Tuesday, October 02, 2007

I want your money...but not your cash

JetBlue has just announced that the airline has gone cashless. The airline isn't the first to make such a move, but it shows the drive for simplicity at the airline. Credit and debit card penetration in North America must be near 100%, especially among airline passengers. It makes sense for JetBlue to make such a payment adjustment. One argument against going cashless is that passengers with a few extra bucks in their pocket may be more willing to buy something to eat than if they have to take the plastic out. However, I would think that consumers are becoming more accustomed to making small purchases with their credit cards than in the past. No longer are they only used to buy the tv or car, but also a pack of gum. The cabin crew has to spend less time with each customer; they don't have to wait for the guy in 28B to origami-fold himself in order to fish out some spare change. Now they can provide more service throughout the cabin. Plus, I have read arguments that cash is a pig-pen of disease and going cash-less may lower sick days. I think there are other sources of disease in an airplane that are important, but it's a noteworthy comment. Cash that disappears in pockets of cabin crew is also minimized. More importantly though, such purchasing may allow the airline to better customize their services and products. Imagine if JetBlue knew that every Tuesday from Oakland to New York they always sold out of Merlot to people from the Midwest. That sure would help operations plan their trolleys in the future. Back home at headquarters the airline doesn't have to administer all those coins and bills. That costs money and time. SAS recently admitted that accepting all sorts of currency and coins resulted in tons of money that would be cost prohibitive to count. A credit-card only cabin would solve that problem (of course, others crop up, but they must be addressed as they appear).

On a side not, the JetBlue representative at the Low Cost Airline Congress in London promoted their partnership with Dunkin' Donuts. This is something that North American airlines are more prone to do than others I have seen (sorry, I know US and European airlines best). This has been common in the past with higher-priced items, such as wine, but not commodities. Of course, the margins on a generic cup of coffee may be higher than a branded one, but maybe it is the small things that customers notice and help generate word of mouth advertising. Those who love to gossip about the details about their trips always mention the details. "Gloria, they even had Dunkin Donuts. You know how much Herb and I love Dunkin Donuts. And the hotel folded our towel in the shape of hummingbird!" You don't hear them talk about how their ticket was cheap because the airline does not sell through GDSs, does not offer interlining, or has a single fleet. You see airlines out there that promote their branded coffee, cookies, sandwiches, and much more.

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