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JetBlue's challenge: How to avoid becoming 'like any other airline'

VIDEO8:2808:28
From startup to the big leagues, how JetBlue plans to stay relevant
Key Points
  • JetBlue is scrambling to improve operations, grow and win over an increasingly skeptical group of investors.
  • The airline's shares have struggled along with most of its rivals.
  • JetBlue's executives have vowed to cut costs as it continues to expand.

JetBlue Airways is looking more like its bigger competitors these days.

Plans for the New York-based airline were unveiled in February 1999. JetBlue took its first flight in the winter of 2000, vowing to "bring humanity back to air travel." Now entering its third decade, it is adopting measures used by some more established airlines to drum up revenue and please skeptical investors as its stock price struggles. Increasing baggage fees? Check. Plans for a no-frills coach service? Check. Chasing those lucrative business travelers? Check. Slimming down corporate-office ranks? Check.

JetBlue's challenge is holding onto its quirky culture and succeeding at airlines' tough balancing act: keeping investors and passengers happy.

"We're exiting that awkward teenage stage and becoming adults," said Joanna Geraghty, JetBlue's president and COO.

Despite updates like new planes and cabins, JetBlue wants to hold onto its customer-focused approach that won it a loyal following.

"Customers expect good service, and when they don't get it, they're vocal about it," said Geraghty.

Armed with a fleet of brand-new Airbus jets, each outfitted with leather seats and individual screens offering satellite television, JetBlue was the brainchild of serial airline entrepreneur David Neeleman. He's planning to launch a new U.S. airline.

JetBlue took its first flight on Feb. 11, 2000, from New York's John F. Kennedy International. The carrier's bet on JFK was a gamble on whether travelers would trek out to an airport more known for international service than for short- and medium-haul flights.

"The joke was you could bowl down the runway," said Mark Ahasic, who joined JetBlue a month after its first flight and stayed on for more than six years helping to plan flights and run operations.

JetBlue Airways interior
Jose M. Osorio | Chicago Tribune | Tribune News Service | Getty Images

Neeleman ran a shoestring operation. Customer service agents operated out of their homes in Salt Lake City. The airline's corporate headquarters was in a section of Queens that sits between LaGuardia Airport and JFK.

Its marketing was quirky and smart: An Airstream outfitted with JetBlue airplane seats was driven around the country to improve brand awareness. It also targeted potential travelers in immigrant communities as it launched service to countries like the Dominican Republic to increase sales among passengers visiting friends and relatives.

JetBlue Airways' CEO David Neeleman acts as a flight attendant during a flight from John F. Kennedy International Airport to Syracuse and back.
Mark Peterson | Corbis | Getty Images

JetBlue grew quickly and by 2017 became the fifth-largest U.S. airline by passengers carried, according to data from the Department of Transportation.

The rapid growth wasn't without its meltdowns. When an ice storm hit the Northeast in February 2007, JetBlue was hesitant to cancel flights and struggled to restaff its planes once the bad weather passed. That led to a cascade of delays and cancellations, stranding thousands of customers. Neeleman apologized in a letter to customers and issued a "customer bill of rights, " which set compensation standards for delays and canceled flights. He went on "Late Night with David Letterman" to apologize again. The board ousted him as CEO three months later.

JetBlue Airways passengers wait for flights at New York's John F. Kennedy Airport, in this Feb. 15, 2007 file photo.
Richard Drew | AP

JetBlue rattled more established airlines. It's low-cost model inspired Delta to launch a stand-alone budget carrier called Song in 2003, while United rolled out its version in 2005, which it named Ted. Both failed and were quickly scrapped while their parent companies were in financial distress.

JetBlue and Song low-cost airline planes sit on the tarmac at the Fort Lauderdale International Airport May 18, 2004 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images

While unsteady at first, JetBlue has posted a profit since 2009, according to FactSet data.

JetBlue and most of its rivals have struggled over the past year, however, as fuel costs ate into carriers' bottom lines and investors dumped airline stocks. JetBlue's shares are off more than 23 percent over the 12 months through Wednesday. The only U.S. airlines to post a gain in that period are Spirit, nearly 29 percent, and United, more than 6 percent.

Another uphill battle for the airline is improving on-time arrivals. JetBlue has lagged competitors.

Even though JetBlue might want to avoid it, it has made some strategy changes over the years that have more in common with a Delta or American. In 2014, it launched Mint, a premium cabin with lie-flat seats, on its transcontinental routes, a play for lucrative business travelers in cities like Los Angeles, San Francisco, New York, Boston and Seattle. Fares in its premium cabin are often a fraction of what travelers could find on more established carriers. The big three legacy airlines have also looked for ways to improve their transcontinental service.

JetBlue is considering adding flights to Europe, and a key part will be Mint class, Geraghty said.

JetBlue's workforce has also pushed to unionize in recent years, which will mean higher labor costs. Pilots ratified their first contract over the summer, and flight attendants voted to unionize last April.

Last summer JetBlue raised fees on checked bags by $5 to $30, a move that was copied by its larger rivals, to combat a surge in fuel costs.

"It became like any other airline," said Robert Mann, an aviation analyst and industry veteran.

JetBlue is also rolling out new cabins that may anger some flyers because to fit more seats on board, the airline is cutting standard legroom by 2 inches, to 32 inches, still more than on many other airlines. Its "most legroom in coach" tagline is a major selling point.

"That's what Wall Street told them to do," said Mann.