US value carriers Hawaiian Airlines and JetBlue Airways continue to push forward with plans to debut a basic economy fare in late 2019.
Hawaiian plans to introduce its own version of basic economy in 2019, likely closer to year-end. The airline has not offered a specific amount of revenue it expects to generate from its version of basic economy, but its decision was no doubt driven by rivals American Airlines, Delta Air Lines and United Airlines offering the fare class on competitive routes with Hawaiian; and for now, it has no comparable product.
The airline is facing tough pricing and industry capacity growth on its routes to North America, which represent 52% of its revenue. Company executives recently stated competitive capacity increased 11% on its North American routes (the bulk of which are to the US West Coast) during 2018, and those markets represented 52% of its revenues for the year.
Hawaiian and its existing competitors on routes from Hawaii to the US west coast will gain a bit of reprieve from Southwest Airlines’ market entry after the 35-day partial US government shutdown in late 2018 and early 2019 resulted in Southwest facing delays in gaining necessary certifications to operate over water routes to Hawaii. But once Southwest enters an already competitive market, new pricing pressure will emerge.
JetBlue plans to debut its Blue “Save” fares in 4Q2019. The airline has not revealed specific details about the offering, but has previously declared that the lower tier fare offering is part of its Fare Options 2.0. The company has pledged to lower fares without sacrificing the experience, and estimates that customer segmentation, loyalty and JetBlue Travel Products should add USD35 cents to USD55 cents to its 2020 earnings per share.
No new details have emerged about JetBlue’s Saver Fares or its Fare Options 2.0, except that the airline plans to take a measured approach to deployment. “We’ll test and learn in individual markets, just like we do with pricing today. It’s sort of normal course of business for us, just with different bundles,” company executives recently explained.