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JetBlue changes its fare structure to reflect the benefits of segmented pricing

JetBlue Airways announced on Monday that it will be overhauling its fare options to give customers more flexibility in choosing seats as well as?change and refundability options. Airlines are increasingly relying on segmented prices to 'boost revenue' and offset higher costs.

The New York-based carrier said that the update would be released in the next few days. It is expected to announce its second-quarter earnings on Tuesday before the bell. The segmentation of fares and customer choice have become crucial for revenue performance, even though fuel price volatility will remain a risk.

Customers will be able book the fare that is right for them. "First, they will be able to choose the best fare based on their preference for seat selection, refundability, and the onboard experience," said JetBlue President Marty St. George in a press release.

Investors are watching to see how JetBlue did in recapturing fuel costs through higher ticket prices during the second quarter. United Airlines, Delta Air Lines, and Alaska Airlines are among the peers who reported higher revenue through fare increases.

Now that we've heard a few carriers talk about it, now all the airlines must reflect that. Peter Trombetta is the vice president of corporate financing at Moody's Ratings. The revenue side is crucial. "We know that costs will be higher."

The airlines raised their fares in the spring to compensate for the increase in jet fuel prices linked to the Iran War. However, these increases -- which averaged around 20% -- did not fully cover the cost. As of July 24, the U.S. spot price for jet fuel had risen to $3.67 per gallon. Prices are still well below the peak in early April of about $4.88 per gallon.

Airlines are using consumer choice and flexibility as levers to "drive" stronger revenue performance.

Southwest Airlines reported that the expansion of its basic economy product resulted in more base-fare purchases and a greater rate of customers upgrading?when given the choice. Delta announced last month that they would 'offer basic fares in all premium cabins so travelers can access premium products for a cheaper price.

JetBlue said that while it has offered tiered fares in the past, its revamp will prepare travelers for BlueFirst, JetBlue's new first-class domestic experience.

St. George stated, "We want customers to know JetBlue has the experiences that they're looking for."

(source: Reuters)