The game plan for London follows how JetBlue rolled out its premium service MINT five years ago, when it drove prices down by 50 percent, President/COO Joanna Geraghty told attendees at World Aviation Festival.
JetBlue’s first flight to London – which is likely to be closely followed by a landing in Paris – won’t takeoff until 2021, but the economy-focused carrier has been widely communicating a plan based on what’s worked for it before: namely, building brand affinity and solid customer service at a lower price than the competition.
In addition, JetBlue President and COO Joanna Geraghty, speaking at September’s World Aviation Festival in London, also touted the existing breadth and depth of the carrier’s 50 airline partners, including Emirates and Icelandair, as sources of a stronger foundation with which to build on.
“We very much view having a strategy where JetBlue’s brand and experience can be carried through our partner carriers across the world as an important part of our model,” Geraghty told Bloomberg TV's Guy Johnson on a panel she shared with Emirates CEO Sir Tim Clark, along with ultra low-cost carrier easyJet’s CEO Johan Lundgren. “We will have partners as we operate into London, so we’ll be more than ready.”
JetBlue’s Opportunity to Disrupt
As an airline primarily focused on leisure and economy travelers that’s making the expansion from domestic to European service, Geraghty highlighted the growth of its 5-year-old business flier offering, MINT, as offering a clue as to how it will approach London.
“We think there's plenty of room for competition in the London market,” Geraghty said, pointing at American Airlines, Delta Air Lines, United Airlines, and their joint venture partners, as well as low-cost carriers like Norwegian Air.
“What has made JetBlue so successful, is that we have been able to disrupt the traditional legacy model, she contended. “We love to come into markets with high fares. But we think there's opportunity for us to disrupt pricing, but also on product. If you look at what we intend to do in London, it will reflect what we did for MINT transcontinental in the United States where we came in, where we drove prices down by 50 percent, introduced a lie-flat product, and ultimately forced the competition to up their game.
Calling for a Tech Revolution
Demand has been strong throughout the year though “it has been choppy at times,” Geraghty said during the panel session. During the company’s Q2 earnings call with analysts in August, she described JetBlue’s “revenue framework as one of the momentum.” The carrier expects between $350 million and $400 million in revenue by 2020, which Geraghty believes will come from a number of network changes.
“We're a 5 percent player in the United States,” she said on the World Aviation Fest panel. “There is a lot of headroom for growth. Our growth right now is in the mid-to-high single digits, and we intend to keep it within that range.”
She accepted that JetBlue has been under real pressure associated with growth from some of the A320neo from Airbus, which the airline previously blamed on lowering its revenue forecast projections, as Skift reported.
Being unable to break into “constrained airport slots” is another challenge.
But as with most airlines, the most persistent challenge is simply meeting ever-expanding technology demands designed to improve airline retailing.
“We have an open architecture platform, where you essentially plug into sort of what JetBlue offers,” Geraghty said. “The alliances present a level of complexity, whether it's IT systems and investments that you need to make in order for you to be part of an alliance.
“There is a future down the road where, with technology to support it, you could actually have an even broader network if you weren't so dependent on some of the systems that power things behind the scenes,” she added. “Right now, if you look at the systems, it can be rather clunky in terms of how transfers are handled. But I think technology will support a revolution in this area at some point.”
As ancillaries become more important, getting the most seamless technology systems in place is another race all airlines are competing in.
For JetBlue, the primary driver behind JetBlue’s ancillary growth is clearly baggage fees, which rose 15 percent over Q2 2018. Change fees are also continuing to grow into the double-digits.
Elsewhere, JetBlue is attempting to advance its loyalty program, with membership growing at a rate of 24 percent annually, thanks in large part to promotions from its affiliate rewards card partner Barclays.
But it’s the role of tech that Geraghty is looking to in order to keep generating the revenue momentum while keeping prices lower than competitors. Maintaining that balance involves constant refining of JetBlue’s ancillary planning, which is also what underpins her confidence about extending MINT beyond the Americas.
“Continuous pricing is the other piece of the actual fare itself – and the question we face is: how do you price it in a way that reflects consumer demand, as opposed to just closing out the inventory buckets and working your way up the ladder?” Geraghty told the panel. “And there's a lot of technologies that are getting closer to figuring out that answer.”