JetBlue CEO On American, Open Architecture, and Yes, Snack Boxes (Across the Aisle, Part 2)

And now we’re back with Part 2 of my across the aisle interview with JetBlue CEO Dave Barger. Today’s focus is on the airline’s “open architecture” which has pushed them toward the Alaska Airlines of the east – willing to partner with anyone and everyone if it’s beneficial to the airline. And I hit on snack boxes too. Had to do it, right? (See Part 1, Part 3)

Cranky: The open architecture – a lot of people seem to think that you’ll just go naturally into oneworld at some point. Is the open architecture something that prevents you from going into an alliance? Or is it just “we’ll think about it when the opportunity comes up”?

Dave: I think a good way to look at it is as the largest airline at Kennedy, largest domestic airline in New York, largest airline in Boston, locations like that. You look at Kennedy as, depending on the time of year, close to 90 airlines operating in and out. Open architecture, whether it’s oneworld, Star, Skyteam, or unaligned, that’s good for JetBlue. Because it’s the power of our network. It’s the affirmation of the brand. It’s the investment we’ve made whether it’s on the ground or in technology. I think we’ll start to understand more about traffic patterns as the result of each partnership, which gives you more data, more pixels to say, what makes sense? To declare a path into an alliance is limiting as well. I think we’re so different because the geography and power of JFK, and we’re in a really nice position to be in.

Cranky: I take that to mean that if American came knocking, saying they’d like to sponsor you into oneworld, similar to what BA has done with Air Berlin in Europe, it’s something you would consider but you don’t have enough data yet knowing how all the flows work to make a decision on something like that?

Dave: I think it’s early. But we have historically been an organization that’s always open to taking a meeting because you want to explore what makes sense, whether it’s oneworld or somebody else. Because it’s the best way to optimize our relationships and our revenues, so we’ll see what plays out. Again, it’s so early. With Sabre, that conversion was January 29, so we’re still in effect still putting in place pieces of Sabre to optimize our abilities electronically, so the next couple of years . . . the traffic patterns and behaviors are important. There’s nothing better than looking at data as a result of these partnerships to help with these decisions.

Cranky: On the American partnership, I think a lot of people were taken by surprise by it. Looking a little further, it seems to make sense. Is that something you guys had focused on or did American reach out to you? As you said, you’re open to taking a meeting.

Dave: Sure, American reached out to us but I look at it, I love the word contrarian. First of all, we’re contrarian because we’re into our second decade. If you look at the airline industry since deregulation, the number of airlines that have flown into their 2nd decade is pretty rare . . . . We’re running the company based on financial metrics, return on invested capital, cash flow. That is different. Product. We’re looking at the JD Power award six years in a row, best in class, highest score. That’s contrarian. Not overbooking, contrarian. Even more legroom, contrarian. Culture, direct relationship with our staff in a heavily organied industry, contrarian.

So you look at American and JetBlue in the interline relationship, the partnership, the slot swap, the frequent flier, why not? Because in the traditional models, I still believe that fundamentally the industry is broken. So you’ve got to do things differently. What got us here in the first 10 years won’t get us there in the next 10 years, so I’m really delighted. I’m excited about what the American partnership could mean for us. They have a very significant presence in New York. So the ability to offer our customers in 18 of our markets, Buenos Aires, Tokyo, London on an itineray and vice versa, it’s pretty significant.

Cranky: And DCA [Washington National]

Dave: That’s right. And access to DCA in exchange for slots that I imagine American can better utilize than we can. And don’t forget the additional flight into White Plains. That’s contrarian, it’s such an important word in this business.

Cranky: Ok, you want to talk contrarian, so I have to bring this up. Snack boxes.

Dave: I was just gonna say, it had to be snack boxes.

Cranky: I’ve been a vocal critic of it. You know, I came over and did the taste test. Some tasted good, but it’s nothing special. It’s similar to stuff youll find somewhere else. So it’s just kind of boring, I guess, and not what I expect form JetBlue. I expect a better experieince and the snack box doesn’t really fit into that. I’m kind of curious where you see that going. Is this something that’s, as I’ve heard others say, it’s a step?

Dave: I look at it as additive. By comparison, other airlines that are selling their snack boxes, that’s basically what the product is. . . . For us, beverage service is what it’s been for 10 years. The ability to participate in the full selection of beverages. You see that at other airlines, but I don’t think you see access to make yourself at home in the galley. I look at the unlimited snack basket. Whether it’s the traditional blue chips or other snacks. The product already is solid, so when you start to look at over 3 hours and 45 minutes enroute, especially on the transcons, I look at this as additive. Again, it’s directional.

There are some pretty interesting names to partner with to create that next iteration of the snack box. I would like people to think, Brett, your readers to think, that JetBlue is kind of a cool airline. Somebody is going to come up with that next generation, you start to talk about cobranding opportunities, that’s just cool. I think XM radio was thought of that way as well as DirecTV. We’ve been selectively a follower when it comes to the wifi brigade as opposed to really what’s happening and we’re working hard on that iteration as well. Look at the snack boxes as additive. Look at it as directional.