The Mint Effect — Why Transcon Business Fares Are Dropping
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One of the reasons I love award travel is that it allows people to experience high-end service they might never be able to afford otherwise. However, some previously astronomical business-class fares are becoming much more reasonably priced. Today, TPG Contributor Mitch Berman explains why.
In 2013, JetBlue hit the major domestic airlines right between the eyes by announcing the launch of its new transcontinental business class service Mint, with flights priced as low as $599 one-way ($1,198 round-trip) between New York and Los Angeles/San Francisco. No one anticipated that this limited service could change the face of domestic travel — yet only a year after Mint took flight, that’s exactly what has happened.
In this post, I’ll show you just how much Mint has impacted the premium transcon market since its introduction, and discuss what the future holds for long-haul domestic flyers in first and business class.
Airfare pricing is complex, and despite recent allegations of collusion between several major domestic airlines, they do compete with one another to win markets and gain passengers. This is especially true on transcontinental routes in premium cabins, where airlines cater to lucrative business travelers and other high-revenue flyers.
For years, prices on these routes hovered in the thousands of dollars. I asked analyst Tyler Hanson at Hopper to look at past fares, and he found that the average transcon business fare on United just two years ago was a whopping $4,364. Last April, Hollywood Reporter indicated prices starting around $3,600 for round-trip business class flights between JFK and LAX on the domestic legacy carriers.
American Airlines, Delta and United have since slashed prices on these flights, offering round-trip transcon service in (improved) business class starting from around $1,200. So what was the catalyst for this change? The answer (at least in part) is shown here:
When JetBlue began offering Mint starting at $599 one-way, the other carriers had little choice but to come down in price. Flyers haven’t seen a fare war like this since the ’80s, when budget airline PEOPLExpress took New Yorkers to Montreal for $29 and to Brussels for $99 (sigh).
However, Mint’s $599 one-way fare proved too bitter a pill for the legacy carriers to swallow, and they did not match, leaving Mint the only nonstop one-way transcon business class product in the sky available for less than $999.
Comparing the Business-Class Products
So what do you get for your business-class seat? All these carriers offer nonstop flights, lie-flat beds, Wi-Fi, upgraded food and beverage service, entertainment on 15- or 16-inch flat screens, and amenity kits, as well as mileage bonuses in some cases.
I’ll focus on the premium service offered on flights between New York and Los Angeles/San Francisco. Most of these flights fly to and from JFK (or Newark, in United’s case), and Delta also offers premium service to Seattle.
1. JetBlue Mint
Before JetBlue introduced Mint, the airline had only ever operated single-class aircraft, so it remained to be seen whether its business class would measure up to the competition. Well, now we’ve seen, as TPG (and many readers) have been impressed by the Mint experience. Here’s what you can expect:
- Extra long lie-flat massaging seats (if you’re lucky, you may even be able to score one of the closed-door suites, which are awarded on a first-come, first-serve basis);
- A hand-signed welcome note on your pillow (what, no actual mint? Talk about missed opportunities!);
- Three selections of five tapas-style entrees created by Saxon+Parole, such as rib-eye with crushed fingerlings, baby arugula and balsamic, chilled poached salmon with bulgur or grapefruit and Thai chili (don’t forget the onboard cappuccino machine);
- Amenity kits assembled by Birchbox, featuring a rotating selection of products like Liz Earle Skin Repair Moisturizer, Jack Black Intense Therapy Lip Balm, Davines All in One Milk and LAB Series Overnight Renewal Serum;
- A parting gift of a brownie from Mah-ze-Dahr Bakery.
Mint’s only downside is that JetBlue doesn’t offer complimentary lounge access — while all the other carriers do.
JetBlue will expand Mint in November to include destinations in the Caribbean, and in 2016 it will offer service between Boston and both Los Angeles and San Francisco.
American’s business-class service, which TPG Special Contributor Eric Rosen reviewed last year, features lie-flat seats, Bose noise-canceling headphones and complimentary Admirals Club lounge access. New amenity kits were introduced this year — with mostly the same products as before but in cool, nostalgic felt cases bearing the logos of bygone airlines such as TWA and PSA. American still offers first-class service as well, though it failed to impress TPG when he tried it last year.
In a review worth revisiting (partly because it offers a last lingering view of the immortal Deltalina), TPG made a “flight of shame” last year, flying once more on Delta after having given up on the airline previously. TPG staffer Ryan Gaines favorably reviewed Delta’s transcon business-class service this year. Delta’s business-class cabin features complimentary SkyClub lounge access, lie-flat seats, one of the better meals in business class (spearheaded by excellent appetizers and entrees like braised short ribs), Tumi amenity kits filled with Malin+Goetz products and warm chocolate chip cookies served prior to arrival. Delta also offers premium service to Seattle at fares that are generally comparable to the LAX and SFO routes.
United’s Business Class p.s. Premium Service (which TPG Contributor Richard Kerr reviewed earlier this year) includes a revamped dining menu and complimentary access to United Club lounges. In addition, United provides an outdated amenity kit (eyeshades, earplugs, toothpaste); transcon flights won’t see the major upgrade next month to Soho House’s Cowshed products — that’s only for intercontinental flights.
Given the competition, you might see United’s business class as a miss, but under no circumstances should you miss this meltingly scrumptious Flyertalk post featuring a full year of United premium service illustrated by way of 16 unforgettable ice cream sundaes.
Comparing JetBlue Mint to the Competition
Can we compare an airline that carries about 30 million passengers annually to the Blue Little Engine that Could? JetBlue’s volume is only around 6.5% of what the top 4 domestic airlines carry combined (counting American Airlines and US Airways as one), but right now, this little engine is driving the transcontinental business-class market.
Why are the biggest carriers so eager to follow JetBlue down the primrose path? The simple answer is that first and business-class tickets comprise a huge proportion of airline profits, especially on transcon flights. Michael Boyd, chairman of consultancy Boyd Group International, estimated that “premium-class passengers account for 75 percent of the revenue on cross-country flights,” so it’s no surprise that the top domestic carriers are tripping over themselves to please premium passengers.
First came the race to improve services in business class, with JetBlue Mint elbowing into the leaders. Now, with another little push (well, a great big shove) from JetBlue, a full-blown price war has arrived. Whether it can or will last is another question.
If the smaller airlines can sustain lower prices without being driven out of business, then perhaps yes. Spirit and Alaska are by far the most profitable US airlines, with JetBlue, American and Southwest in pursuit. Far behind the pack — with less than half of JetBlue’s profit margins — come the stragglers Delta and United. With oil prices still relatively low, many analysts predict profits will skyrocket in 2015.
It certainly seems like JetBlue can afford to offer these deep discounts for the foreseeable future. Beyond that, low prices in business class may eventually be felt throughout all classes of service, driving fares down across the board. As long as the price war lasts in business class, all passengers (from economy to first) should be able to get relatively inexpensive transcontinental tickets.
In the meantime, sit back (or lie back) and enjoy your flight! Someone’s sure to bring you a warm cookie before you touch down.
Have you taken advantage of the lower business-class fares?