A top-notch passenger experience or cost cutting? Generally those two concepts work against each other for airlines, with the delivered product swinging like a pendulum from one extreme to the other. For JetBlue, often feted for its strong on-board product and customer service, the push for significant annual expense reductions as part of a Structured Cost Program continues to chip away at contract expenses. And as the company nears the finish line of its $300mm target by 2020 additional passenger-facing cuts are coming through.
We’re nearing the end of our three-year effort to deliver run rate savings between $250 million and $300 million by 2020. Estimate to our progress in checkups over the past few months, we continue to renegotiate multiyear agreements with business partners in all of our pillars not only addressing near-term challenges, but also mitigating cost growth over the next decade.– JetBlue CFO Steve Priest
Catering and Cleaning
Some of the recent changes are rather obvious. The shift to Pepsi and pouring water rather than serving individual bottles will help the company reduce costs significantly. And some of the earned marketing around the Pepsi deal is an added bonus. But there are also other changes that are less obvious, or at least less publicized. They still have the potential to affect passenger satisfaction on board.
The company is experimenting with reduced cleaning services for aircraft making turns at Boston. Rather than a pair of cleaners touching every A320 or A321 coming through the station the company is dropping that to one, focused on cleaning the lavatory. The second contractor that typically would vacuum the carpets on board is being cut. The company explained it to crew members as part of a drive towards improved on time performance, but also acknowledges the “major reduction in costs during this tough cost environment” that the cuts will bring. The program was in a testing phase in July; it is unclear if it was extended.
The company is also experimenting with cuts to the overall volume of catering on board for some flights. Currently snacks and beverage carts are restocked at hubs. In some cases, however, JetBlue is hoping to get two round-trips out of a single stock rather than just the one round-trip. While it is rare that any single item will run out on a turn the odds increase significantly with that second round trip. That’s frustrating for passengers but also for crew who work to rebalance the stock between flights and are trying to find the items passengers want or apologizing for them not being available.
Mint cuts, too
While cuts to the core product could be justified by claiming U/LCC competitive pressure or a focus on very price-sensitive customers, trimming the premium product in the Mint cabin is a bigger risk. But JetBlue is still making some adjustments on that front.
Starting 1 September 2019 Mint catering will see several items removed from the service:
- No more whole fruit (apples & oranges) for snacks
- Dropping Grey Goose and Bulleit Bourbon in favor of Tito’s and Jack Daniels, respectively
- Cutting the decorative box for the MilkBar cookies at the end of the flight (but the cookies remain!)
- Dropping the Raaka Chocolates from the service
None of these cuts alone would likely be seen as enough to consider the product significantly degraded. But seeing them as a group, and at a time where some competitors are upping service standards, there may be reason for concern.
JetBlue’s service cuts come against the backdrop of a new advertising campaign – “Just Alright Doesn’t Fly Here” – launched earlier this month. The campaign highlights the better customer service levels and on-board experience that the carrier offers relative to the competition. With the service changes in play, however, delivering on that promise of a better passenger experience becomes more challenging.
Much of the better product remains. The company still has free FlyFi wifi on board and more legroom on average than other carriers. But a “basic economy” product is on the horizon. Combine that with some of the catering cuts and the challenges for the company become clear.
And while the executives must answer to shareholders the front-line employees answer to passengers. One of the best parts of flying with JetBlue is the passion its front-line staff have for the company. That’s easier to deliver when the product supports it. Faced with apologizing for broken systems, dirty planes and running out of beverages is a bear on that crew and makes for a much harder work environment. And when crew start quipping among themselves, “I guess just alright does fly here” that can lead to bigger problems down the line.
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