JetBlue gambles on premium product, dubbed Mint

New York
Source: Flightglobal.com
This story is sourced from Flightglobal.com

JetBlue Airways is challenging conventional thinking with a new premium product it says will prove an airline seat is not just a commodity.

The airline held a reception today on the roof of its New York City headquarters building to announce Mint, a new premium cabin with lie-flat seats that the formerly coach-only carrier expects will be popular with small business owners and entrepreneurs.

Mint will initially be available only on Airbus A321 flights between John F. Kennedy International airport (JFK) and both Los Angeles and San Francisco, with the Los Angeles flights starting 15 June 2014, and the San Francisco flights beginning later that year.

JetBlue’s chief executive David Barger tells Flightglobal he has “no doubt” Mint will have a positive revenue impact on the airline’s financials by 2015, and possibly as soon as the second half of 2014.

He says JetBlue has already proven passengers are willing to pay for a better product.

“In a commodity business, we have had people paying a higher revenue to our company because of the offering we have,” Barger says.

In addition, contrary to some analysts’ assertions, Barger insists room exists in the US market for a middle-of-the-road carrier like JetBlue, which has fares and expenses that are in-between those of US legacy carriers and ultra low-cost discounters.

JetBlue’s relatively low costs, combined with a product that customers value, gives the airline revenue advantage, he says.

“[Analysts} are a little narrow in their thinking,” says Barger. “We think there [are] really three models ... in the airline space.”

Entering the premium game

JetBlue will begin taking delivery of A321s this year, but the first aircraft will have just 190 coach seats.

Beginning next year, the airline will take delivery of nine of 11 A321s with Mint cabins. Those aircraft will have 143 coach seats and 16 lie-flat seats, four of which will be enclosed in a “mini suite” — a first in the domestic transcontinental market.

The lie-flat seats are 22.3in (0.57m) wide and 80in long, making them wider and longer than competitors’ premium seats.

Each seat has a 15in television, and JetBlue will offer food from New York City restaurant Saxon + Parole.

In addition, JetBlue is adding Ka-band Wi-Fi, dubbed Fly-Fi, to all its aircraft.

Priced to sell

The lie-flat seats went on sale for $499 one-way today, but JetBlue says non-sale prices will range from $599 one-way to a refundable $999 one way. Customers who purchase tickets costing $799 or more will not be subject to JetBlue’s $150 reservation change fee.

JetBlue says it will not upgrade customers to Mint for free.

Barger says Mint prices are a bargain compared to competitors, which are charging $1,800 one-way for lie-flat seats on the New York-Los Angeles route next June.

JetBlue will go up against American Airlines, Delta Air Lines and United Airlines, which have recently invested in their transcontinental product, improving food and drink offerings and adding lie-flat seats.

Virgin America also flies transcontinental routes, and offered a first class.

JetBlue has said its revenue on transcontinental flights was lagging competitors, and Barger says internal research indicated customers were “booking away” from JetBlue for two reason: lack of a premium cabin and lack of Wi-Fi.

That left JetBlue with two choices, says Barger: pull out of the transcontinental market or double-down with a premium product.

“We either get in big time, or we get out,” Barger says. “We decided, being in New York, [we] have to be in.”

Target customer

Barger says Mint was designed to attract “customers who have been neglected by other carriers.” Those are flyers who travel frequently, but not frequently enough to reliably get free upgrades.

Marty St. George, JetBlue’s senior vice-president of marketing, says JetBlue’s target premium customer is not a United, Delta or American road warrior. JetBlue isn’t going after “investment bankers from Goldman Sachs,” he says.

Rather, the airline seeks to attract small business people, entrepreneurs and high-end leisure travellers – people who care about the price of a ticket, but also want a premium experience.

Keeping core customers happy

JetBlue executives stress that premium seats are not a move by the airline to segment its customer base, insisting that JetBlue will continue to focus primarily on its service to customers in coach.

There are “no second class citizens” on JetBlue, Barger says, noting that JetBlue’s aircraft will not have curtains segmenting the premium section from coach section.

Executives note JetBlue is outfitting all its new A321s with new coach seats manufactured by B/E Aerospace. Those seats will have new features like cup holders and larger, 10in video screens.

JetBlue’s A320s will also get the new seats, but the airline has not said when that project will be complete.

“The core offering is getting even better,” Barger says.