Preaching JetBlue: how David Neeleman is spreading the gospel of service at the fast-growing airline

Chief Executive, The, Oct, 2004 by Rick Newman

Spend a day with David Neeleman, and you're more likely to feel you're on a campaign swing than a corporate soiree. On a trip to Puerto Rico to launch service out of Aguadilla, a city near the island's west coast, the JetBlue CEO steps off the plane to the cheers of a gaggle of employees. He does a quick TV interview, calling up a key talking point: "We're making money. All the other airlines are losing money." He chats up the local employees and learns that Eddie Torres, the newly appointed general manager for Aguadilla, recently got engaged. "Oh, that's nice," Neeleman swoons. "When are you getting married?... That's a happy life." Then as he boards the plane to leave, there's another ovation. He blows kisses to his acolytes and deadpans, "I'm going into exile now."

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No, Bill Clinton is not running an airline. This is the management style of the most popular boss in aviation. JetBlue, which Neeleman started in 2000 out of John F. Kennedy International Airport in New York, is likely to post a profit margin greater than 10 percent in 2004 in an industry projected to lose more than $3 billion overall this year. By most measures, the upstart airline stands out like Jack's Beanstalk in a land of stubble. Its load factor--the percentage of seats filled--hovers near 85 percent, about 10 points higher than for the industry as a whole. Customers, lured by perks such as free TV at every seat, often pay more to fly JetBlue than to fly competitors, and New Yorkers make the long trek to JFK when other airports are closer. "Neeleman's an idealist," says analyst Jim Parker of Raymond James & Associates, an investment bank in Atlanta. "He thinks he can create an airline that people will actually like."

There's much more to JetBlue's success than its grassroots CEO. The airline's costs are among the lowest in the industry. It began life with coffers full of eash and a fleet of brand-new Airbus A320 aircraft, which helped. And Neeleman is supported by a strong management team with decades of industry experience. But it's Neeleman's everyman style that has clearly captivated employees, customers and investors, making him a darling of both Main Street and Wall Street. He knows many of his 7,000 employees' names by heart, flies in coach even when he must travel on other airlines (JetBlue has no first class and, Neeleman swears, never will) and is passionate about service. "When I get treated poorly, it really pisses me off. Then it pisses me off that it pisses me off," he chuckles. "Let's just treat each other with respect."

That's not an ethic Neeleman picked up in business school. In fact, he quit the University of Utah after one semester to start a travel company near Salt Lake City. Much more influential than any formal schooling, says Neeleman, a Mormon, was the two-year mission he spent in Brazil, proselytizing in the slums of Sao Paolo. "I still remember walking down those dusty streets, looking at all those people," he says. That's where he developed "a disdain for people who think they're better than others." But he still appreciates the value of an elite education. "I've got a lot of those Stanford and Harvard guys working for me," he grins.

On the flight from New York to San Juan, Neeleman seems charged being among his employees and customers. Once the plane settles into its cruising altitude, Neeleman walks to the front of the cabin, grabs the microphone and introduces himself. He explains that he'll be coming through the cabin serving snacks, an announcement that prompts a smattering of applause. As he hands out chips and cookies from a wicker basket, he makes small talk with the passengers. "Whatcha playing?" he asks one man who is tapping away at a Game Boy. "How's the legroom?" he asks another passenger. "You know, Row 10 has a few extra inches--for next time."

A skeptical observer might wonder whether this is all a big publicity stunt for the benefit of a reporter tagging along. But the rest of the cabin crew seem familiar with Neeleman's routine, and they casually go about their business while he marches up and down the aisle. "Seeing David is great," says Kimmy Antenucci, one of the flight attendants. "He's so easygoing and we get to talk." Mike DeLorenzo, another flight attendant, points out another reason for the good morale: "The company does the right thing for us." The base pay of JetBlue employees tends to be lower than at other airlines, but a generous stock purchase program and other benefits make up for it--at least during times when the company is as profitable as it has been.

Advantages of Youth

Neeleman's competitors eagerly point out that as a startup, JetBlue has several inherent advantages over established carriers--no pension obligations, for one. Its pilots, flight attendants and mechanics are nonunion. Those advantages will fade, critics say, as the airline grows. Employees will get raises, boosting labor costs. As the planes age, maintenance costs will increase, and JetBlue will begin to face the same challenges as established carriers.