JetBlue Sets New Fare Classes, Bag Fees

30 Jun 2015 | Author: | No comments yet »

Is JetBlue Selling Its Soul for a Bag Fee?.

JetBlue, a stylish budget carrier based in New York, had long been a holdout by allowing at least one bag to be checked free. It took seven years for us to get to this point, but there’s now only one major airline that doesn’t charge customers for the first checked bag – Southwest Airlines.JetBlue Airways Corp., in the first major makeover of its fare system, will end a free checked-bag perk but offer passengers more ticket choices starting Tuesday.

In this photo taken Tuesday, March 24, 2015, Colin Drummond, 4, pushes luggage from behind as he walks with family members to check-in a relative for an Alaska Airlines flight at Seattle-Tacoma International Airport in SeaTac, Wash. The move, being introduced as part of JetBlue’s three-tiered “Fare Options,” leaves Southwest Airlines Co. as the only major U.S. carrier not charging for an initial piece of checked luggage. U.S. airlines continue to collect record fees from passengers who check suitcases or make changes to their reservations, according to data released Monday, June 22, 2015, by the Bureau of Transportation Statistics. (AP Photo/Elaine Thompson) (Elaine Thompson) The airline proudly proclaimed itself a holdout on fees for years, allowing passengers to check one bag for free. Customers who buy the cheapest “Blue” tickets will have to pay $20 for a first bag when booking online or at a kiosk, and $25 at the check-in counter.

But those booking with JetBlue beginning Tuesday will chose from the following options: The cheapest fare, JetBlue’s “Blue” fares do not include checked bags. George, executive vice president of commercial and planning, said in an interview that JetBlue hopes customers who need to check a piece of luggage will buy up to a “Blue Plus” fare, which on average is only $15 higher. Exceptions will be made for flights to 10 Caribbean and Latin American destinations, where Blue and Blue Plus fares will allow one free checked bag, the company said.

It has also made some passengers and industry watchers wonder whether, at 15, JetBlue is already acting middle-aged. “The move to a we’ll-suck-less-than-the-other-guys approach is JetBlue at its most defensive, least disruptively innovative,” columnist Joe Brancatelli wrote in December. I think once customers experience it, we’ll be in great shape.” The new pricing system doesn’t affect passengers who already have booked tickets. On top of the luggage fee, JetBlue will begin next year to add 15 seats to its 150-seat Airbus A320s, following an industry trend of “seat densification” to boost revenue. The new, slimmer seats will reduce the space between rows from 34.7 inches to 33.1 in. across its A320 fleet, but it will still be the most generous allotment of legroom among U.S. airlines, JetBlue says.

It’s all part of an effort under Chief Executive Officer Robin Hayes to improve the airline’s finances and show Wall Street that the company can be friendly to both air travelers and investors. Starting later this year as many as 130 of its Airbus Group SE A320 jets will be retrofitted with so-called slimline seats, letting the airline accommodate as many as 15 more people on planes that now carry 150. The bag fee, tighter seating, and additional revenue efforts are expected to bring in more than $450 million in operating income in 2019, when the cabin refits are finished, JetBlue told investors on releasing details of its plans in November.

Those figures could be “somewhat understated,” partly reflecting conservatism, Morgan Stanley analyst Rajeev Lalwani wrote last week in a client report. Bag fees collected during first quarter 2015, including fees for the third bag and beyond, oversized bags and bags that need special handling (in millions). Most customers assume by now that the fee is charged across the industry, which added a host of fees as airlines floundered during the financial crisis. “We do this research regularly, and we have seen a change over the years,” Marty St. JetBlue has been consistently profitable in recent years, but it hasn’t displayed the sort of return on invested capital Wall Street likes to see, partly because of a focus on expanding its network.

The cabins feature lie-flat seats and other premium features and are available mostly on transcontinental routes to Los Angeles and San Francisco, and to a small number of Caribbean destinations. The carrier, under a new CEO, has been trying to woo Wall Street with changes to its product that retain its passenger-pleasing reputation but generate more revenue. U.S. airlines have been moving toward more fees and less legroom in the economy section, even as they have spent lavishly to make first class and business class cabins plusher. JetBlue has never competed on lowest price, assuming that people will spend a bit more for amenities such as free snacks, more space, live television and most recently, broadband Wi-Fi. “I will put this product up against any product in North America,” St. But the company, which routinely wins awards for its service, still has generous legroom, offers free snacks and free Internet, DirecTV DTV 0.44 % and Sirius XM Radio.

With most other carriers already charging for bags and certain perks, JetBlue’s new fare categories inch it it closer to the practices of most other big U.S. carriers. Online travel agencies like Orbitz, Priceline and Expedia, will — for the foreseeable future — only sell the cheapest fares, those that don’t include a checked bag. The company was surprised by the negative reaction—that an airline striving to restore “humanity” to air travel should be seen as just another nickel-and-dimer in an industry that is widely reviled. “Maybe we’re naive, but I was very surprised to get blasted like we did,” St. And while JetBlue’s new Mint cabin may fly on only a handful of routes, it lets JetBlue sell lucrative premium seats between cities with lots of corporate and wealthy travelers. There will probably be a new round of lamentations, especially among “drama-loving” bloggers who “may , at least online, shrilly cite JetBlue’s actions as more proof of the end of civilization as we know it,” Henry Harteveldt, a travel analyst with Atmosphere Research Group, wrote on Monday in an e-mail. “An airline could find a cure for cancer and give everyone who wanted one a free kitten or puppy, and people would still be mad at it.”

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