JetBlue and Virgin America Go Elite to Court Big Money

In case you missed it, JetBlue and Virgin America both announced earlier this week that they would be rolling out elite programs for their frequent fliers. What are the chances of that happening on the same day? Pretty good, actually, because they were announced at the start of the Global Business Travel Association (GBTA) conference which is an enormous event for corporate travel. These moves shouldn’t be a surprise since most low cost carriers have been moving toward courting the business traveler for some time.

JetBlue and Virgin America Go Elite

Both airlines have been making a big push for a bigger slice of that oh-so-tasty business travel market because that’s where the money is. (This is music to Spirit’s and Allegiant’s ears because it just gives them more room to serve the leisure traveler.) As JetBlue has started to develop more utility for business travelers in Boston and New York, it naturally wants a bigger piece of that market. (You think those 10 daily Boston – Washington/National flights are for leisure travelers?) And Virgin America knows it needs more revenue if it has any hope of making a profit.

So what is it that business travelers want? They want a great schedule and they want free upgrades. Hmm, well this move isn’t going to give them any of that. But it will make the travel experience more pleasant, and it provides recognition for those who do spend a lot with the airline.

Big Money to Get In
The key here is “spend” … and spend a lot. While most traditional legacy airline elite status programs are based on miles flown (with some element of spend), these are almost purely spend-based. For Virgin America, it is 5 points per dollar spent and you need 20,000 points for basic Silver elite (it’s 50,000 for gold). That’s a lot of dough to spend just to earn elite status. At $250 each way, that means 16 flights between JFK and SFO are needed to earn elite status as compared to 10 on a legacy airline.

JetBlue will give you Mosaic elite status (the only level it offers) when you hit 15,000 points (or 30 total flights and 12,000 points). But for JetBlue, you get 3 points per dollar. That means 20 flights will get you elite status on that route at $250 each way, double what it would take if you flew a legacy airline.

So it can be pretty hard to qualify, though this might be an extreme example. Shorter flights tend to have a higher spend per mile so the gap shrinks. In LA to SF, for example, if you have a $150 fare, you need 27 flights on Virgin America, 30 on JetBlue, and 30 on United for base level elite status. But JetBlue and Virgin America tend to skew toward longer flights anyway.

What do you get?
But are the benefits worth it to dedicate your flying to one of these airlines? I guess it depends on who you are. Most of the benefits are pretty standard for elite status. You get free checked bags (well, more than the 1 you already get for free on JetBlue). You also get priority boarding and security (plus priority check in for Virgin America). You’ll also get dedicated customer service contact lines. Virgin America has gone a little further with dedicated live chat and email as well. You’ll also get the obligatory bonus points to earn on travel, but you won’t get upgrades.

No upgrades?!?! I know a lot of you are having heart palpitations. But this is smart because the airlines don’t need to dilute the value of their premium offerings like legacy airlines have.

Of course, JetBlue can’t upgrade you very far anyway since it only has extra legroom seating and no first class. People who earn status this year get 6 free upgrades to those extra legroom seats, but that’s a one time deal. After that, the only upgrade benefit is that you can use points to upgrade instead of just dollars like everyone else.

For Virgin America, the stakes are higher but upgrades are still very limited. There is a twist in that the airline is now dedicating seats toward the front of the cabin as premium seats. They’re no different than anywhere else on the airplane but only elite members can sit there for free until the day of check in. Other have to pay for “Main Cabin Express.” On the day of check in, elites can sit in the Main Cabin Select exit row and bulkhead seats without charge. But to upgrade to First Class, there is no deal. The only thing elites get is an expanded window to pay for the upgrade, so they have first crack.

Virgin America’s two tier system is more complex than JetBlue’s very simple offering. With Virgin America, elite members will also get some goodies like discount coupons for future flights, waived fees, and special partner deals as well. But the result in the same.

Rationale
In the end, both of these require more spend for fewer benefits than with elite programs at legacy airlines. And you know what? That seems smart. These guys both have better onboard products domestically anyway, so they should be trying to get a premium. For those who like to spend as little as possible and get a lot for free, this isn’t going to be that attractive. But no airline should really care about those people anyway.

The point is to cater to road warriors. They’re going to be traveling anyway and paying a fair bit for it. For them, the most important thing is to reduce the hassle. Adding dedicated customer service, front-of-the-line passes, and more liberal policies might just reduce the hassle enough to make it worth shifting business where it might not make sense today. At least, that has to be the hope. Otherwise, these airlines are just throwing away benefits and adding complexity for nothing.


11 Responses to JetBlue and Virgin America Go Elite to Court Big Money

  1. stan says:

    i was briefly a jetblue business traveler. i decided to go back to one of the big boys for a number of reasons:

    – i dislike the revenue-based TrueBlue program. because i have to fly low fares due to business reason, i wasn’t earning much
    – and even if i was earning more, the value of those points was low to me. can’t redeem them to europe, asia, or anywhere else it might be nice to redeem for an expensive seat
    – yes, lack of an ‘elite’ program was a factor, but not as big a factor as the above
    – and finally, the TSA situation at T5 is horrific. i fly 100+ flight segments a year and i have never seen a more rude, arrogant, and dysfunctional TSA checkpoint than at JFK T5. there are 17 stations and i have NEVER seen more than 5 open on a busy monday morning. it can take an hour to get through the line. plus, they nearly always use the backscatter machines, making the lines far slower than if they did not. plus the agents are horrifically retaliatory if you opt-out, sometimes making you wait 15 minutes for an ‘assist’. jetblue is apathetic about the lines and treatment of its customers by the TSA in T5

    so, in my opinion, more than a meager ‘elite’ program has to be put into place to get me to return

    on the plus side, the in-flight product is pretty good. and the terminal, while not the majestic palace some see to think it is, is way above average. it’s too bad that actually getting to the plane is totally unpleasant.

    • Noah says:

      Stan,

      I can tell you that Jetblue has tried to work with TSA in T5 to improve speed. Unfortunately, TSA is really terrible about it, and PANYNJ doesnt care (unlike Massport which usually helps push on behalf of the airlines). They use a staffing model that is readjusted only twice a year, despite huge changes in the Jetblue schedule every few months. Its a sad reason to have to change airlines, but I understand the concern

      Now with Even More Speed, it is better, but still not great.

  2. I’ve said for a long time that airline programs should be by dollar spent, not by miles flown.

  3. FRANK says:

    No upgrades?? Gasp!! You LOST most of the frequent flyer community with that one.

  4. Graham says:

    I think the Main Cabin Express thing really isn’t a perk. Much like US’s preferred seats, they’re a perk you could sell to non-elites, but as an elite that seems like not that big of a perk.

  5. JayB says:

    “…adding complexity for nothing.” Well, the airlines are pros at this. Fares, fees, rules, aircraft types, hub and spokes and, of course, loyalty programs.

    In fairness, maybe the industry, save the niche markets for a single group of travelers, a single route, or single origin, is just too complex for anyone to make money in it. And, too hard to figure out what tomorrow will look like, let alone a year from now.

    Too difficult to base any service when the differences between customers is so great…some will pay any price because they can get someone else to pay; others can’t make any choice without finding the absolute lowest fare.

    Maybe, just charge whatever the competition is charging, minus a dollar, or whatever will complete the sale, right here, right now.

    Aircraft and aircraft seating configurations? Let someone else take the risk. Forget about owning airplanes. We’re getting there with all the regional aircraft, but might as well extend the contracting out to the mainline routes as well (at least in the US domestic markets).

    Routes? Hub to hub, fine. Hub to spoke, fine. But, combining the two? How long can the average legacy continue this?

    And loyalty? “We promise to listen to what you want, and we’ll treat you right. No formal programs we both know neither of us will understand or find truly fair.”

  6. Jim says:

    Airline travel becomes more and more socially stratified every year, thanks to our nation’s economic policies. How long is it going to be before Southwest puts in first class seats and an elite status?

  7. Noah says:

    I love Jetblue, and wish I could use them more, but unfortunately, routes and frequencies are not that strong.

    I dont mind a coach seat, but I would like a free space-available upgrade to extra legroom (at least) at boarding time. Free meals or drinks would be nice, but not necessary. Even waived change fees or free same-day confirmed changes would be helpful. Sadly, the value of the miles is low. At least Southwest has high-value points. (there was a BA blog about it a week or two ago)

    Jetblue is the best onboard experience in coach…but other loyalty programs are simply more attractive to the frequent flier

  8. Sanjeev M says:

    Free upgrades to F will dilute it. The upgrade to extra legroom is more than enough. In the case of VX this includes food and extra TV.

    I believe Jet Airways (India) actually serves every passenger differently no matter where they’re sitting. E.g. a Silver in 17A may get a meal on a route
    where 17B only gets a drink.

    It may not be needed for short Indian domestic hops, but B6 and VX are doing 5 hour transcons where I’m sure the elites would appreciate a meal or snack box. (anywhere outside the US these flights would be flown by widebodies).

    • Fred says:

      AirAsia also does something similar, where they serve you meals that you order online before the flight (of course you can buy them on the flight if they’re available). It’s not difficult – there’s just a list of seat numbers and it’s printed right next to it whether they ordered anything or not.

      (just an aside, but I don’t get what widebodies have to do with anything. And fwiw, several airlines in Asia such as KE, CA, CZ and AirAsia use 737s on 5-6 hour flights)

  9. SJC user says:

    I think I’ll stick to the legacy carriers for now. It seems like too much effort to get elite status on B6 and VX and then you really don’t get much of anything. Of all the “perks” you get for being elite, upgrades matter most to me, followed by priority security and priority check-in. Since B6 is Y only and VX doesn’t offer free upgrades to anyone, why bother with these two?

    Also, VX and B6 simply do not have the network to get me where I want to go. Honestly, DL and UA are the only airlines that fly everywhere I want to go.

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