Some of the JetBlue veterans may remember the dreaded row 27 from a few years ago. On the A320s, row 27 was the very last row. It was right in front of the lavs, it didn’t recline, and it had a slightly less amount of legroom. Customers complained enough that JetBlue head David Neeleman decided to pull that row out altogether. That meant that he could spread out every row between there and the emergency exits giving 34″ pitch (a proxy for legroom), a couple inches above average. The seats in front of the exits still had an average 32″ spread. (Those couldn’t move because then they’d block the exit.)
Well today, JetBlue announced they’re going to do the same thing up in the front and it’ll be done by March 2. There will be one less row in front of the exits now and that gives customers an amazing 36″ of pitch. Instead of the 162 seats that the airline launched with, there will now be only 150.
So why are they doing this? Cost savings, of course. Here’s why:
- The FAA requires that you have one flight attendant for every 50 customers on board, so now that they’re down to 150 seats, they can get rid of one flight attendant on every flight. Since the airline is expanding, this isn’t as big of a big deal (see below for more thoughts). They will offer leave of absences to flight attendants until they’ve grown enough to need all the attendants flying again early next year.
- By removing that row and the people that would sit in it, each aircraft will weigh 904 pounds less than it does today. That means fuel savings as well as increased range (see the next bullet).
- JetBlue is notorious for having to make westbound fuel stops especially during the winter months, so this should help the airline avoid some of those stops since the plane will weigh less.
Is everyone excited now? If you’re a customer, you should be. It means you’ll have access to the best legroom in coach in the US. (Some United Economy Plus seats have this, but you have to pay extra for that.)
If you’re an investor, you’re probably a little more concerned. The airline says this will save $6 million per year even including the amount of revenue being given up by not having those seats to sell. That is surprising to me. Let’s do a little back of the envelope calculation using the airline’s third quarter earnings
just for fun here.
The press releases say they currently have up to 470 flights per day. Since they’re expanding fast, let’s round up to 500 flights per day for all of next year. That means that they will operate 182,500 flights in an average year (next year is a leap year, so it’ll be more). Right now about 80% of all aircraft in the fleet are A320s, but they tend to run longer flights, so let’s say that 65% of all flights are on A320s. That leaves 118,625 flights a year on A320s
If each row has 6 seats, that means we’ll lose 711,750 seats per year that we could have sold. Of course, the airline doesn’t always need those seats. In fact, for the first 9 months of this year they operated an 82.2% load factor and some of the long hauls during the winter take weight restrictions. Let’s say that they only would have sold those seats on 35% of their flights. That means that we’re just shy of 250,000 seats that could be sold per year. Multiply that by the average fare for the first nine months of this year of $119.63 and you get $29,801,328 in lost revenue.
Hopefully my calculations used conservative enough numbers that this is understating the actual impact, but still $30 million per year is significant. If they are going to net $6 million, that means they expect cost savings of $36 million per year at a minimum. Is that possible?
I’d say it is possible since that’s what JetBlue forecasted, but I’m skeptical. For one thing, United Airlines had this same issue when they launched Ted’s lame airline-within-an-airline concept. They could have run their A320s with 150 seats and three flight attendants but they chose 156 and four flight attendants instead. I would assume that United’s flight attendant wages are higher than JetBlue’s especially considering seniority and I would bet that JetBlue gets a revenue premium over Ted. That means United would have saved more money and lost less revenue by going with one less flight attendant yet they still decided to put those extra six seats onboard. Granted, United wouldn’t have had weight restrictions or forced fuel stops since the planes fly shorter routes, so maybe that is what pushed JetBlue over the edge here.
Let’s not forget the intangibles here too. It’s not like that fourth JetBlue flight attendant was only serving 6 people. The workload of serving 156 customers was spread out over four different people. Now, 150 customers will be served by three people. That’s a lot higher workload now, and that could result in a customer service hit. That’s worth even more to an airline like JetBlue that succeeds because of its customer service reputation.
Also, we should think about how the flight attendants feel about this. Since the airline is growing so fast, nobody will lose their job, but it will be harder for the less senior flight attendants to get desirable bids (routes). Think about it. The most desirable routes now need fewer people onboard, so some of the less senior people may be pushed to places they don’t want to go, like Pittsburgh or Nashville instead of Cancun and Aruba. The flight attendants aren’t unionized but this could be enough of a spark to get some of them interested.