In a bid to compete with its rivals, JetBlue Airways Corporation (JBLU - Free Report) is planning to offer basic economy fares next year. The carrier felt that its success was at risk in case it did not follow the path of its rivals in offering low fares.
The no-frills charges might not mete out the flexibility of ticket changes and free advance seat selection. Even then, passengers will continue to enjoy a free on-board Wi-Fi, snacks, soft drinks and a carry-on bag facility.
Airline majors including Delta Air Lines, Inc. (DAL - Free Report) , United Airlines, the wholly owned subsidiary of United Continental Holdings, Inc. (UAL - Free Report) and American Airlines Group Inc. (AAL - Free Report) already offer basic economy fares. These fares don’t provide customers with an option to select seats in advance or alter their travel dates for free. The larger airlines started offering basic economy fares mainly to contend with the low-cost carriers like Spirit Airlines.
JetBlue’s decision to offer basic economy fares comes close on the heels of its impressive third-quarter update. The carrier now anticipates third-quarter revenue per available seat mile (RASM: a key measure of unit revenues) to increase between 1% and 3% (the earlier view had called for the key metric to grow in the 0-3% range). JetBlue cited robust close-in demand as one of the factors behind its decision to issue an improved guidance.
JetBlue carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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