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JetBlue enters basic economy battle with new fare options

Stock Markets Nov 12, 2019 07:16AM ET
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By Tracy Rucinski

CHICAGO (Reuters) - JetBlue Airways Corp (O:JBLU) on Tuesday became the latest U.S. airline to launch a low-fare option in an effort to rival basic economy offerings from major airlines and meet competition from ultra low-cost carriers.

The new fare, to be called "Blue Basic," will allow one carry-on bag - space permitting - and free seat selection 24 hours before the flight, but those passengers will be the last to board the plane.

"There is a growing customer segment that really values low fares and that are willing to trade off certain benefits," JetBlue President Joanna Geraghty told Reuters.

The three biggest U.S. carriers - American Airlines Group Inc (O:AAL), Delta Air Lines Inc (N:DAL) and United Airlines Holdings Inc (O:UAL) - have all rolled out basic economy fares in reaction to the growth of no-frills carriers Spirit Airlines (N:SAVE) and Frontier Airlines, even as they court higher-paying passengers with new premium fare options.

"Basic economy has proven to be a revenue driver for airlines that have implemented it and should drive incremental revenue growth in 2020 despite expectations for industry unit revenue to decline," Cowen analyst Helane Becker said in a recent note about JetBlue to investors.

For travelers willing to pay for early boarding, free advanced seating and flexibility with travel changes, JetBlue is launching a separate fare option called "Blue Extra."

New York-based JetBlue, which boasts that it has the most leg room in coach, has said it expects its new fare options to add about $150 million to revenue in 2020.

The "Blue Basic" fare can first be found on routes like Ft. Lauderdale, Florida to Nassau, Bahamas or New York's JFK to Long Beach, California before being rolled out to most of JetBlue's other routes over the next month or two, a spokesman said.

JetBlue enters basic economy battle with new fare options
 

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