Posted on: 20 November 2014 by Mark Howells
JetBlue is aiming to generate $400 million in annual operating income from 2017 – on a run rate basis – using a selection of new and existing initiatives to boost shareholder returns whilst enhancing what it describes as the company’s “product advantage”.
Initiatives being discussed by JetBlue’s leadership team include ‘fare families,’ whereby from 2015 passengers will have a choice of three branded fare bundle options. The first is for passengers not checking any luggage, whilst the second and third fares are for those wanting to check one or two bags respectively. The latter two fares will also come with along with other benefits, including additional TrueBlue points and increased flexibility.
The airline is also planning a cabin refresh on its A320 fleet, which will see the implementation of an increased number of lighter seats, following the successful launch of JetBlue’s A321 cabin.Having said that, JetBlue also acknowledges that its ‘Even More’ extra legroom service currently represents a growing source of ancillary revenue.
The A320 renovations are expected to begin in mid-2016 and will also include larger seatback screens with more entertainment options and power ports accessible to all customers.JetBlue wants to continue rolling out additional Mint service on JFK–LAX routes throughout the fourth quarter of 2014 and JFK–SFO during the first quarter of 2015, since the premium offering has been exceeding expectations by improving transcontinental margin performance.
The airline is also pursuing monetisation strategies for its Fly-Fi internet product by forming partnerships with companies including Verizon, the Wall Street Journal and TIME. The entire Airbus A320/A321 fleet is expected to have Fly-Fi in the first half of 2015, with Embraer 190 installations beginning thereafter.
“We believe the plan laid out today benefits our three key stakeholders. It delivers improved, sustainable profitability for our investors, the best travel experience for our customers and ensures a strong, healthy company for our crewmembers,” said Robin Haynes, JetBlue’s president and CEO-designate. “As we focus on executing this plan, JetBlue's core mission to Inspire Humanity and its differentiated model of serving underserved customers remain unchanged.”
Finally, JetBlue has announced the deferral of 18 Airbus aircraft scheduled for delivery from 2016-2018 to 2022-2023, which will reduce capital expenditures by more than $900 million between now and 2017 and allow the airline to optimise its fleet to better match capacity with demand. In this way, the airline will keep unit cost growth under 2% until 2017 (excluding fuel and profit sharing).