Saturday, October 5, 2013

The Bi-Coastal Battle (In the Skies)

This week, JetBlue Airways opened the book a bit more on what they will offer to enhance their position in the lucrative and highly competitive markets of New York (JFK) to Los Angeles (LAX) and San Francisco (SFO) with the announcement of their premium product known as "Mint," which will roll out on their new Airbus A321 aircraft starting next summer. Mint will include the longest and widest domestic premium seats, 16 in all (four are personal suites with closing doors). The seats will feature a massage function and adjustable firmness levels and will include two 110-volt outlets, two USB ports, and an indicator that allows the seat occupant to be woken when it's time for service. Additionally, there will be new 15" video screens featuring many more channels of DirecTV and SiriusXM programming. Food and wine gets an upgrade as well: a pre-departure drink and a cocktail once airborne, and a tapas-style menu from New York restaurant Saxon + Parole. Mint travelers will also leave the aircraft with a gender-specific gift from Birchbox. With this announcement, JetBlue has made their latest play in the battle for those precious premium travelers.

Five airlines compete in both markets and offer multiple flights daily: Virgin America, JetBlue, United, Delta, and American. It's a crowded field and understandably so, as first and/or business class passengers are likely to pay for the higher level of service versus relying on upgrades through a frequent-flyer loyalty program, which is more commonplace. On a typical flight from JFK to LAX, roughly 10% of occupancy is premium passengers and those same passengers account for about 30% of the flight's revenue, on average. If you're in the business of transporting people between the two largest urban centers in the country, it's a statistic they would be remiss to ignore. In the past year, the players have announced changes to their offerings (save for Virgin America which arguably now finds itself behind the pack), including brand new airplanes with new lie-flat seating, enhanced wi-fi, improved in-flight entertainment systems, and more to their business and first class cabins. It's an interesting game to watch for followers of the airline industry.

It is this focus on the premium traveler that places a larger spotlight on the changes for New York-based JetBlue, who has always abstained from providing a tiered-level of service - until now. Mint reflects the airline's shift to embracing the coveted business traveler in these two specific markets, while not forgetting about what made it one of the darlings in the airline business: an egalitarian approach to service centered on the leisure traveler. It's a model that has been successful for JetBlue in their 14-year existence and has gained them a solid fan base in the New York area and beyond. Now the airline must do a balancing act of sorts and it appears that they will be successful at doing so.

Along with the new Mint class of service, upgrades are coming to coach as well. Self-serve snack bars complete with sodas and water, larger and softer seats, added channels of live television (from 36 to 100) and free and fast wi-fi can be expected in the economy class cabin. Perks for all that should go over well with fliers but again, only for those A321 flights from JFK to LAX and JFK to SFO. This represents a small number of flights within JetBlue's total network, but they are significant from an economic and perception standpoint.

It's notable how aggressive this airline has become in their response to the recognition that they've lost a bit of a foothold in the premium transcontinental market. Mint will be a formidable choice among the flying elite, we'll just have to wait until June 2014 to see to what extent that is. The airline announced introductory one-way fares of $499 for the first four days with an expected increase to $599 after that (at least in the short-term). That all sounds good and should have the competition shaking at least a bit.

So, what are your thoughts, agreeable or contrary. I would like to hear them. Thanks for reading!