JetBlue Starts to Reveal a Plan to Improve On Its Own, And It Isn’t Terrible

JetBlue, Uncategorized

JetBlue has spent much of the last couple years hoping that others would solve its problems. First it was the Northeast Alliance with American and then it was the Spirit acquisition. Both have now been shot down in court, and while there is a very tiny chance of winning an appeal on the Spirit deal, nobody in their right mind would rely on that. So it was that on the airline’s fourth quarter earnings call, it finally started talking about how it would clean up its own house. It’s saying the right things, but until we have more details, it’s hard to know if this is going to do anything.

You can listen to the call yourself if you’d like, or you can browse the presentation. It was clear that CEO Robin Hayes has really already left the building. Though he is officially still on duty until February 12, other than opening remarks, he let soon-to-be CEO Joanna Geraghty do the heavy lifting. Joanna explained that the airline has been working on a “plan B” for months in case the merger didn’t go through. Details were in short supply, but she promised that much more would be revealed during the May investor day.

What do we know about this plan? We know the basic building blocks as displayed in this slide from the presentation.

This is high level and somewhat fluffy, but directionally it makes sense. Let’s break this down.

Focus on Core Customer

JetBlue says its target is the premium leisure customer, and that happens to be a customer segment that’s having quite a moment these days. Then again, that’s a group that’s been having a moment for some time now. And really, this is what JetBlue has to focus on.

JetBlue will never have ULCC-level costs, so it has to get more revenue in the door than those guys. At the same time, as a smaller airline that doesn’t have the reach of the big guys, JetBlue will do better in a leisure world than a business one. That being said, Boston and New York should still be good candidates to woo business travelers, and JetBlue isn’t ignoring that.

If you can get beyond the bullcrap of “recharging our innovation DNA,” Joanna did pay a little lip service to the corporates.

We are also recharging our innovation DNA to bring an even better quality experience to the full spectrum of JetBlue customers from leisure to visiting friends and relatives to corporate and premium travelers.

The question is… how does JetBlue change its focus? Joanna announced that the airline has more than 15 revenue initiatives that will be worth more than $300 million this year. The first example makes me queasy… preferred seating where people have to pay to sit closer to the front even though the seat is no different. I do not understand how copying what the legacies do is something that customers will like. This is just a money grab.

JetBlue also says it will expand its selling through online travel agents which… uh, ok. That’s trying to scrape the bottom of the barrel to fill seats and hope to upsell people, not about taking care of your loyal premium leisure travelers.

So it doesn’t start off well, but then it gets me drooling…. Take it away, Joanna.

This begins with refocusing on our most proven geographies. Our core network fits in some of the largest markets in the world, but there are clear barriers to entry, and we intend to capitalize on our deep relevance in these markets by urgently reoptimizing our network to make sure that we were taking care of our core customer, making sure we go where they want to go, when they want to go.

WHY WAS THIS NOT HAPPENING BEFORE? Sorry, I’ll calm down now. But yes, yes, and yes. Please focus on strengths and try to win in those markets — Boston, New York, and Fort Lauderdale. In the call, they said that this has already started, but there’s more to come. It can’t come soon enough.

That’s really all JetBlue is saying so far, so we’ll have to wait for May to learn more about what other ”revenue initiatives” are in place.

Continue to Integrate Travel Brand

If you don’t fly when and where people want to go, then nothing else matters, but if you can do that as JetBlue said in the first part of the plan (and you can do it on-time, as we’ll talk about later) then a big effort can be put into trying to get a higher share of wallet from those travelers.

Part of that is putting more and more benefit into the TrueBlue frequent flier program. All airlines are trying to do this, and JetBlue has made several changes to make its program more appealing. But it’s not just TrueBlue. There’s also JetBlue Vacations and Paisly which are about trying to get more money from people’s vacations beyond the flight.

Normally, I find these kinds of initiatives silly, but in JetBlue’s case if it’s really aiming at premium leisure, being able to help those travelers with the whole trip is an actual value-add that could also bring good money to the airline.

My assumption is that JetBlue is underperforming in this area, and so it should do something to get that low-hanging fruit. It must still be an airline first and foremost, so this needs to be put into the proper place in the airline’s hierarchy, but there is likely some opportunity and it’s not bad to try to grab it.

Drive Cost and Capital Discipline

At first, it seems very strange that JetBlue would talk about how it desperately needs to merge with Spirit only to then turn around and say it’s going to now take fewer aircraft as a standalone airline. But there is a method to this madness.

The airline is pulling down orders significantly, really dropping A321neo deliveries and deferring some A220 deliveries to a later date, as you can see below.

This would seem strange for an airline that couldn’t get enough airplanes and pilots to satisfy its desires, but there is another side of the coin here. As Joanna explained…

Most notably, we have a significant amount of flexibility to extend the life of over 30 A320 aircraft to provide growth tailwinds and we will continue to explore other cost-effective and capital-light ways to grow our fleet.

Ah yes, so instead of getting brand new, expensive airplanes, JetBlue can just keep some A320s in the fleet for longer and for cheaper. At the same time, JetBlue CFO Ursula Hurley explained that they will keep A220 deliveries at a level so that they can still retire the Embraer 190s soon. This makes all too much sense.

I never really believed there was huge opportunity for a ton of new airplanes and pilots anyway, not with the NEA dead.

Operational Reliability…

… is the foundation to restoring profitability. At least, that’s what the slide says. It’s supposed to underlie everything JetBlue does, which I find hilarious since JetBlue has never run a good operation. The airline did crow about its Q4 performance, but with FAA slot waivers keeping flying lower than usual in NYC during winter for the first time, it would be hard for JetBlue to not do better. JetBlue needs to be proactive and make big changes to its operation to make sure it can run better even when slot waivers go away or weather gets terrible.

Joanna was the COO before her promotion, and just this week she hired her replacement, Warren Christie. Warren has been with JetBlue for more than 20 years which wouldn’t seem to bode well considering the airline hasn’t run a good operation during that time. But early feedback I’ve heard from people is positive on him. I’m happy to give him the benefit of the doubt and hope he’s able to actually right the ship.

JetBlue says it is still committed to fighting through appeals and trying to buy Spirit, but if that doesn’t happen, this is the standalone plan. And you know what? I like the bones of the standalone plan way more than I like the Spirit purchase rationale. 

Naturally, the devil is in the details. We will see what the full plan is in May at investor day. For now, it feels weird to say that it looks like the airline is starting to turn slowly in a better direction, but this is the first time I’ve felt that way in a long time. 

More in May…

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35 comments on “JetBlue Starts to Reveal a Plan to Improve On Its Own, And It Isn’t Terrible

  1. Best analogy I can think of regarding Joanna’s comments, it’s like a boxer retreating to the corner after several bad rounds & is now going to reassess there strategy before they get TKO’ed.

  2. Rumor is around the company(take that for what it’s worth) is that they are looking at adding some sort of business class to the fleet, similar to Alaska, to go in conjunction with MINT.

    The A220s might get more seats too, to increase revenue.

    My question is this, for JetBlue to be more attractive, they need more frequency in some cities, maybe even day time flying from West to East in some markets outside SFO/LAX/SAN. Hopefully they’ll deploy those A220s out west more. They’ve been running it to YVR and BUR all January, and the loads have been good.

    There’s also the question of JFK/BOS. I have friends who live upstate NY, and they won’t book JetBlue in the summer, because if there’s a storm in JFK or BOS they’re screwed on their connecting flight, whereas they can book the legacies, and go through a different HUB and get to where they’re going. How does one think they get around those operational challenges outside of their control. I still think they need to try and build a customer base outside of the Northeast.

    1. Imagine doing away with connections, at least at a place like JFK. It’s the biggest O&D market in the US, so finding butts for seats shouldn’t be an issue.

      Why continue to offer a product (connection) that has such a risk of disappointing the customer and which absorb enormous resources in terms of reaccommodation?

      If you have up on connections at JFK, how much more simple would things get?

      How many times do they currently wait for customers (or bags) from one flight to get to another?

      1. DEF – JetBlue already mostly does away with connections. It doesn’t price for connections at all, with the possible exception of Europe. But it has never really focused on those anyway.

      2. Yeah – their Achilles heel has always been lacking a hub that allows for convenient / smooth / geographically logical connections. I know investing in a new hub is very 1990s but if it makes sense for anyone this decade, its B6. American has Philly to take the pressure off its NYC operation, United has Dulles, etc.

        I actually think it would be a pretty interesting experiment for them to pick the most underserved market between FLL and JFK (maybe RDU?) and try to build out a focus city that eventually offers connections so JFK (and BOS realistically) can be primarily O&D. Several have obviously tried and failed at RDU but none of them needed it to work like B6 does in order to allow for connections between the Northeast / Southeast / West.

        1. Hubs need a huge base of O&D traffic to work. A high % of the seats on every flight need to be filled with O&D passengers. You are never going to sell enough tickets on connecting itineraries to fill the plane with just connecting passengers.

          The problem is that the metro areas with enough O&D demand to create a viable hub are all “claimed” – the largest metro areas all have at least one major airline base, often more. Once you exclude mainline hubs and major Southwest “bases”, you’re looking at a list of metro areas with some combination of lower population, lower growth, and weaker travel demand (due to employer mix, wealth, etc.)

          RDU is not “underserved”. Everyone is looking at the same numbers and pouring capacity in. AA, DL, and WN are all doing some amount of non-hub flying from RDU, and on the ULCC side Frontier, Avelo, and Breeze are all trying out a ton of routes to see what gets traction. It would be almost impossible to build out a true connecting hub in an environment where any one of 6 competitors might jump in and take share on any routes that do get traction.

          1. Yeah – I know there are no good options. I guess I meant RDU might be the best of a lot of bad options if B6 was going to try to break free from its reliance on JFK & BOS for connecting traffic. There’s no dominant carrier at RDU and the capacity the mainlines have added are all about saving a connection for O&D traffic (UNC kids can fly nonstop to Cancun on spring break now on 7 different airlines!), not building out a true focus city / mini hub that gets people from Burlington & Buffalo to 12 places in Florida.

            I’m well aware its a weak argument… just throwing spaghetti at the wall because I think B6 is pretty growth limited outside NYC & Boston unless it can do something to reduce its reliance on JFK & BOS.

          2. You’re right. As much as I want to see PIT get some love (huge diversion point for bad NE weather), there is nowhere near enough O&D ops to justify a hub. And I don’t think there could be either. But that being said, I think flyover country is a huge potential market for jetBlue.

            1. Most of “flyover country” is a bad long-term bet for a hub for demographic reasons. The Census estimates that the Pittsburgh MSA population actually *declined* ~1% between 2020 and 2022. If you’re making a long-term bet on a location, you want macro tailwinds, not headwinds from population decline.

              There are a handful of large midwestern MSAs that have maintained population growth (Indianapolis, Columbus, Kansas City, and Cincinnati), but still at much lower rates than Sun Belt cities across Texas, Florida, North Carolina, etc.

              Also, it’s a similar problem to RDU – the Big 4 are looking at the same data that JetBlue is, and they’re flying all the routes that they think make sense. CVG actually looks very similar to RDU: AA and DL are both doing substantial non-hub flying, while Frontier and Allegiant offer a ton of nonstops at sub-daily frequencies. Hard to build a hub if you need to start by getting in a price war with multiple competitors for the highest-demand O&D routes.

    2. Stating the obvious here, but BOS and JFK are two of the worst airports that I can think of to make into connecting hubs. Congested airspace, a lack of room for growth, a lot of bad weather and you’ve got the recipe for a mess. And, if you’re going to super serve BOS and JFK (NYC), how much sense does it make to fly through some of the nearer upstate NY airports? Because, for pax from those markets, connecting elsewhere is going to be better than JFK. And, any residents of the Greater NY area who live north of west of Manhattan Island would probably do just as well to either drive or to fly through EWR.

      BOS is not as extreme a case, but somewhat as Logan Airport is situated in the very most inconvenient location imaginable for anyone who doesn’t live right in the city or Cambridge (which the majority in the market do not). Which again, limits the usefulness of those shorter flights out of BOS.

      I guess the idea of providing Boston and New York with their own airline and winning in those 2 markets would be good enough to call it a success, but it also means that JetBlue won’t be able to expand much further than that. Even Sun Country seems to be having better luck diversifying from their home market than JetBlue does.

      1. Not sure I really understand your suggestion.

        The only routes that JetBlue flies within New York State are from Buffalo, Rochester, and Syracuse to JFK. Those routes would take between 4.5 and 7 hours by car, which is definitely a distance where there is demand for a short flight. Importantly, there is a lot of O&D traffic on these routes: The New York State economy is very interconnected, so there is a lot of demand to travel between NYC and the other major cities in the state. I would expect that these routes aren’t primarily for connections – they are mostly justified by the demand to travel within the state.

        JetBlue has direct flights from Buffalo and Syracuse to Florida – no connection in JFK required. Presumably they would scale that up to other destinations if they saw demand.

        Within the “Greater NY area”, JetBlue is actually the dominant carrier at HPN, with >50% of passenger market share. They’d probably love to expand that further, but HPN has a passenger cap so it’s not really possible to run more flights, or even to upgauge.

        Further out, multiple airlines have tried to serve SWF, but the geography doesn’t really work. It’s too isolated and far away from the actual population clusters.

    3. The converse is that airlines need both local and connecting traffic and B6′ competitors do that; DL and to a lesser extent AA is more than happy to connect traffic via LGA, JFK and BOS, does it as reliably as the NE allows, and has the rest of its network as a backup when weather and operations require mass cancellation. UA does the same with EWR.
      Given that other carriers sell both the local and connecting markets via the same flights that they use to compete with B6, B6 is at a disadvantage because they have more seats to fill at deeper discounted fares. Add in that B6 has more capacity than other carriers in many of these markets and part of B6′ revenue initiatives might be to carry connections or more of them but has to make the operation more reliable first.

  3. Fees to sit closer to the front is a long way from their old free checked bag, carry-on, and seat assignment. If they’re just gonna be like the legacies (with an even crappier Economy Minus product), why fly the airline with the weaker network and operation?

    1. Don’t call yourself a premium airline if you charge for the breathing on your planes. Just call yourself JetSpirit and spirit yourself away from you core base.

  4. Premium leisure? sigh.

    Perhaps we’ll see the long awaited B6 lounges and First class, assuming the company still has brains (which they probably don’t).

    If they can focus on their core hubs, codeshare with AA, and actually do something serious about their OTP (Bethune CO anyone?) It shouldn’t be too hard for them to start turning the tides.

    Don’t even get me started on how B6 failed to turn Boston Logan into a fortress hub…

  5. I hope this means the end of 1x (and less than daily) flights to cities west of the Mississippi. I’d take the further and say that with the exceptions of LAX, SFO, SEA, and (**maybe** SLC), B6 should focus on the eastern 1/3rd of the U.S.

  6. Sounds like their strategy is largely already being done by Delta, and in their core markets too (NYC and BOS). With their sub-par operating performance and reputation, it’s hard to see them pulling the premium customer away from Delta, which is generally regarded as best-in-class in both operations and CX. But that said, I have no idea what a better path would be. There isn’t much room for JetBlue in today’s environment so following Delta and trying to get some crumbs might be their best choice at this point. Regardless it’s going to be a long, slow turnaround at best.

    1. I live in the nyc area and people here are hoping for a more robust competitor to delta. They feel delta is just gouging them and wish JetBlue would be more aggressive towards their product and operations to target the delta customers. I can’t tell you how many said they like JetBlue better and still fly mint and like it better than D1, but delta offers more breadths to the network and bet on them being more reliable, but would jump over to JetBlue in a heartbeat if these bullets points are actually successfully executed. Especially the operations reliability. If I was delta seeing this right now, I would be feeling a bit uneasy knowing they have a competitor with many love and the only reason delta is winning is because of better reliability, take that reason away and they will be seeing many customers ditch the widget for blue skies ahead!

      1. Delta can rest easy. These are the same talking points JetBlue has presented in every investor day, earnings call, and employee all-hands for a decade. Lots of talk about the operation needing to be fixed, while crossing their fingers/praying the operation fixes itself.

        1. What talk were you listening to? I always heard, “We’re mostly leisure and being that 65% of our fleet touches the northeast there isn’t much we can do”. So I am not sure what you were hearing, in fact what I stated was the line every critique used against Jetblue for years. Now the tune is different, they are seemingly more serious about it cause they see what the old strategy cost them. So no, Delta, or any airline is going to “rest easy” In this industry when you rest easy thats when the dagger gets lethal by a competitor. They thought that when jetblue started and Delta freaked in 2002 when Jetbue was eating their lunch and came out with song which came and went as fast as a feather in the wind. Also now that the merger with spirit isn’t likely going to happen, Jetblue isn’t going to heavily bogged down in a costly and difficult distraction of merging 2 companies, something Delta and other airlines were likely betting on the short term since they went through it and its a mess the first year or so. Now Jetblue has 3.5 billion in capital they will focus on themselves. Delta will not be “resting easy”.

        2. Agreed, their statements sound nice, but they also sound like the sort of thing any undergrad business major could make up and aren’t anything surprising or new.

          I don’t think anyone really will care what they say (now or in the future) if they don’t follow through with it.

  7. So they are going to be old school US Air except no presence in Pennsylvania and bigger JFK ops in NYC?

  8. the most significant part is the cut in capital spending. JBLU is realizing that the A320 can last far longer than they were anticipating; since you have to do major overhauls in the 30 years that the A320 can last, it is worth also doing cabin overhauls.
    And they also said they would cut capacity which is very significant for a low cost carrier. They will undoubtedly not be near as focused on market share; they fly as much capacity as DL and UA do from NYC combined to some Caribbean destinations including with middle of the night operations.
    It is reducing the number of redeyes and middle of the night operations which will help get JBLU’s on-time back on target. They have no wiggle room to recover when JFK or BOS have major operational issues due to weather.
    And it will remain to be seen if B6 can turn its operational performance around but that is the biggest turnoff to customers and really hurts in highly competitive markets. Given that Joanne ran operations, either she had other people that told her to run the operation “hot” or she is finally seeing the light Or B6 is blowing smoke. But I am more likely to believe one of the earlier 2 possibilities which means we will see JetBlue’s operation improve.

  9. In general, when a company is lagging and not successful, sometimes the hard decisions need to be made to look internally and clean house. Precisely BECAUSE JetBlue has retained so much ‘talent’ over the past two decades is the reason they are in such a mess. The airline really needs to push out the complacent, less-innovative types and bring in fresh ideas externally from the industry. JetBlue will continue to falter until they realize and take action.

  10. I wonder on the timing of the A321N deferrals? There have been rumblings of UA wanting to get their hands on A321Ns sooner than already scheduled, and I’m curious if B6 just essentially handed UA a few planes?

    It’s not going to seal their fate, but one would think if B6 was running a good operation, they’d have space to grow, which would fundamentally handicap a competitor?

    That doesn’t mean that Airbus couldn’t have found some additional slots for UA earlier, but did B6 just make it easier?

    1. If those A321N slots do go to UA, though, would that really be THAT bad for B6? I haven’t done the analysis, but I imagine that far fewer of B6’s routes have competition from UA than from AA, DL, or perhaps even WN.

      For pax flying mostly north/south east of the MIssissippi (and especially north/south within 100 miles of the Atlantic coast), UA isn’t usually a decent option, and those routes are B6’s bread and butter.

  11. Amazing how “focusing on their core markets” is a new strategy rather than tried and true. They had the chance to do this in BOS after the pandemic but screwed around at JFK with the NEA for so long that Delta surged to the forefront. (As I learned in a previous CrankyFlier brand post!)

  12. I really want the best for JetBlue. It is a world class airline, that is very beloved. I hope that they can right their operational ship, and I also hope apart of that is figuring out a way to diversify outside of that God awful NE region, and become more competitive in the US aviation landscape.

    They have let too many geographic opportunities pass them by in previous years, and those decisions have not put them against a wall. I recall Dave Barger saying “we are an airline that flys people to and from New York”. That’s the type of thinking that I feel won’t work anymore. People want to go other places that aren’t NYC/BOS. They’ve got those A220s that can do a lot, and is very a versatile aircraft. Let’s see them put it to use.

    I dunno maybe ETOPS certify it, and run it from BUR-HNL(fat chance of that happening).

    BUR-FLL 2X a day on the A220, something like that.

  13. Only slightly related but, given the MAX 10 issues, I wonder if those A321 NEO deferrals will end up with UA. Wasn’t Scott Kirby just in Toulouse?

  14. Just another step to their inevitable purchase by United.

    Their costs are too high to be an LCC and they don’t have the full service of the legacies.

    When they started, waaaaay back when, they offered essentially point–to-point to warm places, operating out of supposedly less desirable JFK.

    Now, EWR is functionally, if not legally capped. LGA is full and has the perimeter rule, and UA is a distant 3rd in the New York market, frozen out of JFK.

    1. Distant third in the NYC market? lol

      They’re the largest carrier in NYC with the single most powerful east coast hub, allowing significant O&D as well as connection opportunities.

      No other east coast hub, for any airline, serves as many markets as UA’s EWR station. A merger between B6 and UA would never be allowed.

    2. You do know EWR is considered part of the New York market, right?

      A quick check of Wikipedia (with usual caveat about accuracy) puts UA on ~ 36 million passengers in the most recent reporting period. DL is second at 33.3, JetBlue third at 22, and AA fourth on 17.5.

      UA may lose out on passengers that prefer JFK from Queens, Brooklyn, and Long Island, but they gain from access to the parts of New Jersey that prefer EWR to PHL, which runs further south than you might think and includes a big chunk of the pharmaceutical industry and some very affluent costal areas.

  15. Regarding the preferred seating, I don’t like it, but I see it in a slightly different way. If you book later, you end up having to sit in the least preferred seats. Charging for it gives later bookers more opportunity. On the other hand, again, it is a money grab if you don’t structure it well. It also means those people who pay for Blue Basic might get better seats if no one buys the preferred ones.

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