Jetblue: High-Flying Airline Melts Down in Ice Storm

(1)Before the Ice storm

What is the JetBlue Experience and how is it related to the companys overall
business strategy?
JetBlue Experience combined value, service and style. Passengers enjoyed free
co-branded amenities, including brand name snacks, Dunkin Donuts coffee, XM
satellite radio, DIRECTV satellite television, and Bliss Spa comfort kits.
The JetBlue Experience also included innovation. From its inception, all JetBlue
travel had been ticketless, all fares one-way, and all seats assigned. And JetBlue was
the first airline to deploy the new Embraer 190 regional jet and the first to offer free
live television which is a significant selling point compared to other airlines.
The companys overall business strategy is an airline which offering a high level of
service with low cost. The airline sold an experience as the above instead of the sole
air transportation. JetBlue has sought to provide what it calls the best customer
service in the business. The JetBlue Experienceis a vivid reflection of its overall
business strategy.
What challenges did the airline face in managing the customer experience as the
airline grew rapidly and how did they respond?
As the airline got bigger, JetBlue was trapped in turbulence in 2005. The company
suffered the first-ever operating loss about $20 million. There are three causes
accounting for the challenge. Firstly, some direct competitors appeared. Secondly,
labor and maintenance expenses began to creep up as JetBlues people and planes
got older and the company experienced problems with the introduction of a
brand-new aircraft type, the Embraer 190. Thirdly, some important markets were
ravaged by the hurricanes.
The executive teams planned to grow revenues by raising average fares, using
capacity more efficiently and adding service to small and medium-sized cities
where a relative lack of competition would allow JetBlue to command a price
premium. They also reiterated the airlines commitment to reliable service, which
meant operating flights even with a delay rather than canceling the flight for the
schedules convenience. They improved workforce productivity through better
training, smarter business processes, and more extensive use of automation. They
also conducted financial hedging strategies, refused bonuses and delayed the
delivery of 36 new aircraft in order to control the rising fuel price and manage other
costs. Eventually, JetBlue was profitable and had the second-lowest rate of
complaints in the 10 largest U.S. Airlines in 2006. It proved its management in
customer experience successful before the Valentine's Day in 2007.
(2) During the Ice Storm

What exactly went wrong? Why? Who, or what, was responsible?

A suddenly ice storm is the superficial causes of the crisis. But facing the same
stormy weather, JetBlue cancelled 634 flights representing 39.6 percent of its
schedule which is the largest proportion comparing to other airlines mentioned in
the case. Thus, some other factors resulted in the worst crisis in the companys
history.

The proportion of cancelled flights

The Proportion of Cancelled flights in Different Airlines

45.00%

39.60%

40.00%
35.00%
30.00%
25.00%
17.10%

20.00%
15.00%

19.60%

13.40%

10.00%
3.70%

5.00%
0.00%
American

United

US Airways

Contintental

JetBlue

Airlines
Source: Carey, Susan and Andrew Pasztor. Behind Travel Mess: New Rules for Sleet. The Wall
Street Journal, March 23, 2007.

Firstly, JetBlue lacked continuous communication with weather office in order to

get the latest information. If the JetBlue could recognize that the terrible weather
would not allow the planes to set off as early as possible, the passengers trapped in
the loaded planes would not have to sit on board for six to 10.5 hours. The wrong
decision made the passengers in JetBlue flights the last ones entering the terminal
when television news crew were waiting. The next day, the JetBlue became national
headline news. Some bad remarks was spread across the nation and reliability,
customer satisfactory and stock price decreased straightly.
Secondly, the external communications with the passengers and internal
communications between airline staff seemed to be problems. The crew in the
loaded planes didnt have the ability of managing the passengers mood and
providing the diverse food. And the staff in JFK had no clue what was going on. No
passengers could get answers. The situation even the staff having no idea brought
out desperate insecurity during the transaction. It will decrease customers
confidence towards JetBlue resulting in lower level of reliability.
In general, no pre-arranged planning to the extreme terrible weather is critical to the

small airline company which became bigger gradually. Its profit can be contended
with major airline, but its operations to emergency still hadnt been improved.
Did the airline handle the crisis well-why or why not? What else could JetBlue
have done to improve the situation
On the whole, the airline handled the crisis well. Jetblue response to the complaint
quickly. On the evening of February 14, JetBlue issued a public apology and
announced that it would give a full refund and a free roundtrip ticket to any
passenger detained onboard for more than three hours and the ones whose flight
was cancelled. And the customers who were affected by the storm would not
penalized for rebooking new fights. The top executivesDavid Neeleman and
Dave Barger, made lots of efforts to rebuild public trust. Neeleman, the companys
public face, granted dozens of media interviews, in which he accepted responsibility,
expressed remorse, and pledged to prevent this kind of problem from happening
again. Dave Barger went to JFK on the 14th to oversee the operational response and
speak with passengers and crewmembers. Neeleman had issued a personal apology,
which appeared in his blog and in full-page ads in major newspapers. What is more
important, the airline also published a Customers Bill of Rights, specifying how
and when it would compensate passengers for delays and other problems. Reactions
to Neelemans apology and the Bill of Rights were generally positive.
In my opinion, JetBlue should provide appropriate communication with the
customers directly besides media interviews. Gen seemed not to be satisfactory
strongly about the meeting with David Neeleman in the case And Jetblue can track
the complaints, share the experiences learning from the crisis among the
crewmembers and make the service fail-safe later in order to fix the problem.
(3)Looking Ahead
What are the potential negative consequences for JetBlue resulting from the
situation?
Despite of the millions of dollars on passenger refunds and vouchers, employee
overtime, other storm-related costs and countless hours on coping with the problem,
JetBlue will lose the companys reputation. It would lead to lower customers
satisfactory, bad WOM communication and distrust towards JetBlue. All the
negative consequences would influence JetBlue in long term if the crisis hadnt
been solved immediately.
What do you think of the Customers Bill of Rights as a service guarantee? Will
it help the company regain customer loyalty?
I think the Customers Bill of Rights is a great solution to the crisis. It is a move that
was almost as widely reported in the media as the airline's problems. Firstlythough
there are some conditions applying Jetblue Airways Customer Bill of Rights. But
the conditions is rational. It is consistent with the consumers expectation to airline

industry, as the Coalition for Airline Passengers Bill of Rights, a newly formed
group, used JetBlues woes to again demand relief. Secondly, it is meaningful. The
Bill of Rights mentioned every aspect of the customers air travel experience,
including cancellations, departure & ground delays and overbookings. Thirdly, it is
easy to understand. Customers can understand the compensation easily. In
conclusion, the issue is not an implicit promise. The policy offers explicit
compensation for a variety of departure delays and onboard ground delays. It even
promises $1,000 if, through overbooking, a customer is involuntarily bumped from
a flight. It reflected the reliability and responsibility in the future of JetBlue. Given
JetBlue's strong reputation as a service-oriented airline, the issue can arise the
customers confidence in JetBlue again and would help the company regain
customer loyalty.
What further strategic and/or leadership actions should JetBlue take to ensure
the companys future success and their ability to deliver the JetBlue
Experience?
I think JetBlue should reinforce the human resource management and information
systems. During the ice storm, there are not enough pilots and staffs answering the
questions from the passengers. Both its 800 number, staffed by home-based workers
in Utah, and its New York-based 20-person crew services department were
overwhelmed. Maybe many employees in the company who wanted to help but
who weren't trained to help. JetBlue should build an emergency control center
where staff are all trained well. Moreover the information systems should be
improved. JetBlue should set the goal of doubling the number of agents who could
simultaneously use the company's reservations system and of getting a Web-based
rebooking system up and running so that customers could reschedule a flight at the
airport. And in terms of leadership, if Neeleman would like to accept, he can just be
the chairman and founder of JetBlue and empowered the executive rights to Dave
Barger.