It's well known that high oil prices have not been kind to the airline industry. Given the airlines' cutthroat environment, it would appear that companies such as Southwest (NYSE:LUV) and Continental (NYSE:CAL) can do little but grin and bear the brunt of these high prices. JetBlue (NASDAQ:JBLU), however, has struck upon yet another innovative marketing ploy and found a way to make lemons into lemonade.
This week, the low-cost carrier announced that it was basing the price of one-way tickets between New York and Houston -- the oil capital of the U.S. -- on the cost of a barrel of oil. It has dubbed the promotion "Blue Barrel Fares," and it's already increasing passenger counts on the company's new New York-to-Houston route.
According to reports, JetBlue also intends to make the "Blue Barrel" flights to Houston available from Boston, Pittsburgh, and Washington, D.C., as well as a number of other smaller East Coast cities.
With oil prices hovering around $71 a barrel, the business will lose about $45 per person per flight, but I think the ploy will pay dividends in the future. The company remains engaged in a fierce battle with both low-cost airlines and the legacy carriers, and once new customers experience JetBlue's "upscale discount" service -- complete with leather seats, DirecTV (NYSE:DTV), and XM Satellite Radio (NASDAQ:XMSR) -- I believe they will be duly impressed with the service and inclined to return to the airline, even after prices go up.
Making lemonade
I remember this past month, when temperatures reached 100 degrees in my hometown of Minneapolis and the neighbor kids were offering lemonade for $0.25 a cup. I was most grateful for the chance to get some relief from the heat, but because I knew that they weren't making much money (well, they probably were . but their parents weren't) and was so impressed with their service, I vowed to patronize their stand in the future, even if temperatures cooled and the price increased.
I suspect many JetBlue customers traveling to Houston and other destinations will feel much the same way -- they will be grateful for the temporary relief from the higher airline prices this summer, and impressed with JetBlue's service.
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Fool contributor Jack Uldrich does not own shares in any of the companies mentioned in this article. The Fool has an airtight disclosure policy.
