Is there such a thing as humanity in the Basic Economy world? JetBlue is planning a new suite of fare families to include a more basic option. The news was announced to employees by President Joanna Geraghty and, in a somewhat unconventional move, also published on the company’s blog for the general public to read.
Ultra-low-cost carriers and basic economy options created a big market for bare-bones fares, and internet comparison sites encouraged more people to shop solely on price. Highly price-conscious travelers voted with their wallets, showing they are willing to give up some of the experience for the lowest fare possible.
At JetBlue, we never liked the “no frills” approach. But with these competitors now offering basic economy on many routes we fly, Customer behavior suggests our success is at risk if we do not disrupt this market by lowering fares without sacrificing the experience.
JetBlue does not plan to remove the carry-on bag option nor the other onboard amenities like snacks, entertainment and internet on board. And the existing fare families already restrict checked bags. Boarding order and advance seat assignment are the two main areas where further restrictions could still be applied. Restricting changes will also likely be part of the new Light Blue fare but current change fees are sufficiently high in many cases such that the impact there could be minimal.
Customers who opt for this fare will agree to some limits, which might include things like boarding order, seating and change/cancelation flexibility, but we will not make them feel like second-class citizens.
Fixing Fare Families
Other changes to the fare families are arguably more interesting. Geraghty admits that the current suite of benefits is not driving the upsell numbers it is looking for:
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.
If passengers are not compelled to pay up for increased flexibility today, as Geraghty implies, it is hard to believe they will pay extra for that next year when the new fare families are launched. Priority security might be compelling but that is more likely a win for frequent travelers where a Trusted Traveler option is a smarter investment. Significantly boosting the points earning akin to the Southwest Airlines approach might help, but that’s not going to be the driving factor behind such sales.
It remains unclear that multiple families matter other than the simple basic/regular split. Perhaps the carrier will designate the Even More Space seats as a premium economy product, similar to Delta Air Lines‘ approach with its Comfort+ product. Not that it is a true premium economy offering by most metrics, but that distinction has served to drive a significant revenue boost for Delta.
It is also interesting to note that JetBlue’s approach to fare families applies throughout the fare structure, similar to how United initially introduced the fares. Even at the very expensive end it is possible to buy a Blue or Blue Flex fare today. Refundability or not is also an option across the fare spectrum. Extending this to the Light Blue concept, with a very expensive ticket possibly delivering limited amenities is likely to be even less successful for JetBlue than it was for United.
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