Jet promotion was wildly successful – and profitable – for the airline. So much so that they’re quite keen to repeat it in the future. It was actually revenue positive and the marketing buzz was huge. It was, quite simply, “[T]he most successful promotion in our history,” according to Barger. Sign me up for the next round; I’m ready to go!
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