JetBlues Weather Woes

1
JetBlues Weather Woes
Joshua Kushner Maureen Taylor Stacey Weitz
2
Business Profile

• Founded in February 1999 by CEO David Neeleman
• high quality, low-fare, low-cost passenger
  airline
• 100 million in revenue by 2000
• Homebase JFK International Airport, Forest
  Hills, New York
• Currently serves 54 destinations in 6 countries

3
Corporate Philosophy

• The JetBlue Experience
• LiveTV
• XM radio
• Low fares designed to stimulate demand
• Maintain low fares by keeping operating costs low
• Electronic ticketing
• Use of only two types of aircraft

4
Strong Brand

• Emphasis on hiring customer service oriented
  employees who embody the companys 5 key values
• Safety
• Caring
• Integrity
• Fun
• Passion

5
Risk Factors

• Rising cost of fuel
• Subject to geopolitical issues
• JetBlue is a non-union workforce
• Importance of employee satisfaction

6
Risk Factors

• Operations centered in Northeast and Florida
• More susceptible to adverse weather conditions
• Aircraft utilization rate
• Automated systems keep JetBlue in operation
• Computer virus or natural disasters

7
Learn from the Past?

• 1999, Northwest Airlines had a flight arrive 22
  hours late to the Caribbean after sitting on a
  tarmac for over 8 hours
• Bought rolling stairs to remove passengers from
  trapped planes and stash emergency food in case
  of emergencies
• December 29, 2006, American Airlines had 68
  delayed flights due to bad weather in Texas
• American now has a policy to fully refund
  customers after sitting on the tarmac for more
  than 4 hours and further plans to prevent this

8
Events of February 14, 2007

• Ice storm causes delay of 9 incoming and outbound
  flights at JFK on runway with passengers on board
• More than six hours each
• Food in short supply, bathrooms overflowing
• Thousands also stranded in terminal
• Of the 550 daily flights, more than 250 were
  cancelled
• Reasons
• Congestion
• Frozen equipment
• Keeping planes on runway incase weather broke

9
The Aftermath

• February 15, 16 Delays, cancellations continue
• February 17, 18, 19 23 of flights pre-canceled
  to organize operations
• Inability to cope with rescheduling flight crews
• In total, there were 1,096 canceled flights
  affecting 130,000 passengers

10
Making Things Right

• YouTube Apology
• David Neeleman, CEO
• Feb 19, 2007
• Testing the waters
• JetBlue Blog
• Formal written statement
• Issues of accessibility

11
Making Things Right

• Television
• David Neeleman, CEO
• Feb 20, 2007
• Large scale apology
• Newspapers
• 20 major papers
• 15 U.S. Cities

12
Making Things Right

• Passenger Bill of Rights
• Voucher systems
• Cancellation standards
• Delays, groundings,
• etc.

13
Customer Reactions

• Immediate Reaction
• Negative
• Feelings of neglect
• Later On.
• Positive
• Refreshing change

14
Financial Losses

• In all, the 1,000 canceled flights cost the
  airline over 41 million in reimbursements, lost
  revenue, and extra costs, such as overtime for
  crew members
• JetBlue had already been losing money due to
  rising fuel costs and ambitious expansion efforts
• In addition, JetBlues stock fell 0.66, or 4.87
  the Tuesday following the ice storm
• By May 2007, JetBlues stock continued to fall up
  to 20 from before the February 14th storm
• Expenses led to a 22 million loss in the
  first-quarter of 2007

15
Management Shift

• March 2007 Russ Chew moved in as JetBlues new
  COO
• Also added former UPS executive to his board and
  named a chief for its JFK Airport hub
• May 10, 2007 David Neeleman stepped down to
  become a non-executive chairman
• Replaced by David Barger, who is a little less
  well known, but the only original member of the
  senior management team still at JetBlue

16
JetBlue Today

• JetBlue posted its first third-quarter profit in
  2 years
• 23 million
• Revenue rose to 765 million from 628 million
  just a year ago
• 12 new routes to Florida beginning in Winter 2007

17
JetBlue Today

• In-flight digital revolution
• Free WiFi access on board
• Only for use of Yahoo or Blackberry messenger or
  e-mail services
• Available on Airbus A320 BetaBlue
• December 3, 2007 JetBlue pilot successfully
  taxied a plane after sliding on the runway due to
  reduced tracking

18
Discussion Questions

• Why did JetBlue not learn from their competitors
  mistakes?
• Why did JetBlue not have a crisis plan in place?
• Was it a good choice to use David Neeleman as the
  companys spokesperson?
• Was David Neelemans delayed departure still
  effective? Was it necessary?
• How could JetBlue have better communicated with
  employees and passengers during the crisis?