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Note to JetBlue: Please Don't Change -- Just Drop Money-Losing Flights

By contrast, McAdoo said Florida flights from JFK and Boston produce an estimated $800 million annually in revenue, and make money. The JFK/Florida operation produces margins of 9.5%, he said; the three most profitable flights, in terms of absolute dollars, are JFK to Orlando, Fort Lauderdale and Palm Beach International.

“Jet Blue’s network is one of extremes,” he said, with Caribbean flights and Northeast to Florida very profitable, while West Coast and Boston flying is unprofitable.

As for seating, JetBlue has 150 seats in the A320, its most common aircraft type. Coach seats have a generous pitch -- the space between the seats -- of 34 inches. By contrast, the A320s flown by the US Airways division of American Airlines seat 150 but have a more standard pitch of only 31 inches, according to SeatGuru.

In 2011, JetBlue added a product called “Even More Space,” which provides 38 inches of pitch -- equivalent to first class in many airlines -- for an added fee.

That was a mistake, according to McAdoo. “They ought to go back to their roots,” he said in an interview. “They made good money when they started out. 'Even More Space' is not paying for itself.” In his report, he writes that seats were removed to create “Even More Space” with the hope that extra leg room would attract enough higher-paying passengers, which would more than offset the loss of eliminating seats for up to six passengers. The offset did not occur.

Moreover, an earlier decision pulled six seats from planes in order to eliminate the need for unscheduled fuel stops on trans-continental flights.

In all, JetBlue lost 12 seats on A320s that once carried 162 passengers. Put them back, McAdoo says, except on the few airplanes used for trans-con flights. Don’t worry about the extra cost of adding a flight attendant when a flight has more than 150 passengers. Before cost, the 12 extra seats would add $250 million annually to pretax income, he said.

On the July earnings call, analysts raised questions about adding seats and and bag fees, and JetBlue executives offered vague answers.

Regarding bag fees, Hayes said JetBlue is looking at introducing a new fare structure in the first half of next year. The new structure would "put different bundles of offerings in front of customers,"  he said. 

In Florida markets, Hayes aid, JetBlue benefits from offering a free checked bag, but that is not the case in other markets. He said a new fare structure would enable the carrier "to monetize first bag in markets where you don't get it [free]."

As for adding seats, Hayes noted JetBlue benefits from "maintaining a differentiated product" and that "a big gap has emerged between what we offer and what other airlines offer." He said the airline intends to restructure its fares before it considers a change in seat density.

A JetBlue spokesman declined to comment on whether JetBlue might drop unprofitable routes.

McAdoo isn’t the only analyst who foresees change at JetBlue.

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