JetBlue has bucked industry trends in 2015 by posting growing passenger unit revenues for the first nine months of the year, while other US airlines posted sharp declines, driven by foreign exchange pressure and lower fuel surcharges. In addition to those particular challenges, pockets of soft domestic pricing have also pressured passenger unit revenues for American, Delta and United.
But JetBlue has provided guidance to a decline in passenger unit revenues of 2% to 3% in 4Q2015, which initially, and unsurprisingly, put pressure on the airline’s stock price. The company feels confident that it can continue to drive a unit revenue premium to the industry in 2016, underpinned by its new fare families product, and a new branded credit card agreement.
Most US airlines believe they can return to a flat or positive passenger unit revenue trajectory by mid-2016. If that occurs, JetBlue’s passenger unit revenue outperformance versus the industry could possibly shrink. There is also the potential that JetBlue could face some pricing pressure in 2016 from larger airlines that are opting to discount certain fares as fuel prices remain far below historic highs.
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