JetBlue Airways will add a basic economy fare next year as it restructures its fare tiers, joining US mainline rivals in further unbundling its product.
The fare overhaul will introduce a new option that comes with some limitations, such as boarding order, seat assignment and itinerary changes and cancellations, JetBlue president and chief operating officer Joanne Geraghty says in a letter to employees.
Tentatively named "Blue Save", the new fare option will include a carry-on bag and personal item. It will not include free checked bags, in line with JetBlue's cheapest fare option today, Blue. The Blue option, however, allows passengers to choose a seat at no charge.
Geraghty says the airline is overhauling its fare structure to remain competitive with mainline carriers that have rolled out basic economy fares in recent years.
"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," she adds.
JetBlue last changed its fare structure in 2015, when it introduced three fare tiers: Blue, Blue Plus and Blue Flex. Prior to the 2015 change, the airline had offered only two fare classes, both of which included one free checked bag.
In late August, JetBlue hiked the checked bag fee for Blue fares to $30 from $25, prompting similar moves by American Airlines, Delta Air Lines and United Airlines. It is not immediately clear how much checked bags will cost under the proposed new Blue Save fare. Passengers travelling on Blue Save fares will still receive complimentary drinks and snacks and onboard wi-fi.
Geraghty says in the employees letter that "very few customers" now select Blue Flex, the airline's most expensive fare category. "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," she adds.
JetBlue has come under pressure from Wall Street recently to cut costs and grow margins. The airline has announced capacity cuts in the fourth quarter, and faces higher expenses from a new pilots contract and the phase-out of its Embraer 190 fleet.
JetBlue is holding its investors day on 2 October, where it is expected to outline more of its initiatives in the coming years.