JetBlue and WestJet both had separate announcements last week around the same basic idea. The airlines are cutting legroom in the back of the bus in order to create or expand a section with more legroom up front. This is an interesting contrast to Southwest, which apparently doesn’t see the value in a differentiated “Economy Plus”-style product. I’m with JetBlue and WestJet on this.
JetBlue announced that it would double the number of seats with Even More Space on the Embraer 190 fleet from 8 to 16. To add those extra inches, it either has to get rid of some seats or it has to shrink legroom elsewhere. Looking at the seat maps, it appears JetBlue is going the latter route. It will still have 100 seats on the airplane but at least some of the regular coach seats are bound to drop from the usual 33 inches of pitch.
WestJet said it would introduce its first premium economy product on its whole fleet. As part of this new offering, WestJet will “standardize the seat pitch for the remaining rows on all aircraft to 31 to 32 inches.” On some aircraft, today’s seat pitch is as high as 34 inches so it will be a change for the worse for those who don’t want to pay for legroom.
Southwest, on the other hand, announced awhile ago that it would introduce new, denser seating on its airplanes. It’s adding a row of seats but all seats will be the same on the airplane.
Which strategy is right? These are all customer-friendly airlines and they’re using different tactics. I’d argue Southwest is missing the boat on this one. Why? It’s not a perfect comparison but we can learn alot from the failure of American’s More Room Throughout Coach many years ago while United’s Economy Plus succeeded.
There is value in the upsell.
When American first rolled out increased legroom for all coach seats on the airplane many years ago, the idea was to become a premium airline that people would pay extra to fly. That didn’t happen. A lot of coach travel is viewed by consumers as a commodity. They just want to get places for cheap. So when American removed seats, it increased its unit costs (costs ended up being spread out over fewer seats) and it couldn’t get enough revenue to justify it.
With United, however, Economy Plus was just a subsection of coach. It took the airline years to figure this out, but there are absolutely some people who will pay for more legroom. Some people. United’s Economy Plus has now become so popular and profitable that not only did the new (ex-Continental) management decide to keep it despite biases to do otherwise, but American and Delta have all copied it as well.
JetBlue used to have two inches more legroom in the front half of the airplane on its A320s but it never charged for it. The airline rearranged rows and created the Even More Legroom product which it could sell to those who were interested. It was a success and JetBlue has brought in tons of cash with the program. Now it is expanding it further on the Embraer 190.
WestJet is possibly more interesting as a comparison since it is often thought of as the Southwest of Canada. But the egalitarian model doesn’t look as good north of the border anymore. Though WestJet has good legroom for all travelers today, those travelers don’t all want to pay for it. Now the airline can give average legroom in the back while upselling to those who want to pay more to get more.
That makes a lot of sense. So when Southwest decided to redo its seating, why didn’t it do the same? Instead of adding an extra row, the airline could have just reduced seat pitch (which it did) and added a couple of rows of premium economy. Maybe then it could bundle it with Business Select fares and actually drive some revenue with that product. (Business Select makes a lot less than JetBlue makes with its extra legroom seats and JetBlue is a much smaller airline.)
I know for Southwest, the idea is to remain that same egalitarian airline that it’s always been. But in a world where people are willing to pay more for more, you’d think the airline might have thought differently. It seems to me that WestJet and JetBlue are making smart moves here.
Maybe also the costs/difficulty associated with changing their boarding process? SouthWest certainly have a “unique” boarding process and if someone who had paid to upgrade arrived at gate late to find someone who was in boarding position C60 just took their seat because they assumed it was the same free for all it would lead to too many unpleasant situations. Not to mention potential delays, and the whole point of their whacko boarding is to achieve those ultra-fast turnarounds
I was thinking the same thing. Things could get ugly in a hurry for flight attendants who would have to play referee on every flight. I’m sure they’d put up a stink in a hurry, if not even before such a product was launched. It’s funny to me that the airline that revolutionized travel for so many people seems stuck in its old way of doing business and refuses to adapt to situations like this. Open seating was a great way to board quickly back in the day. But turns now take longer and it has outlived its usefulness. Biz… Read more »
Ben, funny you mention referee, Southwest has been using them in their ads of late.
Question: Would this have anything to do with Luv’s antiquated res system. That has put it behind the power curve on ancillaries in the past. Indeed, I think it was behind its failure to opt for bag fees which became a positive for the brand. With your experience, you would probably have more insight into this, than I. Cheers — kathryn
I think this is an excellent point / question, I would love to know if their res system has anything to do with their lack of add-on revenue streams. If that is the case, it is less of a strategic / tactical decision and more of an operational / functional decision.
I tend to believe that anything Southwest doesn’t implement is because they don’t have the technology to achieve it. They’re two years into a merger, right? And you can’t connect FL to WN, right? The only possibilities for that are: 1) They STILL can’t do it; or, 2) “Wait, Bag Fees ARE helpful.”
Kathryn – It seems to me that the res system has to be an issue, just as it is for everything they do. But it should still work. After all, they can sell Business Select, so if you just make Business Select more valuable by having that include the premium seat, then it works.
The growing scourge of Economy Minus
Let’s not forget, TWA tried this concept as well, in 1993. Failure. But, then again, it was during bankruptcy.
WestJet hasn’t been the “Southwest of Canada” in more than a decade. The only thing they really have in common is the bad flight attendant jokes. A much better comparison has long been JetBlue but for people who don’t know so much about the airline industry the Southwest example is easier to understand.
Well…I don’t think with Southwest’s open seating and cabin standardization that this will be easy to implement, nor do I think it will hurt WN sales. I know some people that only fly if Southwest flies there…they have a happily captive audience.
I think WN could keep their boarding process and still sell more legroom seats. The people that paid would be boarding group A and would be expected to take those seats. Although Southwest loyalists would hate it IMO.
I’ll still go back to my age old argument that I was seat width, not pitch. After more than a couple flights next to a 300+ lb. person I much prefer shoulder space over cramped knees.
what do you do with the seats that were NOT purchased? But, you want the flight to go out full with revenue passengers. You cant sell legroom, then give them away to fill up the flight.
Probably do the same thing airlines do today to fill up first class: upgrades to the elites and/or whoever paid the most for their ticket..
Jetblue sells 100 tickets on an E190 (150 on the A320) if no one pays to upgrade at the time of booking, and you are one of the last to book…you probably do not have a pre-assigned seat. At time of boarding they wait to see how many people do not show up and fill the standard coach seats prior to putting people in the premium seats.
I’m surprised it took airlines forever to figure out how to do the ala carte model. I was an elite with NW from 2004-2007, and loved the little extras — particularly the ability to reserve an exit row at time of booking. When I lost my status, my first thought was that I would pay a nominal amount to reserve those seats… why couldn’t I pay for it? Seriously, at 6’1″, regular coach is a little uncomfortable for a European trip. Back then, I got to fly the bulkhead on the A330, realizing that if I could get the bulkhead,… Read more »
I’ll “buy” the argument that having a differentiated product for which they can price discriminate (in the good, economic meaning of the word) is healthy. However, it depends on how it is done. There needs to be a minimum standard of accommodation. UAs E+ was a bump up to their (minimally) acceptable standard pitch of 31″ with floppy seat backs. So, this was acceptable. If these airlines get the extra room by cutting below that or are doing it with the new thinner seats with no wiggle room, the ‘standard’ seats will be impossible for some of us normal (but… Read more »
WN doesn’t need to put in pay for more legroom since people looking for the lowest fare still believe that WN is the lowest price airline and will still fill up the airplanes. So the more seats they can jam into the plane will bring in more money and waiting to see of people will pay more for the extra legroom.
This could all change when WN begins international flights…then they will have to have seat assignment. When that happens I can’t see Gary Kelly leaving any money on the table…
Don’t forget WN allows through passengers to remain onboard and change seats. In this situation, they would also have to not allow those passengers to move into one of premium seats. It is probably bad enough now, when you have A1 and get on a through flight and you are stuck in row 10 because 50 people stayed on the plane!! When I do fly them, I always check to see if my flight is coming from somewhere else, knowing the through pax are going to move up and reduce my seat selection even with a low number.
That’s very true. Luckily for me, I like to sit behind the wing to watch the ‘workins’…the rest of the ‘normal’ world likes to get on early so they can clutch up in the front of the cabin. I never have any issues sitting where I want on WN.
B6 better not squeeze the legroom in regular-Y much at all – this would damage an important part of the brand image.
supposedly the added e190 seats change the minimum pitch from 34 to 33 incles…but still above the legacies at 31-33. And only a few seats become 33 in. Even More seats are still 38-39 in.
Southwest seems to be reluctant to change. This is a terrible mistake in business – especially in the airline industry when change is the name of the game. What HAS always worked for them is not necessarily what WILL always work for them. And since their costs are higher than just about everyone’s, if I were them I’d be doing anything possible I could to juice even 1 more penny out of each seat mile. Since coach travel is almost a commodity, like Cranky said, ancillary charges/upsells are an easy way to bring in some more $.
completely agree.
especially with their now truly national network in most major cities, the up sell could help secure the all-powerful business customer…WN needs to find a way to improve revenue, because cost discipline seems to be unappealing (other than slightly reduced CASM through 737-800s)
I don’t think very many people pay for Economy Plus on United. My guess would be that about 75% of the people sitting there are Mileage Plus elites who got upgraded for free because they didn’t have a high enough tier to get into business class. Remember that while differentiation of products may get additional revenue from those who are willing to pay, it also makes everyone else resentful. If I fly JetBlue, and I don’t want to pay extra, I get an inferior product. However, if I fly Southwest, I don’t have to pay extra and I get the… Read more »
No. You would not get an inferior product if you opted for regular seating on JetBlue. Those seats still have equivalent legroom to Southwest. What you would get is a superior product if you purchase the Even More Space seating. Bear in mind that JetBlue reduced the seats to 150 on the A-320 so they always had more space to play with, instead of staying with the higher capacity with the additional cost in inflight crew that would entail.
Yes, but that is how people think. It’s a psychological thing. If you are given the option to upgrade and don’t, you automatically feel like you are getting an inferior product. If you aren’t given the opportunity to upgrade, you will not have that thought cross your mind.
more than equivalent to southwest…Southwest is 32-33 in pitch in economy, while Jetblue is 33 (in limited new e190 config) to 34 in (overwhelming majority of “economy” seats)
I think that is why Virgin has had a tough time with their upsells. At time of booking, the upgrades are ridiculously expensive (SEA-LAx was $300 last week), but upgrade at check-in is much cheaper ($39) and crew and others get upgraded, thus degrading the value of the product for everyone who pays for it.
Notice Jetblue does not allow people to move to the better seats onboard without charging them there to avoid that issue.
There used to be a time when most websites having to do with airlines were customer service oriented and customer friendly. This article though is showing that profits take a front seat by whoever is writing this article. It may be more revenue and more profitable for airlines to reduce room for the majority to give more room to a few who want to pay more. However using this argument you can go the Ryan Airlines route and start justifying passengers should go to the bathroom before they board and hold it for hours if necessary or ante up and… Read more »
sadly, as long as people buy tix on Spirit or Allegiant that will not happen. Ultimately, the majority of flyers are price conscious, not value conscious. It is possible (like the DOT argues) that consumers dont really know better, but ultimately, people are still buying on base price alone.
There are some bright spots. Jetblue increasing Even More seats means that there is likely a high demand for them, more than for added regular seats.
At least for me, this is one of the reasons I still like flying on Southwest, that is they are the only egalitarian airline operating in the US, maybe in the world. I like that you have choices if you want to pay for them and if you arrive early, you generally get to board earlier. I also like that they don’t charge for bags and change fees. This to me, is Southwest main point of differentiation in the market and I think they should strive to maintain it.
Huh? You like that they’re egalitarian, then like that you can pay to get onboard earlier?? (e.g. you paid for a better seat.)
I think you’ve drunk the Southwest Koolaid….
[…] Link – via The Economist’s Gulliver Travel Blog […]
I will freely admit to being a card-carrying Kool-aid drinking member of the Southwest fan club, especially after two unpleasant experiences in two weeks with United and AA. That’s because I know with Southwest I’ll be able to see my laptop screen (or at least, I used to.) I know I’ll be able to sit with my family. I know I won’t play the “Oh I thought I was in 16C” game. I believe that I am more likely to be on time. I know that I won’t be forced into a middle seat when aisle seats were available because… Read more »
Transparency of their fares? Then why won’t they let their fares be listed alongside other airlines? They’ve been pretty adamant that they don’t want to be in any comparison shopping service.
Jeff may have had a little too much Southwest Kool-Aid. How do you know you will be able to sit with our family? Suppose those folks with the Wal-Mart shopping bags get to the seats first and then refuse to move because they want to sit with their family. What about when you arrive at the wrong airport and have to take an expensive cab ride the connecting airport…My experiences with wn on time performance have all been bad. Do you really think wn is NOT charging for bags? Switch to Dr.Pepper Jeff and try the friendly skies… you may… Read more »
Nick: By “transparency of their fares” I was referring to the notion that it’s easier to see what costs what on their site when searching for airfare. The different values and restrictions (a.k.a. price fences) for air travel based on refundability, advanced purchase, web-only, and the like are spelled out for you. Other airlines and Orbitz-like aggregation sites can make this pretty obscure, requiring multiple searches to compare and contrast options. (They’re getting better at closing this gap.) From a business perspective, it makes sense given my assertion that they are fundamentally serving a different target market — they don’t… Read more »
Jeff – That decision not to sell elsewhere is a great move for a couple reasons. It’s great for Southwest because they don’t have to pay the fees as you say, but even more importantly, it makes it a lot harder for people to compare. Southwest has become significantly more expensive over the last few years, but a lot of people don’t realize it. So they still go straight to southwest.com and don’t always check elsewhere. The reputation alone can make it easier for Southwest to raise fares.
Excellent point, CF — ever since their fuel hedges expired they’ve not been able to remain in that “lowest cost airline” spot — which was in jeopardy anyways with assaults from the Spirits of the world. Like most industries where the product becomes commoditized, differentiation comes via customer experience and customer service. Airlines like Southwest and JetBlue continue to place an emphasis on better customer service (or at least, the perception of better customer service) and that will continue to sway consumers who aren’t just looking for the cheapest flight.
[…] Airline economics: How airlines make money | The Economist, Cranky Flier blog) Posted August 9, 2012 at 3:58pm in airlines legroom fee seating travel || home Ultralite […]
Nothing like arriving at your destination unable to walk because the airlines forced you into a cruel body position. When is the AMA going to weigh in on these unhealthy practices? The airline industry is a disaster for consumers now. We should all pray for some serious regulation to return to the industry. People are not cattle.
Including Westjet on a statement about being “customer friendly” is inaccurate.
They dropped the low cost model as soon as they realized they can gouge canadians with impunity. Even mentioning WJ in the same breath as Southwest or Jetblue is an insult to the latter two. Help, Canada needs a *real* low cost alternative!
[…] WestJet and JetBlue See the Value of the Upsell; Southwest Doesn?t from The Cranky Flier. Great graphic. […]
I don’t claim to be an airline expert but… I prefer Southwest. I know how much the ticket is going to cost. I get on the plane, get where I’m going then get off. No muss no fuss no crooked extra fees.
There also is Ergonomy. Seats are becoming too cramped towards uncomfortable. We accept this for lack of money. If this is acceptable, then we can take it to new extremes. What about standing – like in a bus – for half the price, or cram on top of each other like passengers on a third world train. It all depends on the sheer weight/volume an aircraft can carry. We can travel like disaster evacuees on a C-130. Or like the luggage in the airplane’s bays. If the price suits us. Ergonomy states acceptable limits, decency, but we can always opt… Read more »