When JetBlue first launched it seemed really reluctant over a loyalty program. They had to have one, but TrueBlue was a half-hearted effort at best. It was a low value revenue-based program with few benefits.
Over the past couple of years they’ve been on a real journey to offer a compelling program for elite benefits. This made a lot of sense in the context of their American Airlines partnership.
- They were getting customers from American, but American’s loyal customers expected similar treatment
- They were increasingly going up against global carriers, expanding transatlantic
- And their customers had the choice to credit to the AAdvantage program. They’d do that if TrueBlue wasn’t compelling on its own.
The American partnership is kaput, but the doubling down on loyalty actually continues. Some of that is seeing through what was in the pipeline, but their CEO explained during the airline’s third quarter earnings call that loyalty programs are profitable, they’re behind in this, and they want to make up the margin gap.
You know, it’s clearly a margin gap for us, right. I mean, I think all these airlines report sort of roughly what their percentage of revenue is and then you know, if you assume that the margin on these programs are high, you know, it’s definitely, it’s definitely single digit, low single digit percentages of difference.
This is why actually, we’ve been so focused on not just building our travel, but our own loyalty program to sort of play catch up, but also craving JetBlue Travel Products. You know, we know that we do not have the same exposure to business travelers as some of these global leisure airlines. And so how do we gain more exposure, more share of wallet for leisure customers as well, and so our goal over time is to get to a point where our JetBlue Travel Products and our loyalty program together can be at a point where they can compete for what I’d call a legacy airline tight margin. So that’s the road we’re on Jamie’s, we’re not there yet, but you know, we’re I think we’re making really good progress
.@baker_never_y: "But do you have an internal estimate as to how many points of margin differential loyalty might currently be driving?"@JetBlue $JBLU CEO: "Hi, Jamie. You know, it's clearly a margin gap for us, right. I mean, I think all these airlines report sort of roughly…
— Ross Feinstein (@RossFeinstein) October 31, 2023
Loyalty programs are high margin, and they’re necessary to attract the customers that they need. Frontier Airlines revamped its loyalty program in 2018. They were first to intertwine theirs meaningfully with their co-brand card. And as the airline struggles they’ve decided to double down on loyalty.
Even Spirit Airlines doubled down on loyalty during the pandemic, mostly copying Frontier. And even Allegiant sees upside for its credit card revenue. Neither fish nor fowl, Southwest Airlines is adding new benefits.
This all contrasts mightily with Delta which is temporarily rolling back its gutting of elite status qualification and club access, saying that they do not have enough premium product to match demand (while using takeaways as a stick to motivate customers to spend more on its cobrand cards).
The ultra low cost carrier and smaller airline segments have been lagging the industry most financially. They’ve discovered that while they once saw loyalty as a cost center to avoid to the extent possible, it’s a profit center for airlines that are actually earning profits. And they’re looking to loyalty to help turn around their fortunes.
After all the programs that have been built by American, Delta, and United have become so valuable that they’re worth as much or more than the airlines themselves, with each able to raise $6.5 to $10 billion apiece during the pandemic backed by future income streams of their programs. Ignoring or downplaying loyalty for years at other airlines seems to have been a mistake.
You did fine until you tried to argue that Delta’s cuts to loyalty is a mistake. But I knew when I saw the headline where you were going.
Loyalty programs cannot make up for a poor quality product or a weak network.
AA execs said they neglected to consider the loyalty program when previously making cuts to NYC but, when the NEA got shot down, AA still cut NYC flights again. A loyalty program SUPPLEMENTS a strong network and helps retain customers but can’t create something that a network can’t do.
B6 can chase loyalty but its biggest obstacle is its lack of a quality product including on-time. All of the loyalty spending won’t help until B6 fixes its on-time problem which benefits everyone that flies them.
DL is upping elite qualification requirements because they have more demand than supply for elite services. No one else has the same problem. DL’s loyalty program revenue shows they have the complete formula figured out better than any other airline and it is pure fantasy to think they will shoot themselves in the foot in tightening the qualifications to get a higher level of elite flyer than other airlines.
>All of the loyalty spending won’t help until B6 fixes its on-time problem
If JetBlue becomes reliable they will have sustained growth. Their legroom alone is enough of an edge.
And yet Delta……
Tim,
You’ve got me actively rooting against Delta on all fronts now by your childish hobby of stalking travel blog sites in order to reply to ANY perceived slight against Delta. Seriously, GET A LIFE! You thrive for attention no matter if it’s positive or negative.
@Gary – the “reinvented” loyalty program at B6 has made great strides . However , as others have rightly stated , reliability and schedule frequency weigh heavily against B6 .
That being said , for a traveler like myself , the biggest drawback is the lack of any premium cabin on the majority of the B6 fleet . I am certainly not saying lie flat Mint needs to be offered on all the aircraft but some sort of “Junior Mint or Peppermint or Spearmint” should be offered . I like the B6 Mint International experience but there is no way I would consider B6 if I were connecting to a place like PHX with no premium offering .
Furthermore , I might not even consider B6 if transferring from international to a short haul destination . I often find that I am most tired on the connection after going through the international arrivals process , re-checking baggage , going through domestic security , and walking to the new gate . At B6, this is exacerbated because they have no clubs to offer a bit of a refuge during the layover .
JetBlue Barred From Amsterdam’s Schiphol Airport for Summer 2024 Season
US carrier to fight move, cites duty of US, Dutch governments
Delta also loses slots, says it has begun legal challenge.
Disturbing in many ways, having often transited through AMS during The Pl@gue.
I realize now that all of my previous JetBlue was connecting off EK, partnership recently divorced. B6’s connection with QR might be worth it.
Loyalty is what struggling carriers waste money on; successful carriers spend money on product at the expense of loyalty and get financial rewards for doing so.
There is zero word of mouth benefit with spending on loyalty. Put a gigantic 4K TV screen in front of passengers and they will rave wit their friends how great their flight on Delta or Emirates or whomever was. Spend the same amount on loyalty and the same people will not rave with their friends, and, if asked, will tell their friends how they wish the plane had screens to distract kids.
Jake gets it.
And, Steve, I comment on plenty of social media stories. Delta is big enough and draws enough attention that I comment on them as well.