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I agree, but that is the way business runs today. Not happy with a $100 million profit, but want a $110 million. Greed is the way of doing business, then they can get their $50 million bonuses. Just hating the way American business is heading. No one gives a sh!t about each other. Just venting frustration on it. 
 
Last week it was Bob McAdoo the Brilliant claiming that jetBlue would see $250 million in pre-tax income improvement annually if it added back the 12 seats it removed from its A320s years ago, discussed in the thread begun last week by WT to discuss the article.
 
I thought - wow - $250 million in additional pre-tax income?    Remember back in 2003 and 2004 when AA began scaling back MRTC?   At the time, Arpey and Beer claimed that AA would see $150 million in revenue improvement (not pre-tax income) by adding back seats to the AB6, 757s, 767s, 777s, 737s and MD-80s.   
 
So how is 150-plane B6 going to generate $250 million in additional profit by going to LRTC when AA claimed it was worth only $150 million in additional revenue and AA had 700 planes at the time?   
 
I criticized Arpey and Beer back in 2003-04 for not discussing the obvious book-away from business travelers who could no longer count on getting a roomy MRTC seat, and McAdoo failed to mention that B6 might be doing as well as it is precisely because it offers better legroom.   What if B6 crams in more seats and its existing customers flee?   That's gonna leave a mark.   
 
Here's what Helane Becker had to say about it:
 


Cowen and Co. analyst Helane Becker on Wednesday upgraded JetBlue to outperform from market perform and raised her target price to $15 from $10. "Our upgrade hinges on JetBlue re-working its model to increase profitability," Becker wrote. "This may include a management change. ... We believe JetBlue could make a management change at the top in order to foster a change in strategy throughout the company.
 
"Given the company's long history of underperformance in margins and in ROIC, we believe a management change is almost inevitable," she said.  
 
A first bag fee would add 26 cents to annual earnings per share, Becker concluded. Charging for Wi-Fi, now free, would add 9 cents. And adding 12 seats to each A320 -- cutting back on legroom in coach -- would add 18 cents. That "might hurt JetBlue in the media (but) the revenue benefit to the company would probably trump any customer push back," she wrote.
 
http://www.thestreet.com/story/12851404/1/jetblue-analysts-say-bring-us-the-head-of-dave-barger.html
 
"Probably trump any customer pushback?"   Now that's some real heavy-hitting financial analysis right there.   :D
 
The guys at B6 are smart enough to do the math - they might lose a couple customers in the process, but who else are they going to fly on and avoid the fees being added? WN? I think it's probably just a matter of time before they give in as well.
 
eolesen said:
The guys at B6 are smart enough to do the math - they might lose a couple customers in the process, but who else are they going to fly on and avoid the fees being added? WN? I think it's probably just a matter of time before they give in as well.
I agree with you that the finance people at B6 are smart enough to do the math - I'm disagreeing that Bob McAdoo and Helane Becker are competent to make that call on behalf of B6.   :D
 
The B6 second quarter profit margin wasn't as big as AA's or DL's or even UA's, but it was a pretty healthy profit.   IMO, jetBlue's real troubles began (and were caused in large part) when Neeleman acquired the E190s.   That and the meteoric growth trajectory.     B6 was profitable while the legacies were still suffering from the after-effects of September 11, 2001, and then once they began to recover (like AA in 2005-06), B6 eff'ed with what had worked and began showing small losses/breakeven quarters.    Whoopsie!    Barger has guided B6 to recovery from Neeleman's nose-dive.
 
About those 12 seats:   B6 removed the first six from aft of the emergency exits after it was fined for failing to provide any in-cabin stowage location for passenger wheelchairs, and removing those seats gave it room for the chair and allowed extra pitch for those rows in the back.   And then, obviously, it dawned on somebody that people might pay more $$$ for extra legroom in the front of the plane, and B6 removed the other six seats.   B6 didn't begin charging right away, until it had created the really roomy rows in the first few rows.   Additionally, there was that calculation about the fourth FA for just six seats.  
 
So if B6 reinstalls those 12 seats, where does it store the passenger wheelchair?    And it says bye-bye to all extra-legroom upcharges.   Maybe not enough tall people are willing to pay extra cash for more legroom - I don't know.    
 
The E190s are part of the problem but near as big as other factors.

B6 is becoming a more mature carrier which means higher costs including labor and maintenance. LCCs gain an advantage for a certain period of time but it starts to erode over time.

The "chic" of B6 doesn't have the marketing clout it once had. B6 is well known in its key NYC and BOS markets but has much less marketing pull in other regions of the country outside of its larger destinations (B6 traffic is largely northern originating).

Further, B6 and other carriers did rapidly grew right after 9/11 as you note, esp. in legacy carrier markets. As the legacy carriers regained their footing, including thru BK, it has become a lot harder for B6 to find new markets in which to profitably grow.

And finally, JFK is a lot more competitive than it was when B6 started with special slot exemptions. There is an article floating around the interwebs that notes that AS and B6 are the two carriers that are both seeing below average RASM growth and both happen to be facing intense competition from the same legacy carrier in their core home markets.

As for adding back the seats, increasing seats onboard and selling them will always yield more revenue than upsells - or your pricing model is broken.

Other carriers have figured out stuff like onboard wheelchairs with higher density configurations.
 
Good points, and I tend to agree.   
 
I don't know if B6 ever jettisoned its misguided "We'll never overbook our flights" policy but its first half load factor was 84%.  They could probably pick up some revenue simply by filling more seats on average.   Of course, that makes recovery from weather/mechanical schedule disruptions that much more difficult, but B6 has been plagued by those problems since the beginning.  A business traveler who actually needs dependable transportation would be wise to avoid B6 or NK or even VX and stick with big carriers offering frequency.   
 
B6 has certainly matured into an almost-legacy.   It's selling a hybrid First/Business product on its JFK-LAX transcons in hopes of raising its very low average fares in that market.   And as it's matured, and its growth has slowed, its employees are getting significantly more expensive, and I think that now, some of them are beginning to vote in union representation.   
 
B6 was even paying its pilots more than US Airways for A320s and E190s until the US-AA merger raised the US pilots' pay to AA's higher greenbook rates.   IIRC,  B6 pays its E190 pilots almost as much as its A320 pilots despite 1/3 fewer seats.   
 
My over-riding objection and criticism of McAdoo, Becker (and probably Pumper Keay) is their knee-jerk "if you add lots of seats, you'll make even higher profits" mantra.   They may be correct, but more seats for the sake of more seats doesn't always win.   WN was pretty profitable even before its installation of those six extra seats with its Evolve seating.   I still predict that those crappy seats plus no assigned seats plus no extra legroom options at all (free or upcharge) besides the exit rows will harm WN's ability to steal away significant amounts of AA's business travelers on longer routes from DAL beginning in two months.   I've said it before - the propensity of business travelers to put up with WN on short intra-Texas routes does't mean they'll be as willing to do it on DAL-LAX/SFO/SAN/BOS/LGA/DCA etc.   One hour is one thing, but three or four hours is quite another.   
 
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