If one was to believe that Wall Street doesn’t ruin everything, then I’d argue that, that person was among the most naive individuals on the planet. Companies that trade publically are under extreme pressure to produce profitable returns in order to increase shareholders wealth, and when companies are not preforming to the same level of their peers they find resourceful ways to increase returns and increase profitability. Today, the Wall Street victim is JetBlue, and as a gift from the sharks our knees will suffer and checkbooks will bleed as JetBlue announces policy reforms to an used-to-be flyer friendly airline.
In order to increase profitability and to return more to shareholders, JetBlue announced that they will be reducing their seat pitch on their A320 fleet from 34 inches in economy. JetBlue’s A320 seat pitch is currently 2-3 inches above the U.S. commercial Aerospace average and has been a long part of their advertising campaign. With a low seat density of 150 seats, including 42 Even More Space seats and 108 standard economy seats, JetBlue has been Best in Class when it comes to leg room. Yet, by reducing seat pitch throughout the plane, JetBlue plans to add an additional 15 seats to their current fleet to bring new capacity to 165 seats on each A320. The additional seats will also require an additional flight attendant per flight as the FAA mandates a 50:1 ratio. Can the profit of the extra 15 seats make up for the cost of the extra FA? That will soon be discovered.
In addition to cramming more passengers and seats onto each plane, JetBlue also announced to shareholders that they will start collecting baggage fees for the first time on the first bag each passenger checks with the airline. Currently the airline only collects luggage fees for the 2nd bag. While introducing new baggage fees, JetBlue will roll out a three tier pricing system for passengers with different fares offering different perks. The system will be similar to those fares currently offered by airlines such as American Airlines, Frontier, and Southwest. Each fare class will offer different perks, with the lowest fare class being the most basic/restrictive and will only include the cost of carryon luggage. The move by JetBlue will leave Southwest as the only domestic airline that does not charge to check a bag.
More details about new cabin configuration and bag fees will be available soon, but I would expect seat pitch to be reduced to 32 inches and JetBlue to follow the industry trend to charge $25 per checked bag.
Today announcements reminds us all that the race to the bottom is not over. JetBlue, I suggest you consider changing your corporate slogan from You Above All to Wall Street Above All.