JetBlue promised its version of a Basic Economy fare just over a year ago. Today the product goes live, and it is mostly as expected. Passengers purchasing “Blue Basic” fares will have zero flexibility with respect to changing their trip, even for the TrueBlue program’s Mosaic frequent flyers. Travelers on the Blue Basic fare will also have to pay if they want a seat assignment in advance of the travel day. The new fare also reduces earning in the TrueBlue loyalty program, though a full sized carry-on bag is permitted with the fare.
When introducing the need for these changes JetBlue President Joanna Geraghty also called out the poor sales record of the fare families overall. Too many passengers simply selected the “Blue” fare, limiting the upsell revenue for the carrier.
We will also broaden the appeal of our other fare tiers. For example, very few Customers today select Blue Flex. We can boost interest in that fare if we lower the price and focus on Customers who value speed in the airport and change/cancel flexibility.– JetBlue President Joanna Geraghty
Today’s moves “fix” that problem by adjusting the Blue Flex offering significantly, including removal of the included checked bag benefit.
Blue Basic’s Loyalty Bite
Make no mistake: JetBlue (like every other carrier) does not want travelers buying its new Basic Blue basic economy fare. The company is going out of its way to make it an unattractive option through extra fees and reduced flexibility. But The company really, really, really does not want its Mosaic frequent flyers buying these tickets. One of the most valuable benefits of the Mosaic program is a waiver of change and cancellation fees for all tickets. That benefit does not apply to the Blue Basic fares. Mosaic members must now pay more to take advantage of the main benefit their status confers.
The reduced earning rate – down to 1 point per dollar from the normal 3/$ – is somewhat understandable. But JetBlue also reduced the earning potential for its Blue Plus and Blue Flex premium fares as part of the changes. Those tickets now earn the same 3 points per dollar as a regular Blue fare, rather than 4 or 5, respectively. While it is unlikely that any passengers were swayed to purchase those fares because of the increased earnings it is a cut to see that removed from the benefits.
A fare hike by any other name
While the company continues to describe the move as a response to competition from ultra low cost carriers (ULCCs) the reality bears far greater resemblance to a fare hike. If the basic economy fares targeted ULCCs then they would apply in the competitive markets. That was the case for a hot minute when Delta introduced the first Basic Economy fares in the US market. But the carrier quickly realized that it could get away with applying them in nearly every market, not just those with the direct competition.
The ULCCs made these products possible by driving the acceptance of unbundling broadly across the market. But that doesn’t make these fares directly competitive. And it certainly does not erase the fact that for many travelers the product they are familiar with purchasing just got more expensive.
That JetBlue is removed the Blue Plus fare from most markets, effectively removing the discount for purchasing a checked bag in advance, furthers the fare hike challenge.