Fasten Your Seat belts: Turbulence Ahead
| posted by Chuck SalterWhen JetBlue got off the ground back in 2000, it had a number of advantages over its older and larger competitors. Founder David Neeleman had amassed $130 million, more than any other airline start-up. JetBlue could buy new planes that were cheaper to maintain than older fleets. It had a passionate team-oriented culture that attracted pilots without the baggage of a union. Because its operating costs were the lowest in the industry, JetBlue could offer the lowest fares. It didn't behave like a traditional airline; instead of scaling back the perks, it poured them on -- leather seats, a TV in each seat back, unlimited snacks. But there was always a question hanging over the airline: What happens when it's older, when its fleet costs more to maintain, when its pilots earn more, when those early advantages erode?
Now we know. It loses money ($42 million in the last three months of 2005), just like the traditional airlines. And as the Times notes today, it raises prices -- starting at $10 on one-way flights. The news is more fuel for the skeptics who bristle at the likes of Neeleman, who always said he was building a different and better airline.
But don't ground JetBlue just yet. Neeleman knew its costs would eventually rise and it would have to compete on more than price. That's why he always stressed service as a strategic advantage from day one. In that respect, JetBlue is still different. It doesn't feel like you're flying on the cheap the way you often feel on Southwest. JetBlue offers more than free TV and snacks. If offers savvy customer service, similar to what I've experienced with Enterprise Rent-A-Car, one of our Customer First Award winners. If JetBlue can maintain that service, customers may be willing to pay a little more. How much more is the question Neeleman has to figure out.
