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An outsider's perspective on JetBlue

An outsider's perspective on JetBlue

Old Mar 19, 2006, 5:51 pm
  #1  
nsx
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An outsider's perspective on JetBlue

I've been commuting on Southwest for years, racking up well over 500 flights. Starting last summer I have been occasionally flying B6 for transcon trips when it's convenient. Here are my thoughts, for what they're worth.

Likes:

Wider seats

Unbeatable seat pitch in back

TV (although it can cut into my ability to sleep sometimes)

Endless in flight snacks and drinks.

All of these features are the best in the industry, IMHO.


Dislikes:

Customers who buy the last seats at the highest fare get the worst seats. I prefer Southwest's system in which everyone has the same chance to get an "A" BP and thus a good seat, starting 24 hours before the flight.

Flight delays can be extreme, with no alternative due to thin service. My first B6 flight was delayed 3 hours.

TrueBlue is arguably one of the world's least attractive FF programs. I have called TrueBlue a placebo, but that's a bit unfair since I just figured out how to get an award before my oldest credits expire, and since Rapid Rewards has suffered serious devaluation.

Intriguing:

The selling process at JetBlue is straightforward, and I wonder whether or not it's a little too much so. Prices start low and creep up as the flight fills. I doubt that this is the best way to capture the consumer surplus.

I have been watching Southwest's increasingly elaborate efforts to manage yields by choking off the supply of low fares on popular flights, along with their ideosyncratic Ding offerings. I have to believe that there is a method to WN's madness, in which case the straightforward B6 approach must leave revenue on the table. WN's flights are among the least filled in the industry, improving the product significantly. (I can't be the only one who seeks out less full flights so I have more room, and B6's flights have been jam-packed recently.)

Full disclosure: I became a LUV stockholder last year when I first noticed WN's aggressive fare changes, figuring that what they took with one hand I would then get back with the other. So far this has worked out very well for me.

As to the debate about JBLU stock, I must say that as soon as I read about the maintenance "holiday" for the A320s and the ambitious explansion plans I believed JBLU would go to zero during that process. Rapid expansion requires huge amounts of capital, and I don't see how smaller planes can be as profitable as larger ones.

That said, I have no doubt that B6 will survive even if it does file Chapter 11 during the next few years. The product is superb, and so are the people. Everything else can be adjusted as necessary to beat the competition. Fuel costs may be hurting profits on long-hauls right now, but the market price on those routes must and will increase to cover the extra cost. Therefore this factor will NOT hurt B6 in the long run. The stock price crunch will come from expansion pains and the onset of maintenance costs.

BTW, I also believe that stock in satellite radio companies is worth $0, so obviously the stock market doesn't my pespective on popular companies that absorb capital like a sponge.
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Old Mar 19, 2006, 8:23 pm
  #2  
 
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Originally Posted by nsx
I've been commuting on Southwest for years, racking up well over 500 flights. Starting last summer I have been occasionally flying B6 for transcon trips when it's convenient. Here are my thoughts, for what they're worth.

Likes:

Wider seats

Unbeatable seat pitch in back

TV (although it can cut into my ability to sleep sometimes)

Endless in flight snacks and drinks.

All of these features are the best in the industry, IMHO.


Dislikes:

Customers who buy the last seats at the highest fare get the worst seats. I prefer Southwest's system in which everyone has the same chance to get an "A" BP and thus a good seat, starting 24 hours before the flight.

Flight delays can be extreme, with no alternative due to thin service. My first B6 flight was delayed 3 hours.

TrueBlue is arguably one of the world's least attractive FF programs. I have called TrueBlue a placebo, but that's a bit unfair since I just figured out how to get an award before my oldest credits expire, and since Rapid Rewards has suffered serious devaluation.

Intriguing:

The selling process at JetBlue is straightforward, and I wonder whether or not it's a little too much so. Prices start low and creep up as the flight fills. I doubt that this is the best way to capture the consumer surplus.

I have been watching Southwest's increasingly elaborate efforts to manage yields by choking off the supply of low fares on popular flights, along with their ideosyncratic Ding offerings. I have to believe that there is a method to WN's madness, in which case the straightforward B6 approach must leave revenue on the table. WN's flights are among the least filled in the industry, improving the product significantly. (I can't be the only one who seeks out less full flights so I have more room, and B6's flights have been jam-packed recently.)

Full disclosure: I became a LUV stockholder last year when I first noticed WN's aggressive fare changes, figuring that what they took with one hand I would then get back with the other. So far this has worked out very well for me.

As to the debate about JBLU stock, I must say that as soon as I read about the maintenance "holiday" for the A320s and the ambitious explansion plans I believed JBLU would go to zero during that process. Rapid expansion requires huge amounts of capital, and I don't see how smaller planes can be as profitable as larger ones.

That said, I have no doubt that B6 will survive even if it does file Chapter 11 during the next few years. The product is superb, and so are the people. Everything else can be adjusted as necessary to beat the competition. Fuel costs may be hurting profits on long-hauls right now, but the market price on those routes must and will increase to cover the extra cost. Therefore this factor will NOT hurt B6 in the long run. The stock price crunch will come from expansion pains and the onset of maintenance costs.

BTW, I also believe that stock in satellite radio companies is worth $0, so obviously the stock market doesn't my pespective on popular companies that absorb capital like a sponge.
I can't think of a good analogy, but why would you invest in any airline. The entire industry is a mess right now, so it would probably be smarter to avoid it all together.
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Old Mar 19, 2006, 8:39 pm
  #3  
 
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Originally Posted by prhs1989
I can't think of a good analogy, but why would you invest in any airline. The entire industry is a mess right now, so it would probably be smarter to avoid it all together.
Investments portfolios for many should have some holdings (however small) that are considered high risk/high gain.
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Old Mar 19, 2006, 8:52 pm
  #4  
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Originally Posted by prhs1989
I can't think of a good analogy, but why would you invest in any airline.
I did it to hedge against dramatically increased fares, since my commuting travel cost comes out of my own pocket. Absent that offsetting factor, you're right that it's a riverboat gamble.
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Old Mar 19, 2006, 9:11 pm
  #5  
 
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Originally Posted by nsx
I've been commuting on Southwest for years, racking up well over 500 flights. Starting last summer I have been occasionally flying B6 for transcon trips when it's convenient. Here are my thoughts, for what they're worth.

Likes:

Wider seats

Unbeatable seat pitch in back

TV (although it can cut into my ability to sleep sometimes)

Endless in flight snacks and drinks.

All of these features are the best in the industry, IMHO.


Dislikes:

Customers who buy the last seats at the highest fare get the worst seats. I prefer Southwest's system in which everyone has the same chance to get an "A" BP and thus a good seat, starting 24 hours before the flight.

Flight delays can be extreme, with no alternative due to thin service. My first B6 flight was delayed 3 hours.

TrueBlue is arguably one of the world's least attractive FF programs. I have called TrueBlue a placebo, but that's a bit unfair since I just figured out how to get an award before my oldest credits expire, and since Rapid Rewards has suffered serious devaluation.

Intriguing:

The selling process at JetBlue is straightforward, and I wonder whether or not it's a little too much so. Prices start low and creep up as the flight fills. I doubt that this is the best way to capture the consumer surplus.

I have been watching Southwest's increasingly elaborate efforts to manage yields by choking off the supply of low fares on popular flights, along with their ideosyncratic Ding offerings. I have to believe that there is a method to WN's madness, in which case the straightforward B6 approach must leave revenue on the table. WN's flights are among the least filled in the industry, improving the product significantly. (I can't be the only one who seeks out less full flights so I have more room, and B6's flights have been jam-packed recently.)

Full disclosure: I became a LUV stockholder last year when I first noticed WN's aggressive fare changes, figuring that what they took with one hand I would then get back with the other. So far this has worked out very well for me.

As to the debate about JBLU stock, I must say that as soon as I read about the maintenance "holiday" for the A320s and the ambitious explansion plans I believed JBLU would go to zero during that process. Rapid expansion requires huge amounts of capital, and I don't see how smaller planes can be as profitable as larger ones.

That said, I have no doubt that B6 will survive even if it does file Chapter 11 during the next few years. The product is superb, and so are the people. Everything else can be adjusted as necessary to beat the competition. Fuel costs may be hurting profits on long-hauls right now, but the market price on those routes must and will increase to cover the extra cost. Therefore this factor will NOT hurt B6 in the long run. The stock price crunch will come from expansion pains and the onset of maintenance costs.

BTW, I also believe that stock in satellite radio companies is worth $0, so obviously the stock market doesn't my pespective on popular companies that absorb capital like a sponge.
I respect this post alot, thank you for giving your opinion but not just trashing the company. Unlike others you actually have some class.
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Old Mar 20, 2006, 1:02 am
  #6  
 
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Originally Posted by prhs1989
I can't think of a good analogy, but why would you invest in any airline. The entire industry is a mess right now, so it would probably be smarter to avoid it all together.
That the industry is a mess doesn't mean you can't make money in airline stocks. Over the past year, AMR is up 200%, CAL is up 150%, LUV is up about 25%, SKYW is up about 60%, and the list goes on. Unfortunately I didn't have the foresight to invest in airline stocks a year ago, but if I could go back and do it, you better believe I would!

As nsx indirectly alluded to, Southwest's evaporating fuel hedges are going to help the entire industry. Fares are rising across the board. More good times for airline shareholders are ahead IMHO. Not such good times for passengers who have to pay for their own tickets, though.
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Old Mar 23, 2006, 6:17 pm
  #7  
nsx
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Originally Posted by nsx
Flight delays can be extreme, with no alternative due to thin service. My first B6 flight was delayed 3 hours.
After two approximately on-time flights, my 4th flight on JetBlue is shaping up to be another sleep deprivation experience. This time I had the choice of flying Southwest with a connection arriving 20 minutes earlier than JetBlue, but I decided to go with JetBlue.

Just to be sure, I phoned 1 800 JETBLUE to make sure everything was OK before I left for the airport. No problems, they said. The airport display first said on time, then a 20 minute delay, and now a 90 minute delay.

I'm beginning to think that JetBlue is below critical mass (frequency) on its routes, and will lose customers semi-permanently with delays like this.

Edited to add: final delay was 2 hours. That makes an average delay of 1.25 hours over my 4 flights. I hope to have better luck next week.

I don't claim to have the answer to flight delays, but larger airlines can often marshall resources to fix a multi-hour delay. I haven't yet seen JetBlue do anything other than roll the delays to the end of the day. Ultra-full flights may be part of the reason, not allowing two flights to be merged. Perhaps JetBlue's planned growth will help.

I'll add one more dislike to the OP: the current seat assignment system favors early booking low-fare passengers over late booking high-fare passengers. The legacies have seating preferences for high-mileage customers and sometimes upgrades for full fare. Southwest has a system that frequent customers know how to work to get a good seat virtually every time. On the Southwest forum, people debate ad infinitum which is better. But JetBlue has neither of these systems and puts its highest-paying customers in themiddle seats. That's bad business, IMHO.

I don't have a solution to propose, but I'm sure there are several viable options. Boarding speed seems not to be an issue as it would be for Southwest, because JetBlue turns in my limited experience require at least 45 minutes.

I'm a veteran of Southwest, meaning that I am patient and easy to please, but if middle seats and major flight delays were regular features, I wouldn't choose JetBlue for business in most cases. I can get an aisle seat with good pitch virtually every time on Southwest, and a nonstop on JetBlue is only superior if it actually arrives before Southwest's connecting flight.

Oh, and I'll modify my Likes list to say that JetBlue's FAs are superior in positive attitude to Southwest's, and that is a high compliment indeed. Tonight's crew had started their day much earlier with a 2-hour delay and they handled their very long day with grace.

Last edited by nsx; Mar 24, 2006 at 4:53 am
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Old Mar 24, 2006, 10:33 am
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Some people have noted that the seat assignments on jetBlue is bad the way it is set up, but in jetBlue's defense, there are seats that are blocked for check in at the airport only. With that said, if you know how to work the system, this will benifit you alot. Example: I flew IAD to SMF but missed the flight and went for a later IAD to OAK flight which was "full" but somehow score the only empty row on the whole plane and this was very very very last minute change to my plans. You cant get any more last minute than 2 hrs prior to departure. Well you can, but you know what I mean.

Last edited by SkaterJasp; Mar 24, 2006 at 10:47 am Reason: Didn't want to give out too much info
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Old Mar 26, 2006, 7:50 pm
  #9  
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One more thing to like: Points that post to your account before the plane lands!

I was lucky enough today to get an exit row window that someone had abandoned. It wasn't there 24 hours ahead, so I just delayed checking in and was surprised that this primo seat opened up for me several hours later.
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Old Mar 28, 2006, 2:28 pm
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Originally Posted by nsx
I'll add one more dislike to the OP: the current seat assignment system favors early booking low-fare passengers over late booking high-fare passengers. The legacies have seating preferences for high-mileage customers and sometimes upgrades for full fare. Southwest has a system that frequent customers know how to work to get a good seat virtually every time. On the Southwest forum, people debate ad infinitum which is better. But JetBlue has neither of these systems and puts its highest-paying customers in themiddle seats. That's bad business, IMHO.

I don't have a solution to propose, but I'm sure there are several viable options. Boarding speed seems not to be an issue as it would be for Southwest, because JetBlue turns in my limited experience require at least 45 minutes.
AirTran's system seems to work ok IMHO.
If you buy way in advance at the bargain basement prices you don't get to pick your seat until 24 hours before the flight. If on the other hand you bought at the non-bargain basement price you get to pick you seat right then.

I haven't ever gotten to bad of a seat when I buy at the bargain basement price, but then again FL's fleet is like 80% 717s so ther's only like 30 middle seats on the aircraft to begin with.
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Old Mar 29, 2006, 4:18 pm
  #11  
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[QUOTE=nsx]
I'll add one more dislike to the OP: the current seat assignment system favors early booking low-fare passengers over late booking high-fare passengers. The legacies have seating preferences for high-mileage customers and sometimes upgrades for full fare. Southwest has a system that frequent customers know how to work to get a good seat virtually every time. On the Southwest forum, people debate ad infinitum which is better. But JetBlue has neither of these systems and puts its highest-paying customers in themiddle seats. That's bad business, IMHO.
QUOTE]

I see this point here, but still beg to differ. As a regular legacy airline customer who recently flew JetBlue (and was pleased) for the first time, I would not have tried it all unless I had the combination of the early booking low fare and the seat choice (including the few extra inches of seat pitch, since I'm 6'2"). As long as JetBlue retains that combination, I'll be back at least occasionally. I don't know whether there are enough regular customers who think this way to make a difference to JetBlue, but if so it will lose them if it terminates early booking seat choice. This feature is a big advantage that JetBlue has over Southwest.
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Old Mar 29, 2006, 11:24 pm
  #12  
 
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Southwest vs Jetblue loads

Jetblue from the very early years, used a low fare, high load strategy. They had among the highest yields in the industry for a very long time. Even when they had several dozen flts on the JFK-Florida corridor they could not keep the loads below 85% to 90%. They did not want to raise the prices as they wanted to preserve the brand perception of a LCC ("value").

Southwest has not had to focus on loads but played with fares and yeilds to succeed. Frequency has been important to them from their inception, which means load factors are secondary as long as the route is profitable.

The current ligher loads on Southwest are only viable because of their fuel hedges. Jetblue made some wrong bets (senior executives have confessed to not using fuel hedges at the right time). WN can fly a 60% flt at the same price point profitably that B6 cannot on identical routes due to significantl lower costs. Wait another 2 years and WN will be in the same dilemma that B6 is in.

To maximize RASM, B6 pushes loads to the max by offering real low fares on a few seats. Alternate strategy, is to minimize the number of low fare seats and focus on more "business" passengers.

Southwest will not enter routes that require one or two round trips a day. B6 starts most new routes with 1 or 2 round trips a day. Southwest believes in high-frequency, stimulatory effect on markets. B6 seems to focus on underserved cities/markets.

As you can see with recent schedule changes, Jetblue is slowly building up frequency and connecting its network stronger. Service is being launched between city pairs that were not previously served by non-stop flts.

Jetblue is still only a sixth of Southwest. It will be much harder for Jetblue to expand nationally unless legacy carriers retreat even more to international routes.
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Old Mar 29, 2006, 11:27 pm
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Jetblue seating options

I too agree that penalizing, high paying, business passengers by offering them middle row seats is not a right long-term strategy. B6 needs to find some creative solution that is still simple enough for everyone. Maybe an elite program with a few reserved seats is OK - though so far that does not seem likely.
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Old Mar 31, 2006, 9:42 am
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Originally Posted by enjoystravel
The current ligher loads on Southwest are only viable because of their fuel hedges. Jetblue made some wrong bets (senior executives have confessed to not using fuel hedges at the right time). WN can fly a 60% flt at the same price point profitably that B6 cannot on identical routes due to significantl lower costs. Wait another 2 years and WN will be in the same dilemma that B6 is in.
On one hand I have to argue that once the fuel hedges expire (or prices go down) that WN will be worse off than B6 because they have been around longer and therefore they have pilots with higher senority which requires more pay.
However....
The Higher pay of the senior pilots at WN may be offset by the fact that they use the more fuel effecient 737 jets, and the fact that they only have a single type of jet vs, B6's 2 types so far.

Who knows how these will factor in, but they are pretty huge factors.
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Old Apr 8, 2006, 2:40 pm
  #15  
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I am still waiting to fly on my first B6 flight. I think they, B6, have done everything *almost* right.

What I want to see from B6:

More non-stop short-haul flights. If they are able to pull this off, and keep fares at a reasonable level, they will make money. Lets see, WN RT OAK - SLC $200 + or B6 RT OAK - JFK $200 +. Who makes more money? WN does of course

Fill in their Market before expanding. How come B6 only wants to fly 1 or 2 flights before moving on? I mean, they could dedicate 1 plane to fly LAX - OAK - SLC - LAX - OAK - SLC - LAX in one day. Instead, they take the same plane and might go OAK - JFK - BOS - JFK. More flights, more money.

I think B6 could take on WN and AS as long as they dont try to beat them on price too much. I mean, Dave knows how to price a market. Who doesnt remember $29 fares SLC - OAK/LAX 10 years ago. B6 could also take on markets not served by WN. So for me, SJC - SLC 3x daily would be a great start. Or SLC/OAK - SNA/LGB 3 - 4 x a day. And maybe get rid of seat assignments for shorthaul flights.

Looking forward to my first flight on B6 now that WN is giving me the royal **** .
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