Here’s JetBlue’s New Business Plan: Give Less to Customers, Charge Them More.. and Why That Makes Sense

JetBlue announced on Wednesday that it will add 15 seats to its 150-seat Airbus A320s in 2016. That will reduce average seat pitch from 34.7 inches to 33.1 inches, which is still more generous than the 31 – 32 inch average across the industry.

In addition, JetBlue’s cheapest fares will no longer include first checked bag free.

We don’t know yet which seats JetBlue will be reducing legroom for to accommodate additional seating (reducing their extra legroom seats, or squeezing all seats, or in what proportion a combination of the two). And we don’t know how much JetBlue’s check bag feels will be. But it’s a clear sign that being more generous to customers in economy isn’t a business model that works, which is unfortunate but probably true.

People say they want better seating, but most of them won’t pay for it. Spirit Airlines performs well financially with the least comfortable seats (they don’t even recline, they sit upright, or as Spirit says they are ‘pre-reclined’). There’s a difference between stated preference and revealed preference.

American Airlines tried to give everyone better legroom in the early past of the last decade. It was “More Room Throughout Coach” and everyone got a couple of extra inches of legroom on every aircraft. Customers didn’t choose American over their competitors even at a similar price point. Because revealed preference is that people choose on schedule and price and not comfort. So American killed the plan and put the seats back in.

When planes are full, as they are now, pulling out seats means the airlines have to raise price (to break even, even). And that’s not what consumers want. The point here is that consumers say legroom is what they want, but they don’t actually make decisions that way.

I would love it if the seats in back had more legroom. I hate that American has been adding seats back into aircraft even in 2014 (reducing the number of Main Cabin Extra seats). As an elite member I get these for free, but fewer of them means they’re harder to get. And I’d actually pay a premium for the comfort. But not enough customers will to sustain it throughout the cabin.

And that’s why JetBlue is moving to less comfortable seating, and why they won’t give customers for free the checked bag other airlines charge for. Remember as well that checked bag fees that are not part of a fare are not subject to the federal 7.5% excise tax on domestic airfare. By unbundling the ticket price, even if total revenue doesn’t rise they shield the portion of travel cost that’s categorized as a bag fee from this tax.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. More seats on a plane, not as bad as a CEO suggestions flying passengers standing up or charging to use the loo. I read that some foreign airlines permit passengers to bring along livestocks.

  2. There is one flaw in your analysis, Gary. I fly almost always on my company dime, and i can’t always choose the airline that I want. I have to take the cheapest flight available, and my comfort be damned. And I bet there are a lot of business fliers that can’t choose either.

  3. Gary: so it’s not my imagination that AA is removing the MCE seats? I recall it went back to the exit row, now I’m seeing it in only three rows on the 737s.

  4. As a 6’2″ Mosaic-status customer, I will say that while it may be true that most customers will not pay extra for extra space, JetBlue doesn’t need most customers–it just needs a loyal following of customers who appreciate that (at least till now), it is the best economy class domestic flight available, and who are willing to pay for it.

  5. Gary, why does it make sense for JetBlue that they lower customer benefits for more profit, but when UA or DL do it, it’s horrible? I want more just like any other customer, and I understand the benefit of loyalty programs, but it’s a sellers market right now, and ALL airlines are cutting back on things they give to customers.

  6. This is a great example of where regulation should protect us from ourselves. We state that we want more legroom, we get into fights (and impose systemwide externalities) as we’re squeezed into ever smaller spaces. Please, DOT regulators, impose a seat pitch minimum!

  7. You’re certainly wrong that people won’t pay more for more legroom. E+ and similar sales show that to be false. Jetblue has been quite successful attracting customers who do pay more for their better product. Not everyone will pay more, but many can and do.

  8. This is an example of where the government should have realized that allowing consolidation in the market would lower consumer choice, which, in turn, would lower customer service. Now the innovators are forced to race to the bottom or face losing funding. The market is broken.

  9. Gary,

    Do you by any chance know how much more is the average price of a Premium Economy ticket? In my very limited experience I’ve found that the premium economy seating is not worth the extra 250-300 dollars, specially on a 2-3 hour flight. Could it be that premium economy has offered no real value to customers and that’s why they haven’t been willing to pay more?

  10. @Eric – maybe i wasn’t clear, having a small section with extra legroom seems to work but people in general won’t pay more so offering throughout the plane does not

  11. 33.1 in pitch is as generous as it gets in economy. I would still buy JetBlue tickets with that pitch. They could go to 32 and it would still be ok. When airlines go to 31 and below, then it is truly painful. I am 6’2″ and 185 lbs and I pay for first class most of the time, for width of seat and personal space. Not that the pitch in domestic first class is anything to write home about, but at least if I have a 300 lb person sitting next to me, they are not spilling over into my seat pushing me into the aisle or against the window. I have never seen so many weight challenged people as I do boarding aircraft nowadays and I thank my lucky stars I don’t have to subject myself to that anymore. I know most people can’t or won’t buy first class, but that is my choice. And to comment on the person whose company pays for his “cheap ticket” on business, well, when I was in his shoes, I paid my own way to upgrade to Premium Economy, Economy Comfort, etc or first class, or paid my own way altogether. As did a few of my colleagues and competitors. For me, price is important, but my personal space and aisle seat are most important. I chose an aircraft type, seating section etc etc solely on whether I can fly comfortably.

  12. I heard an nutrition expert on NPR today say that in study after study, people will say that they want fast food restaurants to have healthy options on the menu, even though they know they will not order them. They will go to a place with healthy options over one without, even though they have no intention of ordering the healthy option. So, yes, what we want and what we say we want are two different things. People be crazy.

  13. The facts that JetBlue’s customers’ average height is greater than that of their competitors and that JetBlue’s prices are higher shows a revealed preference for more legroom by a significant segment of the flying public.

  14. Puh-lease. What’s happening as jetBlue ages they hire airline people from other airlines. They read the trade magazines and go to the conventions. jetBlue is morphing into the same industry-standard product.

  15. Two points:
    1. Taken to its extreme, does that mean every airline will turn into Spirit eventually?
    2. I’m AA Platinum and Delta Platinum, and even I can’t get an economy comfort seat on 90% of my flights. I see little old ladies in them. It must mean there’s a demand for those seats.

Leave a Reply

Your email address will not be published. Required fields are marked *