Posted by Seth on January 26, 2012 under Flying, frequent flyer, News | 
Today’s quarterly earnings conference call from JetBlue had a few interesting bits of information that was unveiled, giving insight into future developments that can be expected from the carrier. The company reported a profit for both Q4 2011 and the full year, but there are also some very real challenges that the company is facing in 2012. As one person said on the call, "The honeymoon we enjoyed prior to this period is over."
A lot of the news which I found most interesting was around the "Even More" products that the company sells. What started with Even More Legroom seats offering additional pitch in the cabin has expanded to Even More Space (offering pre-boarding to ensure overhead bin space) and Even More Speed for access to priority security lines in many airports. This service started in 15 airports and recently expanded to 9 more. And selling the service resulted in $120MM of incremental revenue for the company in 2011. That’s a huge number, more than 20% of the total incremental that the company saw in the year.
Given the high revenue realized from the offering, it is not surprising that the company is expanding the number of seats for which it can be purchased. Specifically, the company confirmed that they will be adding 8 more seats to their Embraer E90 planes in the Q2/Q3 timeframe this year. Full details aren’t yet available on the announcement (seems to be a bit of a pattern there lately) but a quick review of the seat map suggests that they can get away with sliding a couple rows behind the exit row around and not really have to change too much else around, so long as they’re willing to keep the 34" pitch that the E90 has. If they go for the 38" that the A320s have they could also do that behind the exit row with minimal impact to customers, changing the other seats in that section from 33" to 32" pitch. Either way, it looks to be a positive change for the company to make more EML seats available.
Beyond the Even More bits, the honeymoon comment piqued my curiosity. The company had a huge growth spurt a few years back, taking on a bunch of new airplanes in a very short timeframe. Those acquisitions are now hitting the magic point in the life of an airplane known as a "C-Check." The maintenance costs for the C-Check and engine restorations on the aircraft are significant and the number of planes the company has going through that process in the next couple years is quite high. The result is a spike in maintenance costs. JetBlue has worked with their maintenance suppliers to mitigate the costs somewhat, but it will still be a challenge for the company in the coming years. And that’s all with a fleet that is still only 6.1 years old on average with a maximum age of 12 years.
There was mention of the new Hawaiian Airlines partnership, but no additional details shared there. And it was suggested that 5-7 new partners will be coming online in 2012, with links at Boston and Orlando likely rather than just at New York City. I’m betting on JAL being a partner via Boston with their new service there starting soon, but who knows.
Other than those bits, not a whole lot of interest. Plenty of accounting mumbo jumbo but nothing that seems especially significant at this point. And there are still a number of open questions, like where the company stands on rolling out additional benefits for their most frequent customers or many of the partnership details with Hawaiian. I guess patience will have to suffice.
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Posted by Seth on December 19, 2011 under frequent flyer, News, points |
JetBlue has added another interline partner to its portfolio, inking a deal with Singapore Airlines to provide through service at both JFK and Newark airports in the New York City area. The agreement allows for connections at Newark to JetBlue’s service to Boston, Orlando and Ft. Lauderdale. At JFK there are many more destinations available. Customers will be able to purchase a single ticket and have through check-in, including baggage for the trip.
Noticeably lacking in the agreement, like most of the partnerships JetBlue has signed, is the ability to ticket directly via JetBlue’s sales channels and frequent flyer reciprocity. Like some previous partnerships it is likely that the purchase issue will be addressed at some point. Frequent flyer reciprocity is not so clear, though JetBlue has indicated they are at least looking at such options on a broad scale.
It will also be interesting to see how they handle through ticketing for passengers connecting to the Singapore-Newark route in terms of passenger comfort. That route is the longest currently flown in the world and is operated in an all business class configuration. Passengers connecting to JetBlue will also get a single-cabin configuration, but it is all economy. Admittedly, it is the most comfortable economy product flying in the USA today, but there’s still a marked difference in the service levels. It would be interesting to see JetBlue and Singapore Airlines work out a deal to get those passengers a complimentary upgrade to ‘Even More Space" seats or some other benefit to extend the "premium" experience as much as possible. Alas, I don’t actually see that coming.
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Posted by Seth on December 7, 2011 under frequent flyer, News, points |
A couple months ago things seemed all nice and rosy between American Airlines and JetBlue. The two signed an interline agreement just over a year ago that added not only traffic feeds between the two but also a limited frequent flier reciprocity scheme and the relationship appeared to be growing stronger. Today JetBlue announced that they are going to be starting service to Dallas-Fort Worth, one of the two fortress hubs that American Airlines operates where they still hold some pricing leverage. Whoopsie.
JetBlue is launching 3x daily service between DFW and Boston starting in May. The pricing isn’t loaded into reservations systems yet so it isn’t clear what the impact will be on fares in the market but it seems more likely that JetBlue entering the market will have an effect versus the announcement from Spirit Air that they will also be entering the market in February. But with 3x daily from the largest operator at Boston it seems much more likely that the competition is really heating up.
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Posted by Seth on December 1, 2011 under Flying, News |
Common decency suggests you don’t kick a man while he’s down. That sort of policy doesn’t necessarily apply in business, however, and it definitely doesn’t apply for Spirit Airlines. Following on their $11 (plus a myriad of fees that no one can ever reasonably figure out) sale to celebrates American Airlines‘ filing for Chapter 11 bankruptcy protection earlier in the week, the Spirit announced a few new routes today focused on the troubled carrier’s fortress hub at Dallas Ft Worth.
Spirit announced this morning that they are launching four new destinations with once daily round-trip service this spring. The new destinations are LaGuardia airport in New York City, Atlanta, Boston and Orlando. The first three are big business markets where American will almost see an erosion of yields thanks to this move. That’s not going to help in their efforts to keep the revenue up. At least it is only once daily service compared to the AA frequencies on offer (BOS – 8, ATL – 12, LGA – 15, MCO – 11) so there is still going to be plenty of opportunities for AA to keep most of their business.
In other bAAnkruptcy-related news, AA has filed the paperwork to return 24 aircraft to lessors, starting the process of shedding some of their costs. Most of the planes are already grounded so it won’t affect capacity. Yet. They’ve also canceled two pilot recall classes, shifting those pilots back to furlough status.
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Posted by Seth on October 13, 2011 under Flying, frequent flyer, points |
American Airlines has announced a new promotion targeting their AAdvantage elite members who are flying out of Boston. For each departure where passengers check a bag via the self-service kiosks passengers will earn 500 miles. The bonus is per trip, not per bag, so no need to check multiple bags. No registration is required and the promotion runs through November 22, 2011.
Even better, there doesn’t really seem to be a need to care about what you’re checking. I figure just grab a FedEx box, put a bag tag on it and collect your 500 miles. No need to even collect the box at the other end.
Posted by Seth on July 28, 2011 under All You Can Jet, AYCJ, News |
I was quite disappointed when JetBlue announced earlier this year that their wildly successful All You Can Jet program would not be returning this year. The company has apparently not left the "unlimited" flight coupon game completely, however. They announced today are offering BluePass, a three month unlimited flight ticket, with a few limitations.
Most significantly, the pass is targeted at residents of Boston or Long Beach. Each flight must be either to or from those airports, depending on which pass you purchase. Open jaw, circle trips and multi-destination trips are prohibited. This significantly limits the flexibility of the pass relative to the AYCJ passes of the past two years. That said, connecting itineraries are permitted so there are quite a number of interesting routes that can be flown with the unlimited pass.
There are "select" passes available to a limited number of destinations (13 ex-BOS, 9 ex-LGB) or a "full" pass that permits service to all airports in the route network from Boston. The price for the passes are $1299 for the LGB limited pass, $1499 for the BOS limited pass and $1999 for the BOS unlimited pass. Taxes for international destinations are extra.
The passes are valid for travel between August 22 and November 22, 2011. Limited destinations for LGB are: LAS, OAK, SFO, SMF, SLC, PDX, SEA, AUS and ORD. Limited destinations for BOS are: JFK, EWR, BWI, BUF, DCA, IAD, RIC, PIT, RDU, CLT, ORD, BDA, and JAX.
The limitations of only one trip per day and originating or terminating in Boston certainly make this deal a bit harder to call an immediate win given my base in New York City. Were I based in Boston the purchase would already be made. Still, it is quite tempting. I’ll mostly be spending the next few hours trying to figure out if the route map out of Boston is interesting enough and if connecting flights will be permissible such that I can get real value from the deal.
Hopefully they don’t sell out before I figure it out for myself.
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Posted by Seth on June 15, 2011 under News |
Want access to the priority security lines at the airport without elite status or buying a first class ticket? Looks like it is time to start flying JetBlue. The carrier announced today the 15 airports at which their new "Even More Speed" program will be implemented, allowing customers access to the "priority" line that other carriers afford to elites or premium cabin customers. With JetBlue this perk will be an additional benefit of the Even More Legroom seats which are being rebranded as well as part of the move.
The initial airports for priority screening are:
Priority screening is also coming to Boston in the next 4-6 weeks as the reconfiguration of the checkpoint there is completed.
In addition to the priority screening access the company is changing the Even More Legroom moniker to Even More Space. The impetus for this change is the addition of early boarding for those customers, providing them the first chance to get at the overhead bins. The early boarding benefit isn’t particularly new but the branding is. Maybe they got a bulk discount on trademark registrations with "Even More" in the name.
Overall this is a nice addition to the offerings that JetBlue has. Combined with the previous indications that some sort of "elite" program (though they refuse to use that word) is coming and that some of these benefits are likely to carry over, it seems clear that JetBlue is working hard to woo the business traveler segment more than ever.
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Tags: Boston, Chicago, elite status, JetBlue, Las Vegas, Los Angeles, New York City, Newark, San Francisco, Seattle, TSA, Washington DC
Posted by Seth on May 10, 2011 under frequent flyer, Trip Reports |
My passport is not quite to the point that I can call it fat. But it certainly is pleasantly plump thanks to the kind folks at the San Diego Passport Agency office. When I booked a couple of the Boston – San Diego $60 fares for travel last week I purposefully budgeted an extra day on the ground in San Diego on Friday. I didn’t have much of a plan for what to do during the day but I figured something good would come up, even if it was just sitting on a beach in San Diego. Instead I ended up getting more visa pages in my passport.
The Passport Agency office in San Diego is pretty much brand new. As such, getting an appointment there is actually very, very easy. I had my choice of days and times; quite a different experience from making an appointment in New York City. And so, at 8:30am I was standing at a counter trying to explain to the agent (who used to work in the NYC office) that I do live in NYC but that I’m applying for extra pages in San Diego and that I’m leaving at 6am the following morning to go back to NY even though my travel plans have me leaving San Francisco in 4 days. Eventually she gave up trying to comprehend my crazy (i don’t blame her at all) and stapled my application together with instructions to return at 2pm to pick it up.
As part of the application process there is now a checkbox on the form (DS-4085) that allows for the request of a double set of pages. There is fine print that allows them do deny the request (and I was somewhat concerned they might as I’d already done extra pages once) but my friendly agent made sure to highlight that selection on my application and, when I picked up my passport both blanks sets were there.
I’ve got five years of validity left on the passport and part of me hopes that having the two extra sets of pages will be sufficient such that I won’t need more before it comes time for renewal. Another part of me sees that as potentially curtailing my travel so I’m not as excited about it. Then again, now that I have my Global Entry access thanks to American Express, I should be seeing many fewer stamps from the Americans so that should help keep the passport a bit more clean. Still, at roughly 20 border crossings each year the pages do fill up pretty quickly.
It is worth noting that getting the pages added same-day incurs an extra $60 fee, on top of the $82 base fee that the State Department charges for the pages now. Still, for me the extra $60 is well worth not giving up possession of my passport for the 2-3 weeks the extra pages take. I already missed one bargain trip to Europe this year because of the Brazilians having my passport. I’d hate to miss another. Even just my regular scheduled travel rarely leaves time for giving up my passport book for that long.
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Posted by Seth on May 4, 2011 under Flying, Trip Reports, TSA |
Flying standby used to be a relatively simple endeavor: you showed up at the gate and if there was a seat you got it. Not too difficult to manage, really. Then the airlines realized that they could make money from folks who wanted to fly standby and things got way more complicated. But on my JetBlue flight from JFK to Boston yesterday I experienced the most interesting version of a standby policy I’ve ever seen.
I arrived at the airport expecting to just relax a bit before my flight, not even thinking about flying out early. That was before I got the notice that my flight was going to be an hour late and likely cause me to miss my dinner in Boston. With a bit of motivation and luck that the TSA line was pretty quick I was through to the gate 20 minutes prior to the earlier flight’s scheduled departure time. Surely it would be no problem to get myself on a standby list and, with any luck, up to Boston in time for dinner. The gate agent was busy so I stepped over to the service center right next to the gate.
"Sorry, but you cannot be added to the standby list. The flight is closed."
Mind you they were still boarding the flight and they had a dozen or so folks standing around waiting to see who would clear off the standby list into one of the few empty seats still available, but they guy I was speaking with insisted the flight was "closed." I tried with the gate as well and couldn’t even get a word in before I was dismissed by the agent. At this point it was pretty clear I was not getting on the flight but I was also curious to see how the event would play out as there were a number of non-revenue passengers also waiting for seats and I was curious how many of them would get to fly ahead of a revenue customer. The answer was at least 5.
That number would have been lower as the gate agent was clearing all the standby customers into seats, including the non-revs who could ride jump seat. I give a lot of credit to the pilot who was flying as a non-rev who insisted that they put her in the cockpit for the sake of getting one more standby on the plane. The gate agent working the flight was actually annoyed by this as it meant more paperwork for her.
When I asked for an explanation at the gate I was told that there was nothing they could do for me there and that I should proceed to the Service Center for a supervisor to explain the situation to me. I walked the 20 steps back over there and asked the same guy I was speaking with earlier to speak with the supervisor as the gate agent instructed me. He picked up the phone and called the supervisor on duty. It was the woman working that gate who sent me away. Apparently she had no desire to explain what the policy was or why they were taking non-revenue customers over revenue ones so I was told I could wait a few minutes for another supervisor to show up.
I guess they figured I’d eventually leave as the supervisor I was promised never materialized. I waited 90 minutes and he never showed. He did call in at one point and I explained the situation to him so I believe he really exists, but I sat there for 90 minutes and he didn’t actually show up and answer the questions at hand. I also left my contact information so that he could call or email me once he did get an answer. Sadly, though not surprisingly that call never came. They did give me a $12 meal voucher for my trouble but that isn’t worth nearly the same as actually getting where I wanted to be when they should’ve been able to get me there. And the 90 minute wait for a supervisor because the other one couldn’t be bothered to explain the policy was pretty poor form.
The JetBlue website help page on the topic doesn’t have any more useful details. There is no mention of a cutoff time or anything else that suggests that non-revs should be seated ahead of revenue customers. And the conversation I had on the phone with the supervisor suggests that they screwed up but no one can confirm the actual policy for me. Even reaching out to a contact inside the company only got me some maybes and sortofs rather than a real policy. Really quite frustrating.
Will this stop me from flying with JetBlue in the future? Probably not. The product in the air is still probably the best coach flying available in the USA. But the inexplicable policy of restricting the waitlist so far in advance and taking non-revenue customers over revenue passengers is certainly that rubs me the wrong way and will certainly make me consider other options, particularly when I know that there might be some give in my schedule and that I might want to fly out a bit early. They may not charge, but the inability to actually get on the list within 30 minutes of departure makes that benefit rather less valuable.
Other than arrive 45 minutes late the flight was fine. No real complaints there. But the standby policy appears to have a rather notable problem.
Posted by Seth on May 2, 2011 under Flying, frequent flyer, News, points |
JetBlue announced today two new partnerships, furthering the growth of their route map and TrueBlue loyalty program. On the flying side Icelandair and JetBlue will now provide interline service with connections between the two available at Boston, New York’s JFK and Washington’s Dulles airports. And on the hotel side Marriott is now an earning partner with TrueBlue.
The Icelandair partnership is similar to eight of the nine other interline partnerships JetBlue offers. It adds the option for a single ticket and through-checking of bags but the fares are additive and there is no frequent flyer reciprocity in terms of earning or redemption.
The Marriott relationship is a nice improvement on the TrueBlue side, adding the option for TrueBlue points earning across the entire Marriott product portfolio. The full-service brands (The Ritz-Carlton®, EDITIONSM, JW Marriott®, Autograph Collection®, Renaissance® Hotels, Marriott® Hotels & Resorts, Marriott Vacation Club®) will earn at a $1=1 point ratio while the other brands earn at a $2=1 point ratio. This is an improvement versus the earning rates on the carrier’s other hotel partner, Hilton, where all properties are at a 2:1 earning rate. Earning on hotel points still does not extend the expiration date of TrueBlue points; only flight or American Express points do.
Overall, two big improvements that see JetBlue continuing to improve their product portfolio.
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Posted by Seth on April 7, 2011 under News |
Yesterday had a bit of a buzz on the internet regarding a piece about airfare pricing from Nate Silver that was published on his NY Times politics blog. The post, filled with mathematical analysis, attempts to use statistics to determine which airports have unfairly high fares relative to others providing comparable service. And I’m sure the math involved is accurate. I have no doubt that someone as statistically gifted as Silver got the regression analysis correct when he ran the numbers. But the findings are still miserably flawed.
Why? Because several of the assumptions made simply do not apply to air travel.
Silver acknowledges that most the other folks who have tackled this topic have made specific flaws in their assumptions. He aims to correct these but instead makes some tragic assumptions of his own.
Let’s take a look at the factors he considers:
The first factor is the distance traveled — we use the distance from the origin airport to the destination as though it were a nonstop flight, whether or not there was a layover along the way….
The first factor cited – distance traveled – is probably one of the last things that actually comes into play when airlines are figuring domestic market pricing. Should they? I can see that argument being made, but it ignores the general concept of market pricing and supply/demand dictating the going rate for a ticket. If the airlines wanted to price everything based on distance they could, but they’d be leaving a lot of money on the table for the shorter flights and they’d never sell the longer ones. Even just using the average costs to operate a flight as a price basis you’d be looking at $600+ on average for a round-trip transcontinental flight. They seem to sell a lot better in the $300 range, at least in major markets.
Silver chose to ignore whether there is a connection or not. While that is reasonable for calculating the distance traveled, it ignores perhaps the single greatest factor that drives travel bookings for business travelers, the folks paying the higher fares: schedule. When you’re a business traveler hopping between cities and trying to get to that next appointment on time and then home as quickly as possible you pay more for a non-stop flight. Should you? Maybe, maybe not. But you do. This pricing function is probably more directly traceable in cargo numbers and there is a ton of data available on that, including in Greg Lindsey’s Aerotropolis, a pretty good read. But the same concept absolutely applies to passenger travel as well. There is a very real value in speed out in the real world; there apparently isn’t one in Silver’s.
Silver found that Newark was about 25% more expensive than JFK based on his data. And there is no doubt that is the case on some routes. But when you also consider that Newark has quite a few more domestic destinations available as a non-stop flight than JFK does that price premium isn’t nearly as surprising. After all, folks pay for speed.
Certainly demand factors into the pricing as well:
Second is a variable representing the demand for travel at both the origin and destination airports. Demand is assumed to be a function of the number of origin-and-departure passengers that an airport handled (not counting passengers who passed through the airport on a layover), but with a modification for average ticket prices. In other words, if the average fare at an airport was high, the model assumed that more people would have wanted to fly there but were deterred by the cost, and if the average fare was low, that some passengers would not have flown if the fares had not been such a bargain.
Indeed, one can expect that fares to smaller destinations will be higher. And they generally are. But assuming that more people really want to be traveling to smaller cities but choose not to because the airfare is too high misses the point. They are smaller cities with lower demand for travel because they have fewer businesses, fewer residents traveling (or being visited) and generally less volume. They aren’t seeing lower air traffic because they are too expensive, they are seeing lower traffic because they are small. Lowering fares may translate to a small increase in volume but it most certainly is not a linear path.
Moreover, the ability for a new entrant to operate in a market requires a certain base level of demand. No matter how cheap the fares, you aren’t going to survive long as a startup carrier if your hubs are in Columbus, Ohio and Greensboro, North Carolina, for example; just ask SkyBus. This means major metropolitan areas see the up-starts, and those up-starts bring lower fares because that’s how they attract customers. Their fares go up over time – JetBlue and Southwest have proven this – but that’s where it begins. And that explains a lot of the pricing trends that are seen today.
Finally, Silver looks at the most important factor, competition:
The regression analysis also accounts for three other factors that have significant effects on pricing. These are, respectively, the market share at the origin and destination airports held collectively by the five “legacy carriers” (United, American, Delta, Continental and US Air); the market share held by Southwest Airlines; and the market share held by the largest single carrier at that airport (for instance, Delta and its affiliates are responsible for about 66 percent of all traffic at Atlanta).
…
Passengers at Newark paid an average of 12 percent more than those at J.F.K. for their trips to Los Angeles, 49 percent more for those to Chicago, 65 percent more to Dallas, and 118 percent more to Washington, D.C.
Given those numbers, it is probably useful to take a look at the competition in those markets. There is zero competition between Newark and Washington, DC. National airport is only served by Continental and Dulles is served only by Continental and merger partner United Airlines. Plus, those routes are not generally reasonable to fly with a connection. The travel time is so short that when you add the connection it is silly to fly when total travel time is important, as it often is. The Dallas route sees a bit of competition from American Airlines, as does the Chicago route. Los Angeles has a tiny bit of competition but it also has the advantage of being a long enough trip that making the schlep over to JFK to save some money on airfare doesn’t actually completely ruin the speed=value margins. Ditto for connecting flights that add a smaller percentage of time to the travel experience.
Somewhat ironically based on the first factor Silver names, longer distances traveled can actually drive down prices as the impact of connections or less desirable departure or arrival airports is decreased as the total travel time increases.
It is actually surprising that Silver didn’t note the disparity on pricing in the Newark/JFK – Boston market. For quite some time now Continental has held a monopoly on that route. Similar to the DC runs, it rarely makes sense to connect for such a short trip and Continental exploited that price disparity. Right up until JetBlue announced their entry into the market. The fares dropped quite quickly at that point. Hardly a surprise, really. Competition, not the airport, drove the pricing.
Here’s a much more simple way to figure out if an airport is expensive or not:
- Is it a mostly leisure destination? If the answer is yes then it is almost certainly not going to be as expensive on average. Atlantic City, Las Vegas, Ft. Lauderdale, Orlando and most the rest of Florida all come to mind, and not surprisingly they’re all on Silver’s list of good value airports.
- Is it dominated (60%+) by a single carrier?
- If that carrier is United, Continental, US Airways, Delta, American or Southwest then odds are it will be a more expensive airport.
- If that carrier is AirTran, Spirit Air, JetBlue or Allegiant (and, to a lesser extent, Frontier) then odds are it will be a less expensive airport.
- Is it a particularly large metropolitan area? If not, fares are going to be higher because demand is lower.
Three easy questions that don’t take statistical regression or misguided assumptions. Silver actually gets some of these, particularly regarding the competition factor. But he also has a couple huge misses, especially around distance traveled and the price/demand curve.
It would also be interesting to compare the actual costs of travel versus just the base fare data. Spirit has a pretty incredible ancillary revenues per passenger – to the tune of an extra $35/head on average – so those "cheap" airports can come with significant surprises once the customer gets to the airport. Indeed, the airlines are quite keen to sell these ancillary bits to their customers and many are now stating explicitly that these fees are where their profits are. The airlines even want to control the way those fees are marketed to the customer by cutting the GDSes out of the pricing loop. Not a good deal for consumers.
Oh, and the suggestion he links to about searching for the best airfares on weekends is horribly wrong, too. Tuesday or Wednesday mid-afternoon is the time you’re most likely to find deals. On the weekends the airlines are raising fares and limiting the cheaper inventory in an effort to cash in on folks shopping for their vacations while their home with their family.
Silver should stick to baseball and politics, two things that he appears to understand a lot better than air travel.
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Tags: AirTran, American Airlines, Atlanta, Boston, Chicago, Continental, Delta, fees, Florida, Flying, Frontier, JetBlue, Las Vegas, Los Angeles, Southwest Airline, Spirit Air, United, Washington DC
