In another strategy shift, JetBlue introduces premium cabin for transcontinental services
The airline world has become used to low-cost carriers offering more and more perks. Even some form of premium cabin is no longer uncommon. But is taking that concept one step further. Or rather, two.
The airline last week revealed its plans for a new business-class cabin to be used on transcontinental routes. Dubbed Mint, the cabin will comprise 16 lie-flat seats, some of which include a movable partition to become a “mini-suite,” on a dedicated subfleet of, compared to the Airbus A320 currently in use for transcontinental routes.
This is JetBlue's first foray into the premium-product market, signaling a dramatic shift from its signature single-class concept. Mint is also another iteration of the JetBlue business model. For the first time, the airline will be marketing two distinct products, an economy- and a business-class-type cabin.
In some way, it is also consequent. Even when JetBlue only offered an economy cabin, it gave its passengers more space than even most legacy carriers and essentially all of its domestic competitors. The airline never opted for maximum-asset use by putting as many seats into its aircraft as possible. The carrier was still at a product disadvantage when it came to coast-to-coast flying, where space and comfort matter most in the domestic market, because it did not offer lie-flat seats.
The decision is moving JetBlue even deeper into the legacy and premium field. The airline is betting it can generate more revenue per square inch with fewer passengers paying a higher fare than it would using its economy product. Per-seat costs are also going to rise significantly on its transcontinental routes, due to the investment needed and the less-economical use of space.
The new cabin will be offered on a dedicated fleet of A321s. Delivery of the first aircraft assigned to the Mint product role is set for February 2014. JetBlue has 30 orders for the A321, 11 of which will be assigned to the premium transcontinental role. The current A321 has some range limitations on winter westbound flights, but JetBlue expects this to be resolved with the introduction of sharklets, Airbus's marketing name for winglets. All JetBlue A321s will have the devices.
CEO David Barger noted that although his airline has not yet ordered the, he “would not be surprised” if an order was placed, adding, “We haven't ordered the 321neo yet . . . I think we will.”
Mint will be sold as a distinct product from the traditional economy offering, and upgrade via mileage or points will not be an option. Potential passengers will now be presented with the usual “lowest” and “refundable” economy fares, with two new choices, “Mint lowest” and “Mint refundable.” The Mint lowest prices will start out initially at $599 one-way after a three-day $499 special, which represents a one-third to one-half discount over the competition.
The decision to offer a premium cabin was made 5-7 years ago, says Barger, but work actually began two years ago. “We found that on the transcontinental markets—specifically into LAX [Los Angeles International Airport] and San Francisco International—there were really two reasons passengers were [not] booking our company. They told us: 'You don't have a premium offering, and by the way, I'll pay [for that], and you don't have WiFi,' so we had a choice to make,” he explains.
The Mint cabin, along with the long-awaited Ka-band WiFi connectivity, should put JetBlue back on the map for frequent transcontinental passengers, but it will take some time to take effect. Service with the premium A321 product is scheduled to start in June 2014 from New York John F.to LAX, but the new Mint-cabin-equipped aircraft will not make its way to San Francisco until fourth-quarter 2014, when JetBlue has taken delivery of enough A321s to make constant service possible.
In New York, JetBlue will not attempt to compete with the legacy carriers for corporate contract passengers—some of the most frequent business-class passengers on the transcontinental routes. “We're not going to try to out-corporate those guys in a place like New York because that's not our business,” says Barger. “There are places, like Boston, where we're very relevant to the corporate customer, because of our flight schedule offering.” However, JetBlue does not currently have any plans to expand Mint service to include the Boston market; it will focus on getting the initial routes solidified first.
JetBlue is targeting the “high-end leisure traveler” and “small business owner.” Barger adds that these types of customers typically pay full fare for a premium-cabin experience, which should allow the airline to see higher returns from a premium offering than their competitors.