LCC jetBlue sets ambitious cost targets; quiets critics over staying power of its business model
Since 2014 jetBlue Airways has delivered marked revenue and margin improvement through several new revenue initiatives, including a new fare segmentation scheme and a co-branded credit card deal. During 2015 the airline delivered a revenue unit performance that outperformed the US industry, which itself largely struggled to obtain positive results in that metric.
But jetBlue admits that during that period it was lagging behind the US industry in cost performance; and although the airline has made progress in improving its unit costs, jetBlue holds the view that it has more to accomplish in order to maintain a competitive cost structure for delivering its low fare, medium frills product.
The company has outlined plans to keep its cost growth from flat to 1% from 2018 to 2020, and aims to shed USD250 million to USD300 million through savings by 2020 – in maintenance, corporate, distribution and airport operations. However, the airline is cautioning that certain elements – including a seat densification programme and aircraft delivery schedules – are creating some choppiness in its mid-term unit cost forecast.
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