When New York-based JetBlue Airways unveiled plans in 2013 for a premium cabin after operating a single class for years, the industry was sceptical.
Why would the airline – criticised by industry analysts for its then-lagging returns – invest in a premium product that would look more at home on higher-cost, mainline rivals?
JetBlue chief executive Robin Hayes, who was president at the carrier when it announced plans for the premium cabin, acknowledged during an investors presentation on 8 March the airline was “very nervous” when it debuted Mint.
The airline had justified the introduction of Mint to boost margins on US transcontinental routes, which were behind rivals selling premium seats up front.
Almost two years after Mint’s debut, the airline could not be more pleased. Mint has “transformed” the airline’s revenue performance on transcontinental routes, said Hayes.
JetBlue now offers Mint on flights from New York John F Kennedy to San Francisco and Los Angeles. In late March, it will offer the premium cabin on flights from Boston to San Francisco before rolling it out on flights from Boston to Los Angeles.
“When we set out to create Mint, the idea was to offer a better product at a lower price and I think we've been extremely successful in doing that,” said Hayes in January during the airline’s earnings call.
Offered on some of the airline’s Airbus A321s, Mint comprises 16 seats up front – of which four are enclosed “mini suites”. The airline has been so encouraged by Mint’s success it recently decided to convert an additional incoming A321 to the Mint configuration, for six such aircraft that it will take delivery of in 2016. JetBlue operates 11 A321s with the Mint cabin.
Besides cities on the US West Coast, JetBlue is offering Mint on some flights to the Caribbean to capture premium passengers.
Mint made JetBlue the fourth US carrier to offer a lie-flat seat on US transcontinental routes – a lucrative network opportunity with the corporate travel demand for the flights. JetBlue is not the first carrier to operate a sub-fleet of aircraft for this market.
United Airlines, for example, operates a dedicated fleet of Boeing 757s on its transcontinental routes with lie-flat seats in the premium cabin.
While JetBlue has been pleased with what Mint has done for transcontinental flights, rival Virgin America is feeling the squeeze on yields on the routes. The Burlingame, California-based carrier has a substantial portion of its route network serving transcontinental flights.
In recent quarters, the airline has seen impacts on yields on the routes JetBlue is offering Mint on, pricing Mint fares lower than other first class fares in the market. Virgin America offers a first class cabin, albeit without lie-flat seats.
Virgin America chief financial officer Peter Hunt said in December that unlike mainline rivals, the carrier does not upgrade passengers into first class, so it took the worst hit from JetBlue’s discounting of the premium segment.
Hunt said the airline is preparing for a similar impact on Boston transcontinental routes when Mint is introduced there.
Virgin America’s chief executive David Cush has reiterated time and again the airline has no plans to offer a “sub fleet” with a premium cabin on board, citing cost complexities. But with the airline the only carrier not offering a lie-flat seat on US transcontinental routes, Virgin America might have to rethink its stance.
Cush said in March the airline will launch a cabin retrofit in the next 18 months, giving an opportunity to make changes to its premium cabin. "We are actively thinking about what to do with first class,” he said.
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Source: Cirium Dashboard
