US Airways and Delta Air Lines raised round-trip tickets by USD10, mostly on domestic routes where it competes with discount carriers (AP/CNN, 08-Apr-2011). JetBlue and Virgin America have matched the increase. AirTran is also raising fares on some routes which is the first time in several months. Meanwhile American Airlines CEO Gerard Arpey stated: “We’re facing another fuel crisis, and crisis is not too strong of a word.”
US carriers raise fares again, in 'crisis'
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Alaska, jetBlue and Southwest cost projections; good in the short term but long term challenges loom
Just as the large three global US airlines – American, Delta and United – work to contain their unit costs, their rivals Alaska, jetBlue and Southwest are committed to keeping their respective unit costs in line as the current revenue environment in the US remains weak.
The latter three airlines face different cost dynamics in the future. Alaska is attempting to embark on a merger with Virgin America, which will inevitably create some cost pressure as the full integration gets under way. Southwest is in the middle of complex pilot and flight attendant negotiations, which makes predicting its cost performance in the near- to mid-term difficult. At some point jetBlue will also conclude a new pilot contract that will affect its cost structure.
Cost performance results for Alaska, jetBlue and Southwest for 2Q2016 and the full year look reasonably favourable, although Alaska has refined its 2016 targets slightly, driven in part by increases in performance-based pay. But its costs should remain competitive compared with its peers, and solidly lower than those of the larger network carriers.
jetBlue’s Mint a great example of innovation; next phase now tests its premium model more widely
Nearly two years ago jetBlue debuted its Mint premium product, which was a bold move for a low cost, hybrid-like North American airline. The company is the only low cost airline in the Americas that offers a dedicated premium product, and the success of Mint has even surprised jetBlue’s senior management.
In an increasingly vanilla US marketplace, largely driven by Wall Street analysyt demands for short term profits, Mint’s success has beaten jetBlue’s own expectations, and now the airline is planning a massive expansion of Mint routes from its three largest bases – New York, Boston and Fort Lauderdale. jetBlue is undertaking the spread of Mint as Alaska and Virgin America work to gain approval for their merger, then to embark on a years-long integration process of the two. During that time jetBlue will leverage its strengths to inject a premium product into some of Alaska and Virgin America’s important transcontinental markets.
There is much for jetBlue to digest as it works to roll out Mint in several additional markets. But with Mint’s current track record, jetBlue is not surprisingly remaining open-minded about its scope.