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Neeleman: 'Fixated' On Bottom Line
Interview · September 24, 2004

These aren't the best of times for the airline business. Fuel prices are soaring, profits are plummeting and bankruptcies have become almost routine. But JetBlue Airways apparently didn't get that memo. It continues to prosper and expand (earlier this month, it added service from New York's LaGuardia Airport to Fort Lauderdale, Fla.). Not that it's always been a smooth ride for the new airline - last year, for example, it admitted to handing over passenger records to a Defense Department contractor. Christopher Elliott recently asked JetBlue's chief executive, David Neeleman, how the company has managed to navigate the turbulent skies.

Q: Let me start with a question I think a lot of your passengers have after they fly on JetBlue. How can you offer that kind of product without losing your shirt?

Neeleman: There are a lot of misperceptions about the airline industry - that it's cheaper to use old planes from the desert to start an airline, for example. Truth be told, while it costs less to actually start flying, the costs of maintaining old aircraft, which also burn more fuel, and have poor reliability so you're spending more money to correct scheduling problems ... well, you get the point.

JetBlue started out as the best financed airline start-up in US aviation history. So we bought new planes, hired great people, invested in technology, and have been fixated on the bottom line since day one. We're incredibly efficient and productive. And we have the lowest costs in the industry.

TVs cost less to offer than bad airline meals. Leather seats cost twice what cloth seats cost but they last twice as long. Service and a smile are free. It's just smart business.

Q: In the not-too-distant future, your costs will be more in line with those of your rivals. How do you expect to remain competitive?

Neeleman: Well, their costs will be closer but we'll still have a better cost structure. But JetBlue's success isn't just about costs, we also have the best economy product out there. We've won the Conde Nast Traveler Readers' Poll for the last couple of years based on our product. And this year we also were named Best Quality Airline by a survey that relies solely on DOT statistics. So, on those metrics of most on-time, fewest complaints, least cancellations and bumped passengers, JetBlue ranked number one in performance.

Q: You've been quoted as saying JetBlue is "bringing humanity back to air travel." What does that mean?

Neeleman: It means putting yourself in the customer's shoes. The airline industry became arrogant and rude in the 90s. And expensive for the privilege of being ignored. We looked at it and said "we can do better". So, whether one of our reservations agents - who work from home - are helping you make your booking, or you're using jetBlue.com, it's welcoming, friendly, empathetic, and easy.

It means we don't gouge people with high fares. We're flexible on changes. We do what's needed to keep customers happy. And we treat people as individuals. It's not rocket science, it's just fundamental principles of customer service.

Q: JetBlue has become something of a modern-day icon, kind of like Apple's ubiquitous iPod. I've personally talked to people who would go to great lengths to fly your airline. Did you set out to create a carrier with that kind of cult following?

Neeleman: We were as surprised as anyone to find become such a hot brand with such a loyal base of customers. I think it shows you what a little humanity can do. It creates a connection, a bond we have with our customers. They trust us to be on time, to be value-priced and to treat them with kindness and respect.

Q: Which airline do you consider your closest competition - and why?

Neeleman: In traditional terms, it depends on the route. We compete with Delta to Florida and American to the west coast. But who's closest to us? Other than the imitators of late, I don't think anyone comes close.

Q: Speaking of imitators, at least two airlines - Song and Ted - have tried to emulate the JetBlue model. Have you flown on either of those carriers yet, and what's your opinion of them?

Neeleman: I haven't. That's not out of spite or any sense of complacency. I've just been busy doing my own thing. My opinion of them doesn't matter. I'll let the customers decide.

Q: Your airline is in the middle of an ambitious expansion, with a focus on moving into new markets such as the Caribbean. In what other parts of the world do you see expansion opportunities? What will the JetBlue route map look like in five years? In ten?

Neeleman: Well, we'll have something like 400 aircraft in ten years so the route structure will look much bigger but maybe not so different. We're building a 26-gate terminal at JFK which will allow us to almost triple our NY flights by 2008. And in addition to our current Airbus A320 aircraft orders, next year we also start taking EMBRAER E190 aircraft which have 100 seats in each.

The 190s will mean we can take the JetBlue experience into smaller markets. So, you'll still see us with a big New York and LA area presence. I'm sure Boston and DC will be much bigger and the big cities we're not in yet, like Chicago will be online. And more international service, of course. I expect we'll be in Canada and Mexico, as well as more destinations in the Caribbean.

Q: In "Flying High" you told author James Wynbrandt, "I'm a deeply religious person." But I've read very little about how being a devout Mormon has affected the day-to-day decisions you make as a manager. Could you tell me, generally speaking, how your management philosophy is shaped by your faith? And can you name a specific instance where you've made a decision grounded in your faith that has affected your airline and the passengers it serves?

Neeleman: I was born in Sao Paulo in a somewhat privileged US ex-pat existence and then grew up in Salt Lake City. When I was young, I went back to Brazil as a missionary but worked and lived with much poorer people. But they seemed so much happier and taught me a lot about what's important in life and how to commune with people from all walks of life. I suppose that's one way my experience has shaped the airline.

As a one-class carrier, we treat everyone great. No one gets special treatment … and same goes for our employees. Everyone is as important as the next at JetBlue and we're a team delivering a better travel experience. At the end of each flight on JetBlue, I always stay and help clean the plane - and the rest of our crew do. I don't expect special treatment. And I'd never ask someone to do something I wouldn't be prepared to do.

Q: Last year, in a letter to your customers, you admitted to releasing 5 million passenger records to a Defense Department contractor. You also said JetBlue had "taken steps to fix the situation and make sure that it never happens again." Can you tell me briefly what kind of steps you took? What has changed since you sent the letter?

Neeleman: Well, we hired an ombudsman to take a look at how we work and make recommendations to prevent something like that happening again. I suppose the most significant change is that one person can't make that significant a decision on his or her own anymore. We have built in a series of approvals so the process is totally different.

Q: If you could be the CEO of any company other than JetBlue, which one would it be? And why?

Neeleman: It wouldn't be an airline, that's for sure. My family owns a resort in Utah called Zion Ponderosa. It's in eastern Zion National Park and it's fantastic. I'd love to be CEO there.

Christopher Elliott is a travel journalist based in Orlando. All e-mailed questions may be edited, condensed or republished at the site's discretion.

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