4 Aug

Mint Service Helps Boost JetBlue’s Profit Margins

WRITTEN BY Ally Schmidt

Minting on its premium services

June 2014 saw JetBlue (JBLU) launch Mint, its first premium seating option. Mint features 16 flatbed seats, four of which are private suites. The Mint seats provide passengers with a number of amenities:

  • private check-in
  • private security lane
  • lie-flat beds
  • a massage function on seats
  • a welcome drink
  • FlyFi broadband connection
  • personal television console
  • amenity kits
  • food from top-rated restaurants
  • extensive wine collection
  • a departure gift

Mint Service Helps Boost JetBlue’s Profit Margins

Mint appears to exceed the services offered by many domestic first class cabins at a price well below other airliners, making it an attractive deal for corporate passengers. Mint’s initial success exceeded expectations, and JetBlue has seen improved profit margins. The company plans to expand its services gradually to the Boston market in 2016.

New bag fees implemented

Most major airlines now charge for the previously free services, including meals, pillows, blankets. and luggage. With the exception of Southwest Airlines (LUV), all major airlines impose baggage fees, including Delta Air Lines (DAL), United Continental (UAL), and American Airlines (AAL).

JetBlue (JBLU) recently announced its new fare structures—including the discontinuation of its one free checked bag service for passengers who do not pay a premium fare. However, the airline reduced its second bag fees. JetBlue still provides free snacks, nonalcoholic beverages, and onboard television.

New fare classes

JetBlue recently revamped its fares. These new fare classes features separate fees for checked bags, bonus points earned, and change/cancel fees as shown below:

  • Blue: This is the least expensive fare with no free checked bags. Passengers pay $20 and $35 for their first and second checked bags, respectively.
  • Blue Plus: This fare group includes one complimentary checked bag, and the fee for the second bag is $35.
  • Blue Flex: The highest fare for its cabins, this fare level offers two complimentary checked bags.

Apart from these fare tiers, a few flights currently offer the Mint premium seating class. These new fare classes are expected to help the company generate better revenues on offered capacity and to improve its unit revenues in future.

Investors can get exposure to airlines by investing in the iShares Transportation Average ETF (IYT), which has ~16.85% of its holdings in airline stock.

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