JetBlue Strikes Lucrative Streaming Deal With

The airline will make access to the retailer's Prime video/music on demand service free for the service's members who travel on its flights.

Eric Volkman
Eric Volkman
May 27, 2015 at 9:00AM
Consumer Goods

JetBlue (NASDAQ:JBLU) wants to put (NASDAQ:AMZN) in the seat with you on your next flight with the carrier. The two firms have struck a deal in which the full scope of the retailer's Prime video and music on-demand streaming service will be available to the airline's passengers through their chosen device.

Image source: Flickr via Doug Belshaw

Existing Prime members will be able to watch much of that content for free, while non-members will pay to access the service. It's an attention-catching initiative from the two firms that can benefit both -- particularly the scrappy carrier.

Air stream
Amazon Prime will be a feature attraction of Fly Fi, JetBlue's satellite-powered onboard Internet service. The airline says Fly Fi boasts speeds of 12 to 20 megabits per second, significantly faster than the current inflight standard.

Fly Fi has two tiers of service -- it's free of charge for general Internet cruising, while bandwidth-straining services like file transfers and downloads incur additional charges. Amazon Prime will fall under the free tier.

It's a great perk for Prime members ... but they shouldn't rush to switch their existing tickets to JetBlue flights just yet. Fly Fi is still in beta; once it comes out of that phase later this year it'll start to include the Prime offerings. Fly Fi is currently available only in selected JetBlue planes, with the airline aiming for full roll-out "as quickly as possible."

Pushing the perk
Very little is free for passengers in air travel these days, and JetBlue is keeping ahead of the game by offering a relatively speedy online experience for nothing.

Times are good for airlines right now, given the savings they're enjoying from a depressed oil price, plus a wave of consolidation that's helped keep ticket prices high. But it's still a tough business with significant, inescapable costs, and determined competition in all segments of the market.

This includes the budget sphere, which is currently dominated by the cagey veteran Southwest Airlines (NYSE:LUV), a firm that knows how to win the hearts of cost-conscious travelers. This is due in no small measure to its well-hyped freebie, the $0 checked baggage fee.

JetBlue makes much less noise about its own zero-cost baggage fee. These days, it's no wonder, as it revealed last year that it'll introduce them for its cheapest tickets in the second half of 2015. It also admitted that it'll stuff more seats into some of its planes, squashing another advantage it liked to tout -- the relatively spacious legroom on its flights.

So JetBlue needs a juicy perk not only as a lure for customers, but to cloud over the fact that an existing freebie and a strong selling point are both departing in the near future.

A traveling Fool's take
On balance, though, I think Fly Fi bundled with Prime access is a fine extra that'll win a lot of positive attention from the air-traveling public.

Nobody likes baggage fees, but since they've become the rule rather than the exception, JetBlue customers will learn to live with them ... especially if the trade-off is a (largely) free private cinema in the sky. And anyone who's flown recently is used to the dog pen-like space in economy class, so the narrowing legroom shouldn't be a deal breaker.

The terms of the Amazon/JetBlue deal haven't been released, but even if it was burdensome for the big online retailer it'll still feel like a win. It's a fine marketing opportunity for Prime, boosting visibility and attracting new members. Expanding the membership rolls is obviously a goal of the e-commerce giant, as it proudly spotlights the service's growth figures.

Amazon will also be happy to collect fees for the premium content on Prime, i.e. the newer/more popular offerings that cost extra to watch. The same goes for the charges incurred by non-members for accessing the service.

Last, and far from least, the deal will be a boon for JetBlue's passengers. Although we've come to grudgingly accept being nickel-and-dimed by airlines, none of us are particularly happy about it. Cruising the Internet at acceptable access speeds and watching some free entertainment on our journeys will really help us feel better about the situation.