The power of Wall Street has beaten JetBlue. While not unexpected, the collection of changes announced at its Investor Day briefing this week may result in a passenger experience which is just a bit more like everyone else rather than the unique JetBlue approach to the market. Among the changes announced are more seats being added on the A320 aircraft and no more free first checked bag on all flights. Additionally, the company will slow its growth a bit through the deferral of aircraft deliveries. Overall the company hopes to realize a savings of $900mm in capital expenditures between now and 2017 and also to generate an additional $400mm in annual revenue because of the new fee structures.
Starting in 2016 JetBlue will retrofit its A320 fleet to match the new A321 aircraft seats. The new seats are a slimline model based on the B/E Aerospace Pinnacle series. With the lighter weight and slimmer design the company expects to add 15 seats to each of the aircraft (10% more) and still maintain the most legroom in the industry. The 15 seats means 2.5 rows added which suggests that the galley space will also see a reconfiguration, likely to Airbus‘s new SpaceFlex space-saving layout which shrinks the lavatory and galley units, making more room for seating. Given that JetBlue flights already consume cabin overhead space for galley storage it is unclear how the smaller galley or 10% more passengers on board will make things better for travelers, but at least more of them will get to have the experience. And the weighted average of 33.1″ average pitch on the fleet means that the 34″ pitch found in the core seats on the A320s is dropping to about 32.5 inches. That is still more generous than the competition and likely to remain quite comfortable but most definitely a downgrade.
The best news for travelers at this point is that the new seats are still comfortable and that the changes are 18+ months out from starting. Also, bigger TV screens and a water bottle holder in the seat-back pocket.
It is worth noting that the increase in seats requires an increase in staffing; the company will now need to have 4 flight attendants working each A320 flight as the seats are added. And the 165 number will be the highest the company has ever had on board. When it first launched service JetBlue had 162 seats in the cabin. This was reduced to 156 and then the 150 on board today.
Also, the company previously reduced capacity on the planes to help with weight and range challenges, particularly for westbound transcons in the winter when headwinds are strongest. The addition of sharklets to the aircraft should increase the range enough to offset the higher weight in most cases.
Get ready to pay more for checked bags on JetBlue. With the introduction of “branded fares” travelers on the cheapest tickets can expect to see a fee assessed when checking a bag. There will be three fare families and they will include other differences in what’s included such as variable TrueBlue points earning rates or ticket flexibility. The company is pushing this effort as one to increase transparency to the consumer while also allowing the traveler to only pay for the services desired. That’s great in theory. But when it is also expected to drive half of the anticipated $400mm in annual increased revenue it is not hard to see that the increased “transparency” really ends up costing travelers more money.
And, similar to Southwest’s plan, higher fares will earn more TrueBlue points. I guess that’s a small consolation for higher prices.
Fewer New Planes
JetBlue continues to reshuffle its fleet plans, deferring the delivery of new A320 aircraft originally planned for 2016-2018. These 18 planes are now expected to join the fleet in the 2022-2023 timeframe. Combined with Airbus’s recent announcement of a long range version of the A321neo which is also expected to to be available by then this could be an indication that JetBlue is now more strongly considering expanding the route footprint. But that expansion will not come particularly soon; the delay in new aircraft deliveries will limit growth potential. Only three weeks ago the company announced a planned change to aircraft deliveries which saw the 2016-2018 period having 45 Airbus aircraft scheduled to enter the fleet (3x A320ceo, 5x A320neo, 28x A321ceo, 9x A321neo; 15x in 2016, 15x in 2017, 15x in 2018). The new plan delays delivery of 18 of those aircraft. There will still be growth but the company will reduce capital expenses over the next few years as part of these announced plans.
Perhaps the best news in the announcements made on Wednesday is that FlyFi, JetBlue’s in-flight internet service, will keep a complimentary option for the foreseeable future. That will be accomplished through advertising, ecommerce options and integration with the TrueBlue program. But, still, free fast wifi is nice to have on board.
Overall it is hard to see much good in these changes for consumers. More seats on the plane, more fees and a slower growth plan are all the opposite of what I prefer as a passenger. Alas, it is not the travelers who get to decide these changes for the airlines, it is the analysts. JetBlue was already delivering higher unit revenue than some of its competitors and yet Wall Street was not satisfied. The CEO was pushed out and changes are coming. And Wall Street will be happy. Who cares about the passengers anyways??
Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.