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

Chief Executive, The, Oct, 2004 by Rick Newman

"I don't think JetBlue has a better chance of being profitable than 100 other predecessors with new airplanes, new employees, low fares, all touchy-feely," Continental Airlines CEO Gordon Bethune told Time in 2002. "All of 'em are losers. Most of these guys are smoking ragweed." A copy of the story with Bethune's remark is taped to a pillar in the JetBlue employee lounge at the San Juan airport.

To employees and customers, however, the "touchy-feely" aspect of the airline seems to matter. "When you have a leader who's so friendly, it makes everybody feel good about what they're doing," says Jim Small, general manager for San Juan, who worked for US Airways before coming to JetBlue. "At US Air, there was no comparison. Management was the biggest factor souring the grapes." Meanwhile, there's a steadily growing body of lore about JetBlue's can-do customer service--notable, perhaps, because air travel has become such a high-pressure endeavor. JetBlue is generous with travel vouchers when passengers are inconvenienced. And employees are encouraged to go out of their way for customers. Neeleman himself once drove an elderly couple from JFK to Connecticut, where he lives and where they were headed, rather than let them spend $200 on a taxi. "He makes everybody want to take care of the customer," says Parker of Raymond James. "It makes everybody more productive. You do get a revenue premium."

Numbers support that. Delta Air Lines, for instance, launched its low-fare subsidiary Song in large part to compete with JetBlue out of New York. It has touted traditional big-airline come-ons, such as frequent flier miles valid throughout Delta's worldwide system. And Song has even undercut JetBlue's fares. But JetBlue still attracts more customers on the most competitive routes. Between New York and Orlando, for instance, JetBlue filled 89 percent of its seats in the fourth quarter of 2003, the latest available data. Song filled just 72 percent of its seats--even though its one-way fares were almost $5 cheaper.

Lessons From Herb

After passing out snacks on the flight to San Juan. Neeleman hangs out in the galley at the back of the plane, chatting with passengers eager to hear his story. Neeleman proudly obliges. The travel business he started instead of going to college went belly up when the air charter company he relied on to transport passengers ran out of money. Neeleman then wrangled a job with a tiny local carrier, Morris Air, and persuaded venture capitalists to invest $15 million in the company. That helped it grow into a scheduled carrier with 300 flights per day. When Southwest bought Morris Air in 1993, the investors got back two-and-a-half times their investment.

Neeleman worked briefly as an executive at Southwest, where his frenetic, innovative style clashed with the basic Southwest formula: efficient, cookie-cutter service. But Southwest CEO Herb Kelleher taught him a few things. "I learned from Herb a whole new appreciation for the way he treated his employees, the way he communicated with them," Neeleman acknowledges. "And if you have the capability, it's much better to buy new aircraft than to lease them. You get instant credibility."