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October 7, 2008

How Seat Cutbacks Are Changing jetBlue’s Bottom Line

Filed under: Pricing Activity, Fuel Watch, JetBlue — Rick Seaney @ 9:38 am

Yesterday jetBlue reported a whopping 28% increase in passenger revenue per seat mile flown in September compared to last year.

How did they do this amidst the poor economy and fuel prices? (No, it wasn’t the pillow fee)

Well, for one thing, like most of the other domestic airlines they put less seats in the air in September, 11% less - which increased their load factor (average % of plane filled) for the month by slightly over 5% — which brought it up to 77%.

The obvious other reason for the revenue increase: higher prices for consumers.

If you line up these revenue increases with substantial operating savings on jet fuel (the spot price quoted yesterday — $2.50 a gallon — down from $4.32 on July 4th), an airline can get healthy pretty quickly.

The big hurdle for most airlines now, especially those that depend on high paying business travelers is, how much will business travel budgets be cut in the wake of the economic downturn?
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