JetBlue CEO David Neeleman: 'People are thrilled to fly on us'
When JetBlue started flying five years ago, skeptics said CEO Dave Neeleman's New York-based discount airline was likely to fail. But JetBlue, which turned five in February, is thriving.
What's next? "The whole food issue ? we're studying that and what we want to do with that."
Courtesy of JetBlue
Low fares, good customer service and seatback satellite television have made the airline a favorite of travelers. Meanwhile, for the fifth year in a row, JetBlue took the top spot in the Airline Quality Ratings report, which was released yesterday. JetBlue finished atop the recently released J.D. Power rankings of consumer satisfaction.
Based at John F. Kennedy airport, the rapidly growing airline operates nearly 300 daily flights to 29 destinations, including Puerto Rico, the Dominican Republic and the Bahamas. JetBlue flies mostly across country, or from the Northeast to Florida. Later this year, Jet Blue will begin adding 100-seat Brazilian-made Embraer 190s to its fleet of European-made Airbus A320s.
USATODAY.com reporter Ben Mutzabaugh recently sat down with Neeleman.
Customer Service:
Ben Mutzabaugh: What are the major carriers doing wrong that they don't do better in consumer satisfaction ratings?
Neeleman on competition
"It used to be if you were the incumbent airline and a new airline came in, you just had to thump 'em."
Dave Neeleman: I don't know. I think it's more, "What are we doing right?" We've just kind of re-thought the whole system and said, "You know, let's treat our customers like customers. Let's not treat them like they're trying to game the system or try and make rules to stop them. If you keep trying to beat down your customers, then I think they eventually just feel like they're not appreciated.
Q: Were you surprised when you got the news saying you finished atop the J.D. Power customer satisfaction ratings?
A: I don't think we're surprised when we win awards. Our people do such a tremendous job of taking care of our customers that word gets out and people are thrilled to fly on us.
Q: Any changes to JetBlue's frequent-flier program?
A: The big change was allowing customers to use their Membership Rewards miles from American Express to "top up." That was always the complaint: "I can't do quite enough trips to be able to get my 100 (points) to get my free ticket." Because, like Southwest, they kind of spoil after a year. So, the answer is, book on American Express and you can "top up" and get your free ticket.
Q: What would you say to people who wish your points didn't expire?
A: Come fly on us more often. Or get an American Express card.
On the horizon
Q: You have 100 of the new Embraers on order. How will taking delivery of those jets change JetBlue?
A: We're going to grow a lot quicker. We'll be able to go to these small- and medium-sized markets that have only dreamed of having these low fares. Now (they) will be able to experience the JetBlue experience.
Q: Where will JetBlue fly next?
A: I think there are few hints. Obviously, primarily today we're a Northeast-to-Florida and a Northeast-to-transcontinental business. There's a lot of room in between here and Florida, and here and the West Coast. The mid-Atlantic region and the Midwest and, I think, the Southwest.
Q: So, you're talking within those regions?
A: Not within? to those regions.
Q: Do Canada and Mexico fit into your expansion focus?
A: We're primarily a domestic carrier, but we'll certainly look at opportunities in both Canada and Mexico.
Q: Europe? New York-to-London?
A: Just North America.
Q: With the Embraers, is JetBlue likely to consider another hub?
A: The Embraer can do a lot of things. It's a very versatile airplane. It can go short, it can go long. It can do all kinds of things. You know, we're not a hub-and-spoke airline. But we have Boston. We can add a lot of capacity up there. We can add a lot more here (in New York). We also have Dulles (Washington, D.C.), so we have a lot of options for those airplanes.
Q: Tell me more about the new Embraers. What would you say to customers who complain they tend to be small and cramped?
A: They're not a regional jet, basically. Airbus came out with a seat that was an inch wider than a Boeing seat. And Embraer looked at the Airbus seat, and said, "Let's go an inch wider." And they have ample legroom, ample space for your bags overhead so you can bring your bags in the airplane. And they even put in an inch-wider aisle. So this airplane is very comfortable ? and there's no middle seat. Given a choice to fly on an A320 or a 190, there may even be some people who would even prefer a 190 over a 320. The seating space is about the same, and you still have Live TV and XM Radio.
The competition
Q: What's the one innovative thing that one of your rivals has done that's made you think, "I wish we had thought of that first."
A: This whole notion of selling food on planes. The whole food issue ? we're studying that and what we want to do with that. With Delta now pulling back and saying they're not going to sell it anymore because they can't get it right, that certainly gives us pause.
Q: What competitive response by one of your rivals has surprised you the most since JetBlue has started flying?
A: I think it was the 2-for-1 deal from American, where you only needed to make two trips from New York to either Florida or California ? and they'd give you a free ticket worldwide. Now whether you could claim that ticket was a whole other issue, but they really aggressively marketed that and really wanted people to do it. It didn't really seem to affect us that much at all, which is interesting because it was a very shocking offer. At the time, I think we calculated that instead of triple miles, it was (the equivalent) of 10 times the miles.
Q: In smaller markets where Independence Air started flying, it's almost as if passengers were revolting against major carriers they felt had held them hostage. Do you expect the same for the smaller cities JetBlue enters?
A: It used to be if you were the incumbent airline and a new airline came in, you just had to thump 'em. Increase frequency, match their fares, double the miles, triple the miles and ? zip ? you just put 'em out of business. It doesn't work that way with JetBlue because people so look forward to flying JetBlue that they don't even want to call the other guy.
Q: United and Delta created their own low-cost units ? Ted and Song, respectively. If you were the CEO at an airline like United or Delta, what would you do if you had to compete against yourself (JetBlue)?
A: I don't know that much about Ted because we don't see them that much. But Song, obviously, is a drastic improvement over Delta Express.
Q: Were you surprised by Southwest moving into Philadelphia and Pittsburgh?
A: No. I think Southwest has had US Airways in its sights for a long time. I was surprised that they went to Philly before Pittsburgh.
Q: Oil prices are something you have to be concerned with. Southwest got around some of that by hedging their oil costs. What are you doing on that front?
A: What we're doing now is conservation. We're trying to burn as little as we can through more efficient use of our ground equipment and all that kind of stuff. Given the fact most of our competitors, other than Southwest ? and they're aren't even a competitor ? don't really have any hedges in place, it may be folly for us to hedge at this price and then have the price go down.
Q: Do you think we'll see more airline bankruptcies in 2005, or have we gone through the worst of it?
A: I think it depends on the price of oil. If the price continues to go up into the $60s and high $60s, I'm pretty confident you'll see some bankruptcies.
Q: Do you think we'll see any mergers as an alternative to outright liquidations?
A: Mergers have never been a successful way of growing in this industry. You can probably count on a couple of fingers the successful mergers in the airline business.
Building a Business
Q: What should we expect JetBlue to look like five years from now?
A: We're going to be a lot bigger than we are today, obviously. We've got a lot of planes coming. We're going to continue to push the envelope on technology and figure out what customers want. We're not sure if the whole Internet thing on the airplane works, but there are other things with wireless devices that you can do that may be interesting. You may be able to communicate phone to plane ? that's something that people kind of want to do. So, we're looking into that through our Live TV subsidiary.
Q: When you launched 5 years ago, everyone said JetBlue was following the Southwest model. Now, some people might say Southwest should follow the JetBlue model.
A: I have a tremendous amount of respect for Southwest. They've really done a fantastic job of building shareholder value over 32 years. But all that said, I think we have a better product than they do. I've heard a lot of flattering things about JetBlue that I'm proud of, but the one I'm most proud of is that we're Southwest airlines new and improved.
Q: People still seem to talk about flying JetBlue as an "experience." Is that something you tried to create?
A: We did. Flying's a pain. It really is. It didn't used to be that way. You actually looked forward to the journey. (Now) flying's kind of like a means to and end and it's not enjoyable. We thought if we could just make that journey something that maybe you didn't look forward to it, but you didn't dread, then you would go more often. And you would go with us more often. And that's how you build a business. I think that's kind of the premise we started out with and so far ? knock on wood ? it's working out for us.
When JetBlue started flying five years ago, skeptics said CEO Dave Neeleman's New York-based discount airline was likely to fail. But JetBlue, which turned five in February, is thriving.
What's next? "The whole food issue ? we're studying that and what we want to do with that."
Courtesy of JetBlue
Low fares, good customer service and seatback satellite television have made the airline a favorite of travelers. Meanwhile, for the fifth year in a row, JetBlue took the top spot in the Airline Quality Ratings report, which was released yesterday. JetBlue finished atop the recently released J.D. Power rankings of consumer satisfaction.
Based at John F. Kennedy airport, the rapidly growing airline operates nearly 300 daily flights to 29 destinations, including Puerto Rico, the Dominican Republic and the Bahamas. JetBlue flies mostly across country, or from the Northeast to Florida. Later this year, Jet Blue will begin adding 100-seat Brazilian-made Embraer 190s to its fleet of European-made Airbus A320s.
USATODAY.com reporter Ben Mutzabaugh recently sat down with Neeleman.
Customer Service:
Ben Mutzabaugh: What are the major carriers doing wrong that they don't do better in consumer satisfaction ratings?
Neeleman on competition
"It used to be if you were the incumbent airline and a new airline came in, you just had to thump 'em."
Dave Neeleman: I don't know. I think it's more, "What are we doing right?" We've just kind of re-thought the whole system and said, "You know, let's treat our customers like customers. Let's not treat them like they're trying to game the system or try and make rules to stop them. If you keep trying to beat down your customers, then I think they eventually just feel like they're not appreciated.
Q: Were you surprised when you got the news saying you finished atop the J.D. Power customer satisfaction ratings?
A: I don't think we're surprised when we win awards. Our people do such a tremendous job of taking care of our customers that word gets out and people are thrilled to fly on us.
Q: Any changes to JetBlue's frequent-flier program?
A: The big change was allowing customers to use their Membership Rewards miles from American Express to "top up." That was always the complaint: "I can't do quite enough trips to be able to get my 100 (points) to get my free ticket." Because, like Southwest, they kind of spoil after a year. So, the answer is, book on American Express and you can "top up" and get your free ticket.
Q: What would you say to people who wish your points didn't expire?
A: Come fly on us more often. Or get an American Express card.
On the horizon
Q: You have 100 of the new Embraers on order. How will taking delivery of those jets change JetBlue?
A: We're going to grow a lot quicker. We'll be able to go to these small- and medium-sized markets that have only dreamed of having these low fares. Now (they) will be able to experience the JetBlue experience.
Q: Where will JetBlue fly next?
A: I think there are few hints. Obviously, primarily today we're a Northeast-to-Florida and a Northeast-to-transcontinental business. There's a lot of room in between here and Florida, and here and the West Coast. The mid-Atlantic region and the Midwest and, I think, the Southwest.
Q: So, you're talking within those regions?
A: Not within? to those regions.
Q: Do Canada and Mexico fit into your expansion focus?
A: We're primarily a domestic carrier, but we'll certainly look at opportunities in both Canada and Mexico.
Q: Europe? New York-to-London?
A: Just North America.
Q: With the Embraers, is JetBlue likely to consider another hub?
A: The Embraer can do a lot of things. It's a very versatile airplane. It can go short, it can go long. It can do all kinds of things. You know, we're not a hub-and-spoke airline. But we have Boston. We can add a lot of capacity up there. We can add a lot more here (in New York). We also have Dulles (Washington, D.C.), so we have a lot of options for those airplanes.
Q: Tell me more about the new Embraers. What would you say to customers who complain they tend to be small and cramped?
A: They're not a regional jet, basically. Airbus came out with a seat that was an inch wider than a Boeing seat. And Embraer looked at the Airbus seat, and said, "Let's go an inch wider." And they have ample legroom, ample space for your bags overhead so you can bring your bags in the airplane. And they even put in an inch-wider aisle. So this airplane is very comfortable ? and there's no middle seat. Given a choice to fly on an A320 or a 190, there may even be some people who would even prefer a 190 over a 320. The seating space is about the same, and you still have Live TV and XM Radio.
The competition
Q: What's the one innovative thing that one of your rivals has done that's made you think, "I wish we had thought of that first."
A: This whole notion of selling food on planes. The whole food issue ? we're studying that and what we want to do with that. With Delta now pulling back and saying they're not going to sell it anymore because they can't get it right, that certainly gives us pause.
Q: What competitive response by one of your rivals has surprised you the most since JetBlue has started flying?
A: I think it was the 2-for-1 deal from American, where you only needed to make two trips from New York to either Florida or California ? and they'd give you a free ticket worldwide. Now whether you could claim that ticket was a whole other issue, but they really aggressively marketed that and really wanted people to do it. It didn't really seem to affect us that much at all, which is interesting because it was a very shocking offer. At the time, I think we calculated that instead of triple miles, it was (the equivalent) of 10 times the miles.
Q: In smaller markets where Independence Air started flying, it's almost as if passengers were revolting against major carriers they felt had held them hostage. Do you expect the same for the smaller cities JetBlue enters?
A: It used to be if you were the incumbent airline and a new airline came in, you just had to thump 'em. Increase frequency, match their fares, double the miles, triple the miles and ? zip ? you just put 'em out of business. It doesn't work that way with JetBlue because people so look forward to flying JetBlue that they don't even want to call the other guy.
Q: United and Delta created their own low-cost units ? Ted and Song, respectively. If you were the CEO at an airline like United or Delta, what would you do if you had to compete against yourself (JetBlue)?
A: I don't know that much about Ted because we don't see them that much. But Song, obviously, is a drastic improvement over Delta Express.
Q: Were you surprised by Southwest moving into Philadelphia and Pittsburgh?
A: No. I think Southwest has had US Airways in its sights for a long time. I was surprised that they went to Philly before Pittsburgh.
Q: Oil prices are something you have to be concerned with. Southwest got around some of that by hedging their oil costs. What are you doing on that front?
A: What we're doing now is conservation. We're trying to burn as little as we can through more efficient use of our ground equipment and all that kind of stuff. Given the fact most of our competitors, other than Southwest ? and they're aren't even a competitor ? don't really have any hedges in place, it may be folly for us to hedge at this price and then have the price go down.
Q: Do you think we'll see more airline bankruptcies in 2005, or have we gone through the worst of it?
A: I think it depends on the price of oil. If the price continues to go up into the $60s and high $60s, I'm pretty confident you'll see some bankruptcies.
Q: Do you think we'll see any mergers as an alternative to outright liquidations?
A: Mergers have never been a successful way of growing in this industry. You can probably count on a couple of fingers the successful mergers in the airline business.
Building a Business
Q: What should we expect JetBlue to look like five years from now?
A: We're going to be a lot bigger than we are today, obviously. We've got a lot of planes coming. We're going to continue to push the envelope on technology and figure out what customers want. We're not sure if the whole Internet thing on the airplane works, but there are other things with wireless devices that you can do that may be interesting. You may be able to communicate phone to plane ? that's something that people kind of want to do. So, we're looking into that through our Live TV subsidiary.
Q: When you launched 5 years ago, everyone said JetBlue was following the Southwest model. Now, some people might say Southwest should follow the JetBlue model.
A: I have a tremendous amount of respect for Southwest. They've really done a fantastic job of building shareholder value over 32 years. But all that said, I think we have a better product than they do. I've heard a lot of flattering things about JetBlue that I'm proud of, but the one I'm most proud of is that we're Southwest airlines new and improved.
Q: People still seem to talk about flying JetBlue as an "experience." Is that something you tried to create?
A: We did. Flying's a pain. It really is. It didn't used to be that way. You actually looked forward to the journey. (Now) flying's kind of like a means to and end and it's not enjoyable. We thought if we could just make that journey something that maybe you didn't look forward to it, but you didn't dread, then you would go more often. And you would go with us more often. And that's how you build a business. I think that's kind of the premise we started out with and so far ? knock on wood ? it's working out for us.
