JetBlue Airways recently ran a promotion for $10 fares from JFK airport, to the 10 destinations they initially served from there. The fares were $10 each way, excluding taxes, from JFK to FLL, MCO, TPA, PBI, RSW, BUF, ROC, OAK, BTV, and SLC. Notice how 5 of those airports are in Florida? Well I'll come to that later. First of all, the tickets had to be purchased before 11:59 pm EST on Monday March 8th for travel on Tuesday or Wednesday, March 9th and 10th. I personally love the idea. By selling tickets at a loss for just one day, they will recoup it ten times over with the good press. The sale also coincides with Jetblue's reputation as an airline that offers great bargains, and cares about its customers. Therein, I'd like to point out why it doesn't hurt them economically as well.
First of all, the sale only runs for one day, and only affects two days worth of flights anyway. Secondly, it is only the empty seats that are sold at this price, as pre-booked passengers would have already payed the full fare. Thirdly, and perhaps most importantly, these are high-frequency markets with low fares. Remember how I pointed out that 5 of the airports were in Florida. Well, lets just consider those 5 routes for a moment. The 5 airports named in Florida (FLL, MCO, TPA, PBI, RSW) are all characterized by the following characteristics:
Robust Demand: Each airport handles more than 840 passengers, one-way daily, with 4 (FLL,MCO,TPA,PBI) having over a thousand, and 2(FLL,MCO) having over 2000. In fact, FLL and MCO are the 5th, and 3rd busiest destinations out of JFK respectively.
Depressed Fares: The average one-way fare in these markets is no greater than 164.25(RSW) on any segment. And remember, this includes fares offered by full service airlines. So for the sake of this argument
lets define the average fare between JFK and Florida on JetBlue at $120 each way. This means that they are selling each ticket at 8.3% of its value. But as long as the airline is only selling seats at that cost, after its flights have some pax on board, then it should not result in too large a dip in profitability.
High Frequency: JetBlue operates a large number of flights to and from Florida. Just for an example, Jetblue offers 9 daily flights between JFK and Orlando daily, all on Airbus A320 aircraft. That's 1350 seats daily!! And if only 100-150 seats are sold at $10, the drop in profitability will be unnoticeable.
JetBlue is planning to offer special offers such as this all throughout the upcoming year, as they celebrate one decade of service from JFK. Keep tuned, and take full advantage of the deals. If they all make as much economic and intrinsic sense as this one, JetBlue's promos can do nothing but add to the brand.
0 comments:
Post a Comment