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How Does Jet Blue Attain High Load Factors  
User currently offlineQuickmover From United States of America, joined Mar 2004, 2490 posts, RR: 0
Posted (9 years 5 months 3 weeks 8 hours ago) and read 3550 times:

I read somewhere that JBLU does not overbook. How can they reach load factors in the mid 80s without overbooking. People are people and sometimes just don't show up for flights thus the reason to overbook a little. JBLU's passengers are no different. How do they do it? No standby?

33 replies: All unread, showing first 25:
 
User currently offlinePyroGX41487 From United States of America, joined Oct 2004, 280 posts, RR: 0
Reply 1, posted (9 years 5 months 3 weeks 8 hours ago) and read 3531 times:

Overbooking, IMO is a bad thing. Cargo and bags tend to have alot less personality then the passengers themselves, so if theres a sacrifice to be made, it should be with baggage or cargo when load factor is an issue.

Realistically, I don't know the exact reason WHY B6 doesn't overbook. My guess is that they don't want to take the risk of throwing passengers off the flight. After all, B6 values it's customers and how would you feel if you were forced to set back all your plans because the airline decided to overbook? Stand-by is alot more efficient, especially when buying tix at the airport or rebooking.

The airline should not be able to remove people from flights due to overbooking.

As for load factors, on slightly longer routes, for example, BOS - LGB, If the weight of the passengers and weather conditions could create a forseeable penalty in the A320's ability to complete that route, then the price should be paid in cargo rather than passengers. As I said before, passengers have personality.



User currently offlineQuickmover From United States of America, joined Mar 2004, 2490 posts, RR: 0
Reply 2, posted (9 years 5 months 3 weeks 8 hours ago) and read 3508 times:

Overbooking good or bad isn't what I'm trying to figure out. If you have 150 seats to sell, the chances are a pecentage of those people won't show. If you sell 170 seats out of 150, like most majors would do or more, you should get closer to that 100% number. JBLU only selling 150 and leaving with the plane 85% full is a mystery when most carriers (that overbook) are filling 65-75% of their seats.
Any ideas?


User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3802 posts, RR: 29
Reply 3, posted (9 years 5 months 3 weeks 8 hours ago) and read 3502 times:

When you do the right thing because it's the right thing to do, results have a way of turning out in your favor in the end -- where it ultimately matters. Like it or not, believe it or not, deny it or not... timeless ethical principles (summed up by "the golden rule") govern our world -- even in the airline industry -- which might be more familiar to some as the time-honored axiom "what goes around comes around." Which succinctly states my beliefs on why jetBlue maintains high load factors in spite of its doing the right thing by choosing not to put pax at risk of denied boarding by overbooking. The ends do not justify whatever means it supposedly takes to achieve the desired result -- which is a huge part of what differentiates airlines like jetBlue from the legacy business model.

User currently onlinePe@rson From United Kingdom, joined Jan 2001, 19188 posts, RR: 52
Reply 4, posted (9 years 5 months 3 weeks 8 hours ago) and read 3486 times:

There's nothing wrong with overbooking unless you deal with it in an uncaring and unsympathic way. If you flash cash and other things at passengers, you'll find people, primarily or exclusively leisure and VFR passengers, will be willing to go on a later flight. Overbooking also obviously means that you can fly more people.


"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 5, posted (9 years 5 months 3 weeks 8 hours ago) and read 3484 times:

After all, B6 values it's customers and how would you feel if you were forced to set back all your plans because the airline decided to overbook?
****

The passenger doesn't seem to mind not showing up for their flight and not bothering to call the airline to tell them that they are not showing up, so why should it be different in reverse.

The reason why the airlines overbook is due to the no show factor of the passengers. Once the aircraft pushes back, those empty seats are revenue that is gone forever.

For those that do not know, the scenario is this:

The aircraft has 100 seats, if the airline sells 100 tickets, then they will get roughly 90 seats with bums in them. There is usually around a 10% no show factor with flights. Therefore the airline sells a few extra seats, thus meaning that they get bums in the seats of the no show passenger whos bum didn't arrive for the flight.

With refundable tickets, the person's bum does not need to show up, and doesn't even need to call (and usually doesn't)

If that passenger does not call, then basically that no show passengers bum has denied the airline the ability to sell the seat, and but has not shown up for the seat that the airline was forced to hold for them.

In the case of the Ryanairs of the word, the reason they do not oversell is that if you pay for the seat, then you either use it, or you lose it, so they do not care if you show up or not as they get the money anyways. With the major carriers, if you don't show up, then they don't get the money and they can't sell the seat.

Therefore overselling is a good idea for the airlines as is protects against this.

Lastly, while occasionally someone gets involuntary bumped, it is extremely rare as for the odd time that people all show up, there is usually a line of people wanting to get a free hotel and free flight vouchers.

Jeremy


User currently offlineQuickmover From United States of America, joined Mar 2004, 2490 posts, RR: 0
Reply 6, posted (9 years 5 months 3 weeks 8 hours ago) and read 3479 times:

I've flown alot and when a flight is oversold, the $200 vouchers are rolled out and there is usually several eager leisure fliers eager to grab them up. I know it can happen, but I've never ever seen a passenger unwillingly taken off a flight. Usually the vouchers do the trick.

User currently offlineBOSSAN From United States of America, joined Aug 2004, 255 posts, RR: 0
Reply 7, posted (9 years 5 months 3 weeks 8 hours ago) and read 3470 times:

From a USA Today article, "Unlike rivals, JetBlue won't do the bump", 2003-10-23:

In fact, JetBlue pondered whether to scrap its no-overbooking policy as recently as six months ago. Neeleman says he wondered whether an additional passenger or two could be added to each flight. But Gareth Edmondson-Jones, the company's public relations director, dissuaded him.

Edmondson-Jones says he told the boss, "God forbid a family of four misses their seats and the next two or three flights have one or two seats on them. What are you going to do, break up the family?" Neeleman, a father of nine, "put the kibosh on it."


The article also mentions two factors: first, jetBlue only sells 2% of its tickets through travel agents, allowing them to have good knowledge of how many seats are filled. Second, tickets are non-refundable, and in order to get credit towards a future flight the passenger must call the airline in advance of the departure of the original flight, providing a great deal of incentive to the traveler to inform the airline if there's a seat free, and revenue to compensate the airline if there's a no-show.


User currently offlineQuickmover From United States of America, joined Mar 2004, 2490 posts, RR: 0
Reply 8, posted (9 years 5 months 3 weeks 8 hours ago) and read 3459 times:

"in order to get credit towards a future flight the passenger must call the airline in advance of the departure of the original flight, providing a great deal of incentive to the traveler to inform the airline if there's a seat free, and revenue to compensate the airline if there's a no-show."


OK there's the answer.
Thank you.


User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 9, posted (9 years 5 months 3 weeks 7 hours ago) and read 3428 times:

The passenger doesn't seem to mind not showing up for their flight and not bothering to call the airline to tell them that they are not showing up, so why should it be different in reverse.

Because the passenger is the customer. Duh.



The reason B6 has 80-90% lf without overbooking is the same reason NJ used to get that kind of performance on its MCI-MDW flight: They offered the flight at a price their customers were willing to pay (in NJ's case, an un-sustainable price!) and only allowed the highest paying fare (full fare Y-class) to refund their tickets.

In any event, as long as they maintain their comparatively lower prices, passengers will continue to book on their flights. And by not allowing them to cancel their reservation unless they've paid the full-fare, they ensure that passengers are far more likely to show up for the flight.

My experience at NJ was that we had our MCI-MDW flights (this was in '99, when our highest price ticket was $100 each way with taxes) basically full every day, every flight. We offered five a day, and we only had about 10-12 full-coach passengers. Everyone else paid between $34 and $95 each way. No matter what your routing, that's a pretty good deal. Too bad it lost money almost every time (we needed something like an 80%-85% load factor on every MDW flight to break even at that time).



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlineDeltaMIA From United States of America, joined Feb 2004, 1672 posts, RR: 17
Reply 10, posted (9 years 5 months 3 weeks 7 hours ago) and read 3407 times:

How can they reach load factors in the mid 80s without overbooking

DL only overbooks on average about 6%. DCI is only around 3%. The markets similar to the ones B6 flies DL doesn't overbook such as on Song routes. Why? Because the cost of denying someone boarding would be greater than the cost of the ticket on the route. So overbooking wouldn't benefit B6 in these markets. Now if they ever decide to go to LIM or some other Latin American country they will change their mind on the overbooking philosophy when 50% of the plane doesn't show up for the flight.
The reason they hit these load factors is because they are flying high demand routes. Nothing really extraordinary about it.



It's a big building with patients, but that's not important right now.
User currently offlinePetazulu From United States of America, joined Jan 2003, 701 posts, RR: 1
Reply 11, posted (9 years 5 months 3 weeks 7 hours ago) and read 3392 times:

I have also heard that the overbooking policy does not lead to much more revenue in the long run. Vouchers, hotels, cash, and the logistical infrastructure needed to accomodate this policy often adds up to a bunch overhead that does not yield good returns on the additional revenue. It also irritates customers, makes the airline look unprofessional, and makes for some bad press.

If the reveneue from overbooking was tremendously significant, I think B6 would do it.


User currently offlineSsides From United States of America, joined Feb 2001, 4059 posts, RR: 21
Reply 12, posted (9 years 5 months 3 weeks 7 hours ago) and read 3375 times:

The airline should not be able to remove people from flights due to overbooking.


Ummm .... what the hell should they do in the event of overbooking, then? Stow the pax in the lavatory? I think most passengers would rather take the airline's compensation and take the next flight out ...



"Lose" is not spelled with two o's!!!!
User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 13, posted (9 years 5 months 3 weeks 7 hours ago) and read 3350 times:

Ummm .... what the hell should they do in the event of overbooking, then? Stow the pax in the lavatory? I think most passengers would rather take the airline's compensation and take the next flight out ...

That was what I was thinking. However, I don't think the airlines should be overbooking to begin with...



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlineLeelaw From , joined Dec 1969, posts, RR:
Reply 14, posted (9 years 5 months 3 weeks 6 hours ago) and read 3287 times:

Quickmover: I would have said something like your reply #6 until two days before Thanksgiving of 2003. There were no weather or other traffic delays that day. I was booked on a red-eye UA flight LAX-ORD (last flight of the day to ORD) operated with a 763. Somehow, apparently a "computer glitch" and earlier overbooked departures, there were 62 ticketed passengers that couldn't get seats, with little or no hope of guaranteed seats on flights the next day because of the heavy travel period. No bumps and vouchers were offered because there were none to be given.

Since I was a connecting passenger from Kona(KOA), my boarding pass had been issued 7 hours earlier, and I boarded uneventfully and the flight left ontime. However, the passengers without seats, were furious and I'm not exaggerating when I say there were near riot conditions in the gate area. The service reps looked like deer in the headlights as whatever they were telling these people was making them angrier. One lady kept screaming, "Why did you let us come out here and wait if there aren't any seats tonight or tomorrow, I could've gone back home!" Her remark left me scratching my head too, and I've wondered since then how UA resolved a rather tricky situation.

If JetBlue doesn't overbook, then bully for them.

[Edited 2005-02-04 19:24:52]

User currently offlineBOSSAN From United States of America, joined Aug 2004, 255 posts, RR: 0
Reply 15, posted (9 years 5 months 3 weeks 6 hours ago) and read 3276 times:

Remember, in late 2002 several of the major airlines tried to make nonrefundable tickets lose their value if the passenger did not call and change or cancel the reservation before the scheduled departure time.

While this incentive to inform the airline would have significantly reduced the airline's overbooking exposure, it was bundled with several other measures (increased ticket change fees, paper ticket fees, standby fees) that made it appear to the business travelers to be an unreasonable attempt to extract more revenue from the harried traveler.

The airlines backed off and made the deadline to contact the carrier the day of the trip -- which isn't soon enough for the airline to know before departure how many no-shows they will have on a given flight.

jetBlue has managed to make the same no-refund policy stick by consistently applying it from day one, by selling no refundable tickets, and by tying it to the no-overbooking guarantee, thus engendering a perception of fairness in their customers.


User currently offlineDeltaMIA From United States of America, joined Feb 2004, 1672 posts, RR: 17
Reply 16, posted (9 years 5 months 3 weeks 6 hours ago) and read 3237 times:

I have also heard that the overbooking policy does not lead to much more revenue in the long run

Thats not true at all. I brings in extra $ millions $.

If the reveneue from overbooking was tremendously significant, I think B6 would do it.

It just isn't beneficial on the routes Jetblue flies as they are notoriously low-yield.
Routes that other airlines fly such as CSG, LNK, LBB; overbooking allows for much needed additional revenue even minus the cost of the DBC's. Even giving out a $200 DBC, $60 hotel night, $25 in meals and a seat the next day (assuming it goes to that length) still accounts above the cost of the ticket. Obviously not all tickets, but at least the cost of the two or three extra tickets that were purchased.



It's a big building with patients, but that's not important right now.
User currently offlineFLY2LIM From United States of America, joined May 2004, 1184 posts, RR: 10
Reply 17, posted (9 years 5 months 3 weeks 5 hours ago) and read 3213 times:

Maybe I'm missing something. JetBlue's policy is that their tickets are non refundable. Therefore, they sell 150/150 tickets on a flight but only 142 pax show up, the flight is still "full" and full revenue for that flight is obtained. Am I wrong here?
Personally, I love overbooking. I have gotten great benefit from these policies at AA, to the tune of $13-15 thousand in the past 10 years, mainly from a number of instances in the nineties when AA offered my family $1500 per person on flights to LIM. It doesn't happen like that anymore.
Still, is my theory about JB correct?
FLY2LIM



Faucett. La primera linea aerea del Peru.
User currently offlineRJpieces From , joined Dec 1969, posts, RR:
Reply 18, posted (9 years 5 months 3 weeks 5 hours ago) and read 3209 times:

Also keep in mind that in many markets, B6 has only 1 daily flight. It would be harder to rebook pax when they would have to wait 24 hours to leave.

User currently offlineBOSSAN From United States of America, joined Aug 2004, 255 posts, RR: 0
Reply 19, posted (9 years 5 months 3 weeks 4 hours ago) and read 3133 times:

FLY2LIM, jetBlue won't refund your money but if you contact them before your scheduled departure they will give you credit for future flights within a year. I believe that, for all airlines, nonrefundable means at most the airline will retain your fare money and give you credit with the airline if you cancel.

Given that, if all 156 seats are sold for the flight, and no one cancels, and only 148 people show up, that's still full revenue for jetBlue. They also have 8 seats they can offer to standby passengers. If those passengers were walk-up, they've gotten to sell 105% of the seats on the plane; if they were passengers on other flights who elected to go standby on this one, or if the no-show passengers canceled at the last minute, it's analogous to a 100% load factor once again.


User currently offlineFLY2LIM From United States of America, joined May 2004, 1184 posts, RR: 10
Reply 20, posted (9 years 5 months 3 weeks 4 hours ago) and read 3115 times:

Given that, if all 156 seats are sold for the flight, and no one cancels, and only 148 people show up, that's still full revenue for jetBlue. They also have 8 seats they can offer to standby passengers. If those passengers were walk-up, they've gotten to sell 105% of the seats on the plane; if they were passengers on other flights who elected to go standby on this one, or if the no-show passengers canceled at the last minute, it's analogous to a 100% load factor once again.

Thanks for the explanation BOSSAN. Good to know I wasn't going crazy. It makes total sense to me, even if I do prefer carriers who overbook, since I'm usually the one holding the seat and have time to travel. I'll give up Christmas if it means getting a bunch of vouchers, he he he.

FLY2LIM



Faucett. La primera linea aerea del Peru.
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 21, posted (9 years 5 months 3 weeks 4 hours ago) and read 3074 times:

I know with AA, if one purchases a nonrefundable ticket and not fly on that flight during that particular day (stand by is free for that particular ticketed day), they will still give one the credit, but there will be a $100 "rebooking fee" and potentially a difference in fare (only if the later fare is more expensive, and if its cheaper, I don't think they refund you the money, but I'm not sure of that..)..

AA does give a $200 travel voucher and standby on next flight for an overbooked flight...since I travel only to large cities, its not that bad for me...




"Up the Irons!"
User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3802 posts, RR: 29
Reply 22, posted (9 years 5 months 3 weeks 3 hours ago) and read 3061 times:

I have also heard that the overbooking policy does not lead to much more revenue in the long run.

A couple of cases in point... during the past summer (June '04) I was waiting for a flight where I could easily hear the gate announcements for two different flights, both oversold. Total compensation offered -- and given -- to volunteers who gave up their seats would have conservatively totaled $600.00 per person. At that point, I did some very basic math in my head and concluded that the airline would have undoubtedly been money ahead to let the seats given up by volunteers to go empty, inasmuch as it is highly doubtful that any had paid a fare even close to $600.00 for the flight. Or, to put it another way, if it costs an airline $600.00 to accomodate a pax paying around half that or less, the airline would have been hundred$ ahead by getting 0.00 for the seat rather than "gaining" $100.00-400.00 in revenue at a cost of $600.00.



User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 23, posted (9 years 5 months 3 weeks 3 hours ago) and read 3038 times:

Maybe I'm missing something. JetBlue's policy is that their tickets are non refundable. Therefore, they sell 150/150 tickets on a flight but only 142 pax show up, the flight is still "full" and full revenue for that flight is obtained. Am I wrong here?

Only slightly. I assume they allow full-coach fare passengers to exchange their tickets. However, in essence, you are correct.

Personally, if I ran an airline, I wouldn't have overbooking. Too many disgruntled passengers and not enough benefit for it. Sure, it makes more money, but the ill-will of your inconvenienced passengers isn't worth it. It's only worth it to the Finance guys who only care about the next 90 days, not the Marketing and Management guys who are worried about the next ten years.



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlinePetazulu From United States of America, joined Jan 2003, 701 posts, RR: 1
Reply 24, posted (9 years 5 months 3 weeks 3 hours ago) and read 3026 times:

Let me clarify my statement about overbooking not leading to significantly more revenue in the long term. I didn't make that up!
That statement was part of longer article in the New York Times where they were interviewing Neeleman and he ticked off many reasons for it. This was about 2 years ago.


25 Post contains links Lightsaber : Personally, I hate overbooking. When I was twelve I was in the situation listed in post 7. Mom an my nine year old sis went on the first flight. I and
26 PyroGX41487 : The simple answer is not to over-book the friggin plane...
27 Bobster2 : One reason for passengers being no-shows is because they were delayed on a connecting flight through no fault of their own. The biggest problem is whe
28 Elwood64151 : The biggest problem is when the delayed passengers come running up to the gate 10 minutes before flight time and find out their seats are gone. The ai
29 FLY2LIM : AA does give a $200 travel voucher and standby on next flight for an overbooked flight...since I travel only to large cities, its not that bad for me
30 EMBQA : VERY Simple: They offer a good service, at a good price, they take care of their customers and people like that, so they fly them again.
31 ScottB : Elwood64151 said, "I assume they allow full-coach fare passengers to exchange their tickets." That assumption is incorrect. To quote jetBlue's own ter
32 Alb222 : Now that the legacy carriers have dropped all of the restrictions, i.e. Saturday night stay, I wonder if the load factors on B6 will be affected. On D
33 Post contains images Lightsaber : I am not sure why this happened to you. I'm not sure either! Its in the past... As to no seat... last time I flew AA, since I wasn't a frequent flier
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