Just a quick note before I get into this post. I, like all of you, saw the crash of American 5342 last night, and I am sure there will be much to say about this. As always, I’m not here to break news but rather analyze it over time. So I will just run the scheduled post below and will talk about this more in the future.
In case you missed it, this has not been a good week for JetBlue. The airline reported earnings and disappointing guidance which saw shares immediately tumble by more than a quarter. The airline posted a breakeven operating margin and a net loss, but it’s the guidance that really grabbed Wall St. The airline won’t grow this year, and unit costs will climb. Unit revenues will climb to some extent as well, but it needs to really boost those revenues further if it wants to get out of this rut and into the realm of sustainable profitability.
Part of this new revenue plan was rolled out just before earnings when JetBlue delivered on the refresh of its extra legroom product. Please welcome EvenMore. This is the product that used to be Even More Legroom, then became Even More Space, and now has done a two-fer, eliminating both the word “Space” and the literal space between “Even” and “More. Is this going to finally give JetBlue the product it wants? You can decide… if you pay extra for it when you fly.
On April 1, 2008, JetBlue first began charging for extra legroom seating in what it called “Even More Legroom.” That was what you got, and it was really just simple math on JetBlue’s part. I’ll include this image from the post I wrote way back then.
JetBlue had already removed two rows from its A320s, so it had a lot more legroom in front of the exit row than behind. So why not make some money on that, right? JetBlue moved seats around and created a standard of 34 inches and then gave the seats up front and the exit rows 38 inches that could be sold.
The price was modest, starting at $10 to $20 back in the day, but there was no real risk here.
Over time, JetBlue realized there was more money to be made. It had created “Even More Speed” for a faster ground experience, and it lumped that in as a bundle that could be bought with Even More Legroom. Eventually it lumped everything together into the Even More Space product which launched on June 15, 2011. This included:
- priority security (where it existed)
- priority boarding
- extra legroom on board
This together enabled JetBlue to charge more for the upgrade. It also made for a more appealing benefit to those Mosaic travelers, elites in JetBlue’s loyalty program, who got it for free. But, JetBlue decided there was more money being left on the table, so it has now created EvenMore.
EvenMore has all the stuff mentioned above, but it also has:
- dedicated overhead bins (which I thought existed before but JetBlue tells me it did not)
- free booze (up to 3 drinks per flight)
- a “premium” snack which right now is a bag of little Tate’s cookies
- complimentary headphones upon request
This cabin will now shrink, only being in the rows at the front (or right behind Mint on Mint-equipped aircraft). Anything further back, including exit rows, will now be “extra legroom” seats which will be straight upsells without extra benefits, similar to the current preferred seating. Presumably this is because they need to make service delivery easier. Flight attendants will know that the rows at the front get the freebies instead of having to go row by row through the cabin.
Mosaic elites will get to sit in these seats at the time of booking for top tiers and at the time of check-in for the lowly Mosaic 1s, so it remains an important benefit and incentive for people to maintain elite status. But, above all, this is really about trying to pretty up the EvenMore offering so people will pay more for it. And the airline is trying to push it harder in the initial purchase decision. When you do a search, you now get four colors. Apparently, EvenMore is orange. (Was Even More Space orange? Not sure if this is different.)
When someone selects EvenMore, they pay the base fare plus the ancillary buy-up to EvenMore. This makes it like Spirit and Frontier which have created a bundle, but the ancillary piece still isn’t subject to the federal excise tax.
The question is now, just how much JetBlue can get for this? Am I really willing to nearly double the price I pay for legroom and booze as shown in the example? No way, especially when JetBlue’s regular legroom remains better than average. I am not tall. Tall people might feel differently.
I wish I had the foresight to have done a bunch of searches to see how pricing has changed since the changeover, but I didn’t. A quick search of current pricing, however, shows that so far it looks like longer hauls are coming in around a $150 bump above the standard Blue fare with Europe not much more than that. Mid-hauls are around $75 to $125 while the poor schmuck flying JFK to Hartford on a Tuesday night can pay $30 for 10 minutes of legroom in the air.
These are a far cry from the $20 that JetBlue charged back in the day for legroom from Long Beach to JFK, but they are clearly a work in progress. Over time, revenue management systems will learn about demand and be able to adjust pricing to better fit what people are willing to pay. I’m not sure if they are using variable pricing or dynamic pricing right now — I’d bet on variable at an airline like JetBlue — but eventually I expect there will be more pricepoints that can be applied as demand develops. This has to squeeze more money out of travelers or it won’t have been worth it.
Meanwhile, this product will act a bridge between regular coach and the new domestic-style First Class that’s coming (or Mint where it already exists). It’s going to be a very busy airplane on the inside with a lot of different options, especially for a leisure-focused airline.
I don’t find this improved version of Even More Space to be particularly compelling personally. The free drinks and premium snack are fine and all, but it’s not going to change what cabin I pick. But for JetBlue, it has the booze onboard, and it’s not hard to stock another snack. If this does get some people to pay more, then it’ll have been worth the effort.
23 comments on “JetBlue’s EvenMore Loses the Space — Twice — to Boost Desperately-Needed Revenue”
JetBlue is headed for a series of developments that will ultimately lead to a merger, where the company will either be swallowed whole or divided up in parts. The airline has never operated efficiently, and can blame ATC all it wants, but the reality is that it never has invested properly in the kind of software and operational resources that could overcome some of those challenges.
While rumors abound that United and JetBlue are in some sort of discussion, the more likely scenario is an American Airlines partnership that leads to B6 entering OW, and eventually, to be acquired by AA. Even with gangster, rogue administration in Washington that would waive any merger, the reality is UA acquiring B6 would require major divestiture of JFK slots and that would make the price tag less attractive.
An alternative scenario is AA and UA splitting up B6, with AA getting JFK, BOS, and UA getting FLL and MCO.
Why do you think slot divestitures would kill a UA/B6 merger but not a B6/AA one? My guess is even the latter could be large enough to negate much of the value of B6.
The major problem is that the # of required a lot divestitures is unpredictable – you have no way of knowing what regulators and courts will require without actually attempting the merger. This would be really risky.
No divestitures needed in the NYC market between B6 and AA, who are much smaller, separately, and combined relative to DL and UA. Divestitures would be needed in South Florida, between MIA (AA) and FLL (B6). I doubt AA has any interest in a FLL hub or focus city anyway.
That’s an overly-confident analysis. The competitive landscape is complex enough that antitrust economists will be able to make the case both ways, and other airlines will make a case for why more slots need to be made available. It would be hashed out through the merger review process, and there is substantial uncertainty in that.
Remember that American thought they were fully within-bounds with the Northeast Alliance, and many legal and antitrust experts agreed, but the court decided otherwise.
Alex,
I can offer a possible answer. From what I understand, United + JetBlue would have a disproportionately large market share in the entire New York metro area if United acquired all of JetBlue’s JFK slots and kept its own holdings at Newark. An American/JetBlue combination, if it were to occur, would create a more balanced overall market share scenario in New York. One divestiture I can easily see occurring would be for United to acquire enough slots at JFK to re-establish the presence it gave up there. And maybe that’s what it has in mind. Of course, I don’t know any of this for certain.
The UA/B6 market share issue is partially true – a combined B6/UA would be about 60% larger than Delta in the NYC market.
But at the same timed, there would be limits on who could take up any vacated JFK slots because of terminal limitations – JetBlue owns T5 and is a shareholder in the consortium building the new T6, so unless a judge ordered B6 to open those to competitors, or the slot divesture was big enough to force JetBlue to sell part or all of those, everyone is limited to what they could fit into T4 (DL will get a few new gates, and existing international carriers might get a move to T1 when the second phase is done) or whatever AA could fit into T8 (and risk cannibalizing some connecting traffic from PHL.)
Frontier might add some if they have the gate space, Spirit is broke and distracted, and I don’t see anyone else (Sun Country, Allegiant, Avelo, Breeze) being interested in many slots, if any. And Southwest is VERY distracted and recently got their butts handed to them at EWR, so I don’t see them being that interested. So the result would be DL growing some, some released slots being taken up by international carriers… and then the rest sitting unused, the only outcome for domestic competition worse than increased concentration from a combined B6/UA.
And there’s the problem that the NYC market is fragmented – there’s a limit to how far people to the north and east of NYC are willing to drive to go to EWR, so reduction of B6/UA service would likely drive up prices at JFK and LGA anyway (and benefit ISP somewhat.)
A better solution in a B6/UA scenario would be for more competition at EWR by forcing UA to give up timings (the non-slot slots) and perhaps some terminal space. Right now the north/central NJ market has less competition than most of the NYC market until you get close enough that PHL comes into play.
To me, I’d suggest a strong codeshare agreement between B6 and UA with UA marketing the codeshares extensively, but stopping short of an outright merger or NEA-ish agreement (no price-setting or . That would give UA an effective presence at JFK and help with Florida.
To be sure, an AA/B6 merger would be much easier to get approved – there’s a little overlap at JFK, but not that much that a few minor slot divestments wouldn’t cure it. They could even throw in a guarantee of counter/gate space at T5 or the new T6 for a new JFK entrant to sweeten the pot a little more, and perhaps a couple of slots at LGA too (AA and B6 overlap to MCO.)
But I just don’t think the merger would be that worthwhile for either airline. AA is the lowest-rated of the Big 3 airlines for customer experience, so JetBlue’s “premium leisure” travelers would be in play immediately, making Delta happy. I just don’t think AA has the management to take the best parts of the JetBlue passenger experience and combine it with their company.
As with UA, JetBlue would be better off with a good codeshare with AA at JFK, with none of the illegalities of the NEA, and moving on from there.
CraigTPA,
In light of what happened at DCA, I have a rhetorical question: What’s more important – customer experience – or safety? I realize this is a false dichotomy, but I think I might be able to figure out how the sixty-four people on the CRJ-700 who lost their lives would respond.
Based on my experience living in the Phoenix area, the “customer experience” on American isn’t really as different from its competitors as many airline blog comments portray it to be. The main difference is the lack of in-seat TVs on narrowbody aircraft. I may be wrong, but I think the number of people who comment on airline blogs probably represents fewer than 2 to 3% of the traveling public, if that. “Customer experience” and market share in New York is simply another false dichotomy, IMHO.
I do believe that there was a bit of orange associated with Even More Space. Not necessarily in the marketing of it, but I’m pretty sure that was the seat trim color.
I seem to recall seeing Even More Space on my JFK-SoCal transcons last year being in the $120-130 range each way. Looking this morning at potential JFK-LAX flights in September for SpotLAX and Cranky Dorkfest (shameless plug), the premium is $180 across the board. That’s over an 85% premium on the Blue fare and over a 140% premium on the Blue Basic fare. Get a few people per flight to spring for the upgrade and it’s probably worth it.
Thanks Ben for the data points!
Legacy carrier seat maps w/ availability and prices are a mess so B6 isn’t doing anything that the big boys haven’t already done.
WN is going down the same path or at least the extra legroom path because squeezing row pitch for most people in order for a few to be willing to buy more space is a formula that is proven to work from a financial standpoint. There will be pushback as WN rolls out its pricing and reservations for its product just as there is with B6. It is always hard to take something away from some people who have had it.
While there will continue to be rumors about B6′ future alongside the desire for other carriers to fix their strategic failures by trying to gain assets from financially weaker carriers in the industry, all B6 has said is that they are looking at partnerships but intends to rebuild the company as a standalone premium leisure airline which is what they set out to do a quarter century ago, before they had management that took down a million strategies that distracted from that focus and often didn’t work.
While investors are restless and want results faster, B6 deserves to have the time to see if its strategies work just as WN negotiated with Elliott. Unlike NK, neither B6 or WN are in bankruptcy reorganization and control their own futures.
It would make sense for B6 to join OW and be aquired by Alaska. It would create an airline with the scale to effectively compete with the big 4. Alaska has sound management, industry leading profit margins, and lacks an east coast focus to its network. I would think JetBlue workers would be for it for the added stability of working for a larger and a better managed airline.
oneworld membership in itself is nearly irrelevant commercially. The big prize would be participation in a transatlantic joint venture, but it’s extremely unlikely that JetBlue or Alaska will ever be allowed into Atlantic Joint Business (with AA, BA, Iberia, Finnair, and Aer Lingus).
Unfortunately for Alaska and JetBlue, the most desirable European partners have already been “asked to the dance”, and already have a US-based airline in their JV. The large European carriers that aren’t already in a transatlantic JV fall into 2 buckets:
– Low-cost carriers (e.g. Ryanair, EasyJet, Wizz, Jet2). In theory, a partnership with one of these airlines could extend the B6 or AS network from a handful of European gateways to provide service to a broad range of destinations. In practice, there are many obstacles. The LCC offering is a mismatch from B6/AS customer expectations, and the LCCs aren’t really operationally set up to provide a good experience to connecting passengers. Also, none of the mentioned LCCs are currently interested in flying transatlantic on their own metal, which would probably make a JV difficult or impossible to arrange.
– Airlines with bad hub geography (e.g. Turkish, TAP Air Portugal). Turkish is pretty straightforward – you need to overfly most of Europe to get there, so it doesn’t work as a connecting point for European destinations. You could sell some onward connections from IST (e.g. to India), Turkish already serves most of the big metros in the US directly, and has the codeshare with United to connect the rest. TAP Air Portugal is slightly more interesting, at least for JetBlue, because it could plausibly open up some reasonable connections to Southern Europe. JFK-LIS-FCO is only ~5.5% longer than the direct routing, and FLL-LIS-FCO is only ~2.2% longer. It isn’t well-situated for northern Europe, but B6 can serve the biggest destinations (London, Paris) directly, and southern Europe is probably a big source of demand for a premium leisure-focused airline anyway.
A little off topic, but interesting to see B6 is offering a LAX-EWR flight for $139 in Blue Basic in the example in the post. Not sure what date that flight is for (might be a ways into the future), but I’m surprised the fare is that low.
I’d be really curious to a see a comparison of what JetBlue is earning for basic economy fares vs its competitors on the same routes… I haven’t seen any numbers or done the analysis, but my hunch is that B6 is having to offer lower fares to fill its planes.
Given the stock price of JetBlue, it could be acquired with the loose change behind the cushions in the United crew lounge at EWR. But the fleet is a mess with at least a dozen planes out of service for at least the next couple of years and no firm timeline how the engine repairs will progress.
Most of JetBlue’s fleet is unimpressive with by far the largest example being non-neo A320’s, some pretty old. They don’t get their dozen or so A321XLR’s until 2030, so that doesn’t help a potential buyer jump to the front that line.
The only thing JetBlue has going for it is their A220 order. Not the fleet, mind you. Just the order. It’s still not big enough to matter and initially has to replace their EMB-190’s. But down the line, the A220’s coming could go a long way to replace United’s 737-700’s and A319’s, if UA has actually decided to keep a plane that small in its fleet.
UA buying JetBlue would be the most likely and expeditious way of getting back to JFK, which it very much wants to do.
But JFK will never generate the kind of money that an ORD or ATL or DFW does because much like LAX, it’s not geographically suited for connectivity. And, like LAX, relies on a large population to provide originating point-to-point service.
All that said, UA has never been able to flesh out its north-south operation on the East Coast for a variety of reasons and is really barely more than an asterisk compared to AA and DL.
It’s possible UA could buy B6 for its fleet and JFK facilities as a stopgap. UA seems to be planning for a life without the 737 MAX 10, so it could buy B6 and gradually replace its non-neo A320’s and A321’s with MAX 10’s as time went on.
Avgeeks love the A220, but I’ve heard that airlines that have seriously evaluated it have been disappointed on multiple dimensions: maintenance cost, reliability, actual range in practice. Not clear that an A220 order is a particularly valuable asset.
Re the third to last paragraph, what is the difference between dynamic and variable pricing?
Bill – So variable pricing is where you have fixed rates that change by time of day, day of week, season, etc. Maybe the 5pm flight from JFK to LAX on a Sunday during spring break is one thing, but a Tuesday at noon in January is something else. But they’re fixed rates. Dynamic pricing is where the system is constantly optimizing and looking for the right price to offer based on a variety of factors including demand that has already been booked, etc. So it’s more sophisticated and for the traveler, exceedingly obnoxious.
Maybe I’m wrong, but it seems like maximizing revenue seems to be the mantra among airline pundits and other commentators lately. In the not-too-distant past, it seems like low cost was the prime directive. It wasn’t that long ago that the ULCCs were the darlings of the industry. Now it’s the legacies that are the chosen ones. Even American, with its financial struggles, is more reliably profitable than the ULCCs.
Having written the above, it’s interesting that Allegiant seems to have made the ULCC model work better than its peers.
JetBlue is still ignoring massive amounts of potential revenue with 34″ pitch in “regular” economy. They aren’t monetizing this in any meaningful way.
In addition, 34″ pitch significantly devalues the “evenmore” buy up opportunity because, ironically, it isn’t that much more space. I am 6’2 and purchase extra leg room on about 75% of my flights (basically every time unless it’s egregiously priced) and I have NEVER purchased extra space on JetBlue because I simply don’t feel like it.
I’ve VERY hopeful that Cranky can “crank” out a scenario or two in which they reduce pitch to say, 31 and see how many extra seats this would provide, all other things being equal.
Bill – JetBlue doesn’t do 34″ pitch anymore. That image is the pre-refresh where they went back to 162 seats and have 32″ of pitch. It’s still better than average by any measure, but it’s more sensisble.
I know that Cranky has already responded in an earlier post about B6 ignoring middle America but to ignore a population base of over 85 million people is just nuts. So we midwesterners could care less about B6’s survival. They’re irrelevant.