JetBlue eliminates change fees on most fares — with a major catch

For JetBlue, it's better late than never.

On Tuesday, the New York-based carrier announced that it's eliminating change fees on most fares, following similar moves made by other major U.S. airlines roughly six months ago.

However, unlike its competition, JetBlue's announcement comes with a big devaluation: basic economy flyers will no longer be allowed to bring a carry-on bag.

Joanna Geraghty, JetBlue's president and chief operating officer, told TPG that "we wanted to come up with an offering of flexibility that applies to everyone, not just those who purchase the full fares. We want everybody to have a degree of flexibility."

Related: Winners and losers from JetBlue's overhauled fare structure

Eliminating change fees

The no-change-fee policy will apply to all JetBlue fares, except for those booked in Blue Basic, the carrier's version of basic economy. Going forward, eligible flights can be changed or canceled at any time before departure.

This doesn't mean that JetBlue tickets will suddenly become refundable. All voluntary changes will be credited to the digital Travel Bank, and funds can be used within a year of issuance for any traveler.

Note that switching to a more expensive flight will incur a fare difference, while switching to a cheaper flight will generate a credit for the difference.

Previously, JetBlue offered a tiered fee structure for itinerary changes that ranged from $75 to $200, depending on the ticket value. The higher the fare, the greater the penalty, except for Blue Basic tickets which weren't changeable.

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But, that's now changing. Effective April 1, basic economy flyers — including Mosaic elites — can change or cancel their ticket for:

• $100 for domestic, Caribbean, Mexico and Central America routes.
• $200 for all other routes.

Though some Blue Basic tickets will undoubtedly cost less than the change fee, the added flexibility is a nice addition for basic economy flyers.

JetBlue's vice president of sales and revenue management, Dave Clark, explains that "before the pandemic, the vast majority of our customers paid more than $100 for a round-trip flight. Even now that fares have come down due to the pandemic, the strong majority are paying more than $100 on a round-trip all-in basis," he said.

JetBlue's no-change-fee policy is a major devaluation to the carrier's Mosaic elite program, which counted free changes and cancellations as one of its top perks. Clark reasons that "the new Mosaic benefits announced late last year have several new benefits. The free extra-legroom Even More Space at the gate is the marquee benefit that replaces flexibility."

All in all, the pandemic has made airlines rethink flexibility.

It started back in February 2020 when JetBlue became the first U.S. carrier to waive change and cancel penalties for newly purchased flights, including basic economy tickets. That blanket waiver has since been extended for over a year, with the latest "Go Back and Forth with Confidence" offer slated to expire on March 31. The carrier confirmed that it hasn't yet made a decision about extending it.

One caveat is that if JetBlue phases out this blanket waiver before the other major U.S. carriers, then the new Blue Basic fee structure will be more punitive than its competition.

Unlike the other major U.S. airlines, JetBlue isn't labeling the no-change-fee policy as "permanent." The carrier explained that "we will regularly reassess our fare structure and other offerings to determine how to best serve our customers."

Major basic economy downgrade

Though basic economy tickets will enjoy added flexibility, there's a major catch.

JetBlue will no longer offer carry-on bags with its cheapest fares. The new restriction kicks in for flights on or after July 20 with tickets purchased on or after Feb. 25.

Blue Basic tickets will include a small personal item, like a purse or backpack, that can fit underneath the seat. Full-sized carry-ons, like rollaboards, will no longer be accepted.

Those traveling with carry-on bags will be forced to check them. JetBlue currently charges Blue Basic customers $35 for the first checked bag and $45 for the second one. Mosaics and eligible cobranded credit cardholders will continue to enjoy free checked bags, as per previous policy.

If you've purchased Blue Basic and want to bring a carry-on bag, your only option is to purchase an extra-legroom Even More Space seat, which will soon allow basic economy flyers to bring a full-sized carry-on. Mosaic elite members will be allowed to bring a carry-on bag regardless of the fare purchased. Non-elite customers won't be allowed to "upgrade" to Blue fares without paying the $100 or $200 change/cancel fee.

This move now puts JetBlue's Blue Basic offering on par with its ultra-low-cost rivals like Frontier and Spirit, and with United, which currently offers the most punitive basic economy experience of the major U.S. airlines.

JetBlue pegs this devaluation as a way to further segment its customers with added upsell opportunity, all while remaining competitive with ultra-low-cost carriers.

According to Geraghty, "each fare really speaks to the type of customer purchasing the fare option. If you want the ultra-low-cost fare, you'll still get a fabulous inflight experience. If you want to pay a little more for the peace of mind, then you'll have that option as well... We want to make sure JetBlue is accessible for everybody."

When introducing basic economy in 2019, JetBlue claimed it could lower fares to match its cheapest competitors. Now, the carrier thinks it'll be able to continue lowering fares by eliminating carry-on bags, even if the primary motivation is to get people to buy up to more expensive tickets.

Clark told TPG that "the key is to increase differentiation between Blue Basic and Blue. By further segmenting fares, we expect more customers will buy up to Blue. That'll lead to fewer customers choosing Blue Basic, and we'll then be able to lower the fare for that smaller segment of customers."

Interestingly, JetBlue's move comes as other airlines, including its soon-to-be-partner American, are easing basic economy restrictions, including the ability to enjoy complimentary elite upgrades, seat assignments and more.

Related: Why now is the perfect time to reconsider basic economy fares

The promise of overhead bin space

Eliminating carry-on bags from basic economy spells good news for JetBlue's other flyers.

Starting July 20, all non-basic customers will be guaranteed overhead bin space for one carry-on bag on domestic flights. If JetBlue fails to deliver on its promise — something that Clark expects to happen "well less than 1% of the time" — flyers will receive a $25 travel bank credit valid for one year.

Note this guarantee doesn't apply to international segments or Mosaic elites booked in Blue Basic. Even More Space customers are eligible for the carry-on guarantee if they purchase a basic economy ticket.

According to the company's research, JetBlue thinks that this guarantee will eliminate much of the pre-boarding stress. If every customer brings a full-sized carry-on, only 60% of them will fit in the overhead bin. By limiting access to the bins, JetBlue can now guarantee that there's room for everyone purchasing a Blue fare or higher.

Another benefit of the guarantee is that it should alleviate "operational friction" and anxiety that ground agents and baggage handlers experience from dealing with gate-checked carry-on bags in the moments before departure.

Other changes

But there's more.

JetBlue is also rebranding its confirmed same-day change policy as "same-day switch." Starting on April 1, Blue Basic customers can make confirmed day-of-travel changes for $75.

Blue Basic tickets will also offer $75 same-day standby privileges beginning on April 1.

Mosaics will enjoy free same-day switches and standby on all flights, including when flying on previously restricted basic economy fares.

Finally, Clark told TPG that the price of Blue Extra, the carrier's most expensive coach fare, "will come closer to Blue fares. We think that will help increase the uptake of Blue Extra," which includes perks like early boarding and free same-day switches.

You'll find a full chart outlining JetBlue's new fares below and linked here.