ANALYSIS: JetBlue’s plan for ‘mini suites’ questioned by analysts [UPDATED]

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News that JetBlue Airways' may install "mini suites" on Airbus aircraft has some industry analysts skeptical with suggestions of an identity crisis at the New-York based carrier, they say.

"Its interesting [JetBlue is] doing this because they are not known as a business airline," says Helane Becker, an analyst with Cowen Securities. "In New York they have focused on leisure travellers."

"I'm a little skeptical on how this product will pay out from a return perspective," says Savanthi Syth, an analyst in New York with Raymond James & Associates. "It's a very commodity-[driven] market. While passengers might pay a little premium, I'm not sure they will pay a lot of a premium."

News broke in recent days that Airbus had submitted a request with the US Department of Transportation (DOT) to install four "mini suites" on A321s scheduled for delivery to JetBlue in the fourth quarter.

Each suite would include a seat surrounded by furniture and would have a manual sliding door, according to documents filed on 23 April with the DOT.

In addition, the filing said that Airbus intends to install at least 12 business class seats on the new A321s. Currently, JetBlue only offers an economy section.

The filing follows an announcement earlier this year by JetBlue that it was developing a "premium product" for cross-country flights.

JetBlue declines to comment on the filing but says more details will be released later this year.

A JetBlue blog post on 7 June says Airbus' filing was evidence the airline is"working on something big."

"Thirteen years ago JetBlue revolutionized the economy experience, and when we launch this new experience in 2014 we will do the same in the premium transcon market," says the blog post. "When we bring the JetBlue way of doing things to this new space, we won't just offer an experience to compete with the other guys - we'll be setting the new standard."

In May, chief financial officer Mark Powers said the product would be on flights to the "two principal destinations" on the west coast.

The goal is to improve performance on cross-country flights that generate relatively low passenger revenue per mile and have a low "net promoter score," a measure of customer loyalty, said Powers.

JetBlue has said that its premium product would help it compete against first class products offered on transcontinental routes by other carriers, including American Airlines, Delta Air Lines and United Airlines.

In recent years, those carriers have raised the service bar on flights from New York's John F. Kennedy (JFK) International airport to both Los Angeles and San Francisco.

United offers its Premium Service on the routes using specially-configured Boeing 757-200s, while Delta offers its "BusinessElite" class on 757s and widebody Boeing 767s. American flies three-class 767-200s on the routes.

Another carrier, Virgin America, also offers first class seats on the routes.

JetBlue, however, would be the first carrier to offer suites in the market.

But Syth and Becker say ultra-premium suites seem contradictory to earlier statements in which JetBlue has said its target customers are not ultra-high-fare business travellers.

During an analyst meeting, JetBlue chief commercial officer Robin Hayes says the airline primarily targets the "mixed wallet" market, which includes "high-value leisure" travellers who also travel for business.

These customers are willing to spend more money than fares charged by ultra-low cost carriers, but they expect a better product in return, she says.

"They are not the road warriors because they don't have 20, 30, 50 segments a year," Hayes adds. "We are really clear about who we're targeting and who we're not."

Becker is not so sure.

"We believe these guys are somewhat schizophrenic," she says. "I think the fact they are doing this shows that they are still kind of conflicted as to what kind of airline they want to be," she adds.

Still, Becker suspects that some loyal passengers will pay extra for a suite. These may be businesspeople living on Long Island - near JetBlue's JFK hub - who routinely fly JetBlue to Florida but don't consider JetBlue when booking trips to the west coast.

"Offering this product enables [JetBlue] to keep some passengers that might otherwise make a different decision," she says.

The big question is whether customers will pay fares JetBlue will need to charge for suites, says Syth. It's similar to the question analysts have long asked about JetBlue's economy product, which offers free television and extra legroom.

"They have this great product but I don't know if they can get the fares" to support it, Syth says.

"They could surprise us. They've probably done a lot of research," she adds.

Becker does not expect other airlines to make immediate product enhancements in response to JetBlue's move. American, Delta and United's transcontinental products are already pretty good, she says.

"But it is certainly something they will watch. If they think JetBlue is taking share from them, they might consider doing [the same thing]," she says. "But not in the short term."

This story was updated 7 June to include information from JetBlue's blog post.