NEW YORK JetBlue (JBLU), known for shuttling vacationers from Northeast cities to the warmth of Florida and the Caribbean, is making a play for corporate road warriors.
Starting next year, the all-coach airline plans to offer 16 lie-flat seats on flights between New York and Los Angeles and San Francisco. It's the first time the egalitarian carrier will have a second class of service.
The transcontinental routes are the most profitable and highly contested domestic markets for airlines. Business class tickets frequently sell for $4,000 roundtrip. American Airlines, Delta Air Lines and United Airlines are all in the process of putting lie-flat beds in their premium cabins on those routes. Virgin America, which also flies from coast to coast, has a traditional first class cabin with larger seats.
"Transcontinental routes have had high premium fares we believe we can beat," CEO Dave Barger said in a statement.
The New York-based airline announced the new seats at the start of a business traveler conference Monday in San Diego.
JetBlue Airways Corp. said the seats will debut on its new Airbus A321 planes in the second quarter of 2014. The planes will have 16 seats in the front cabin and 143 in the back. Four of the 16 business class seats will have doors and are being marketed by JetBlue as "private suites" similar to what Dubai-based Emirates Airway and Singapore Airlines offer their top customers.
Other A321s not configured for the transcontinental service will have 190 seats. The airline did not say if the 34 inches of legroom that coach passengers current have on their jets -- one of the most generous spaces in the industry -- would change with either configuration.
The 16 premium cabin seats will offer air cushions with adjustable firmness, a massage function, a 15-inch widescreen television and a "wake-me-for-service" indicator if a passenger chooses to sleep in.
Jim Corridore, an analyst with S&P Capital IQ, said he is skeptical that JetBlue can start a price war with other airlines for premium seats. Further, he worries that JetBlue will be unable to offset the loss of the 31 coach seats with higher-fare passengers.
"The real benefit of lie-flat seats comes on international routes," Corridore said.
The move comes a week after JetBlue announced dismal second-quarter earnings. Its income fell by nearly one-third, missing Wall Street expectations, as maintenance and other costs climbed faster than revenue. The 13-year-old airline had benefited over the past decade from new planes with lower maintenance costs and lower wages because of its young staff. Now, as it ages, those cost benefits are starting to erode and the airline must find new ways to bring in revenue.
Its average flight in the quarter was 84.9 percent full with paying customers, down from 85.3 percent a year earlier. And the average one-way fare dipped to $157.51 from $159.58 last summer.
JetBlue can't grow much more in New York, where take-off and landing slots are restricted by the government. It has grown in Boston to become that city's largest airline. But Boston lacks the population base for the airline to expand much more. Barger has eyed Washington D.C., but that airport also has government caps on the number of daily flights.
The airline has built its loyal customer base on vacationers who like the free, live TV, extra legroom and lack of fees for the first checked bag. Barger has been trying to lure more business travelers with mixed results.
After an initial spike Monday morning, the company's stock was flat at $6.50 a share.