JetBlue’s Plan to Beat Alaska-Virgin America on the West Coast
Joe Cortez March 22, 2018
After losing out on the opportunity to purchase Virgin America, east coast airline JetBlue decided to compete against them through expanding their premium cabin product, Mint. The plan seems to be working: JetBlue is cruising towards one of their most profitable years, while Alaska is trying to recover from their purchase.
Can a transcontinental premium product make all the difference in airline competition? If those two airlines are JetBlue and Alaska Airlines, it might be the key to profitability. An editorial by The Motley Fool credits JetBlue’s Mint premium product as the reason their airline is doing better than Alaska on the west coast.
JetBlue originally launched Mint in 2014 as their best service on the longest routes from New York to the west coast. While originally planned as an alternative for business flyers and the only premium offerings in JetBlue’s fleet, the product was an instant success. As a result, the carrier added it to more routes, including from Boston and Florida to the west coast, as well as seasonally to the Bahamas.
After the carrier lost the Virgin America bidding war to Alaska, they continued to amp up the pressure by targeting their most loyal flyers in advertising campaigns. At one point, JetBlue gave away 500 free seats to those who never flew the carrier.
Two years after the purchase, JetBlue appears to be on the winning side of the fare war. While they have expanded service and Mint premium cabin seats to transcontinental flights, Alaska is starting to pull back on competing routes, such as those between Fort Lauderdale and San Francisco. In addition, Alaska is not as profitable as JetBlue, blaming the transcontinental divide for the lack of profitability.
“Alaska Air is finally starting to retreat in the face of JetBlue’s assault,” Adam Levine-Weinberg writes for The Motley Fool. “Given that there aren’t many other competitors on these two routes, there is a pretty clear link between JetBlue’s upgrade to Mint service and Alaska Air’s recent struggles on California transcontinental routes.”
As a result of the shifts, the analyst believes JetBlue will continue to grow on the west coast, while Alaska will be forced to make a decision. The options include investing in premium-cabin service, or retreat on competing routes with JetBlue.
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Alaska to retreating from Bay Area will make all hell break loose given that the only other dominant carrier is United. And even today there is still a pretty big handful of people who refuse to go with UA. LAX on the other hand is different, since it serves as a hub for WN, AA, UA, DL, NK, Allegiant. Flyers there will easily find another option, making it ever so hard for AS to regain market share if they downsize.
I agree with diver858.
Out of ~150 seats on a modern narrow-body aircraft, the F cabin is only 12-16 seats, difficult to understand how that would be the determining factor. Further, B6 is deeply discounting Mint, appears to be a loss leader. Perhaps a better explanation is that routes like SFO-FLL are simply too low yield, AS has more profitable options for LVX aircraft.