Isl Jet Blue Singing the Blues?

One of the best things about the airline industry is that everyone has an opinion.  From airline management and employees, to industry analysts, to venture capitalists and other money people, to passengers and even to strangers.  Everyone has an opinion about what needs to be done to fix the current state of the industry.

 

For the last couple of years, Jet Blue has been touted as the "model" for how an airline should be run.  Before that, it was Southwest Airlines.  And for those who've been around the industry for awhile, you can probably remember when the airline darling was People's Express.

 

The problem with being at the top of the heap, is that everyone is gunning for you.  It reminds me of the old rental car campaign that Avis had where it talked about being in direct competition with Hertz (who bills itself as Number #1):  "We're number two, so we try harder."

 

No doubt about it -- 2005 was a pretty good year for Jet Blue.  Good numbers (except for being last in on-time ratings), happy employees, good customer service, low prices, and great press.  All that, and making money, too.  Things that the rest of the airlines didn't quite seem able to master.

 

Now, however, it appears that investment analysts are predicting that Jet Blue will just be one of the rest of 'em for 2006.  Citing an aggressive expansion plan that worked well in the early years, but now is running into the same issues as all the other carriers -- high fuel prices and fierce competition -- coupled with some poor choices about choosing new markets (17 of 20 new markets have been unprofitable).

 

How the company weathers the turbulent times remains to be seen, but even Jet Blue executives acknowledge that 2006 will likely be an unprofitable year for them.  The company posted the first quarterly loss in last year's 4th quarter, fuel costs and increased maintenance costs were two reasons cited for the loss, and this year is not off to a banner start either.

 

All this gloom and doom talk may not seem significant to Jet Blue customers, although ticket prices have risen, but it has had greater impact on Wall Street and investors. 

 

I'm sure the company will make some course corrections, and, in fact, some have already been made.  It will be fun to look back a year from now and see if Jet Blue is the same company as we know it today.

 

And, because everyone has a prediction, here's mine:  Jet Blue will be around a year from now, and they will have expanded their route structure -- although not without some missteps along the way.  They will not be showing a profit in 2006, ticket prices will rise, employee satisfaction will drop, and they will be cursing the same fates as the rest of the industry.  Whether the company is around two years from now will depend on how they step up to the plate to meet these challenges. 

 

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