Now that message is becoming widely absorbed by travellers, airlines that have been restricting flight capacity are now starting to drop the policy. You can argue that the approach has helped to rebuild traveller confidence and has been an effective ploy while demand remains subdued. US carrier JetBlue Airways has seen its net promoter score (NPS) grow and it is not alone among US airlines in seeing this metric rise.
The airline’s president and COO Joanna Geraghty noted during a 3Q 2020 presentation to investors and analysts that the carrier's NPS is "near an all-time high", following a 10 point increase and that nearly 95% of passengers who have travelled with the airline during the pandemic have said "they will fly JetBlue again in the very near future".
The US carrier has deployed the seat blocking tactic and Ms Geraghty acknowledged it has largely been about “rebuilding customer confidence in travel," but is "not something that's sustainable" in the long term as traffic returns. The airline’s CEO Robin Hayes has said the policy is "incredibly expensive, especially in an industry that's struggling".
It is no surprise that airline such as JetBlue are now starting to highlight a return to normality, at least in terms of capping seat capacity across their fleet. The problem with policies such as these is that they create such a strong message that altering them at a later date could have a significant impact on consumer perceptions.
Mr Hayes said that the airline’s view is that “over the course of time the seat caps will go,” but highlighted that right now it still remains “a very important issue for customer perception”. JetBlue will be revising its policy though and will limit seats available at "just below 70%" until 01-Dec-2020, with plans to "continue to increase those lids longer term," according to Ms Geraghty. Mr Hayes confirmed that the carrier will review its policy of blocking middle seats in 1Q 2021.
JetBlue is "cautiously optimistic" of further improvements to bookings in the 2020 holiday season, according to its CEO. "We have seen signs of pent-up demand from customers who want to visit their family and friends or go on vacation. And we believe that we will remain extremely well positioned to serve these customers as they return to air travel", he stated.
The airline’s management is "confident" its business model and brand will allow it to "emerge stronger from the crisis," said Mr Hayes who believes that rapid COVID-19 testing can help reopen domestic and international markets. He said he is "cautiously optimistic that we will see major advancements in this space in the near future".
JetBlue is witnessing better than expected performance and Ms Geraghty noted the carrier's revenue decline of -76% year-on-year in 3Q 2020 was actually a "welcome improvement compared to our initial expectation". Revenue was driven by leisure and visiting friends and family (VFR) traffic, and there was "modest, sequential improvement in Aug-2020 and Sep-2020 demand as new case counts decreased, and quarantine restrictions in some states were eased," she explained.
Looking to 4Q 2020, revenue is expected to be down approximately -65%, while capacity is projected to decline -45% based on the airline’s projections. "Although there still quite a lot of uncertainty about the evolution of the coronavirus, we are starting to see the booking curve extend slightly into the upcoming Thanksgiving and December holiday travel period, and we are encouraged by customers responding positively to our promotional activity including an early holiday sale in late Sep-2020", stated Ms Geraghty.
However, the carrier’s northeast geography continues to be “disproportionately impacted,” though she believes it “will undoubtedly rebound as it always has with past challenges". Mr Hayes said the carrier is taking advantage of opportunities across its network and strengthening its focus cities to “produce structurally better margins in the coming years".
Consequently, it is relocating aircraft to "new cash accretive markets” where it sees demand pockets, and also "positioning JetBlue for future success at Los Angeles (LAX) and Newark (EWR), making our transcon franchise stronger". JetBlue's alliance with American Airlines is also anticipated to "help accelerate our recovery," he said.