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JetBlue’s position in the industry
JetBlue Airways (JBLU) operates a hybrid business model—refer to Must-know: Airline business models for more details on models. It offers point-to-point service like most low-cost carriers and combines differentiated product offerings, including various in-flight facilities that are generally not provided by other low-cost carriers. JetBlue caters to the niche market comprising customers that it defines as “underserved customers”—those looking for better features and benefits that aren’t provided by low-cost carriers and at a reasonable price that aren’t provided by network carriers.
JetBlue’s RASM and CASM
JetBlue’s stage length–adjusted revenue per available seat mile (or RASM) and cost per available seat mile (or CASM) are higher than most of its low-cost peers and closer to network carriers such as Delta Air Lines (DAL), United Continental Holdings (UAL), and American Airlines Group (AAL). See the chart above. Stage-length is the average distance flown per aircraft departure. RASM and CASM vary according to the stage-length. As the stage-length increases, the fixed costs decrease as it’s spread across greater number of miles. So, stage length—adjusted RASM and CASM are appropriate to compare airlines that fly different distances.
The additional amenities provided to the customers increases the CASM for the airline but also enables it to increase its RASM by charging a slightly higher fare compared to other low-cost carriers. JetBlue’s average passenger fare was $163.19 in 2013 compared to Southwest Airlines’ (LUV) $154.72.
JetBlue’s customer amenities
JetBlue’s core competency is its differentiated products and services. It believes that competitive fares and quality air travel need not be mutually exclusive. Below is a list of some of JetBlue’s customer amenities.
© 2013 Market Realist, Inc.