Monday, April 10, 2006

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. 
 


 
 

21 comments:

JoeyC said...

How nice of ya to spite me!

Funny though... they're using successful carriers to try and mask the ones that are bankrupt.

How about a nice article on how DL pilot strike = no 'mo DL. Or an update on how NWA is totally bummed out.

Heck, the USAir/AWA merger wasnt as big as it should have been.

But rather than focusing on the carriers that are screwed, they try and find the needle in the haystack for successful carriers.

No kidding, dears, JetBlue is not even in its prime. It WILL experience turbulent times, just like every other freaking carrier in the world.

Because someone unpredictable occurs which sends jetBlue back a bit, doesnt spell "doom" for anyone.

I want to know why you feel crewmembers are p.o'd at jetBlue.

Check out ANY cabin crew forum. I Havent seen but a few unsatisfied employees.

Therefore, Yuhu, what brings you to the conclusion that every employee will suddenly hate their carrier?

I'm going to leave that job to them.

You, YuHu, who speaks of SWA, should know that David Neeleman (JetBlue CEO) played a VERY important part at SWA for quite a while in management. He isnt the dullest tool in the shed.

Like I said, its none of my business how they run their companies. They do their jobs, we should do ours.
-Joey

PS: Sorry if I sound kinda upset, I'm really not... nor am I pissed off, fyi.

Fly Girl said...

Joey,

As much as I appreciate your passionate support of Jet Blue, you need to walk a mile in airline industry shoes before you get a true feel for these things.

I realize that your mother is a flight attendant there, and I'm sure she loves it. Great! But remember, no matter how thin you slice the bread, there are still two sides.

First of all, I'm not anti Jet Blue at all. They saw a need, they filled in a remarkable fashion, and made a profit doing it. They have some fun and innovative ideas. Other start ups have in the past as well - that's part of the fun and energy of being the new kid at the hangar.

But, just because I like them a lot, doesn't mean I'm blind to their imperfections. They don't walk on water.

Secondly, the financial outlook isn't my prediction. It's been acknowledged by Jet Blue senior executives. It's being analyzed and monitored by Wall Street.

I think these are people who have a whole lot more background in forming their opinions than you or I.

And no one is spinning doom and gloom. On the contrary, analysts are talking about what the company has already done to get ahead of the game, giving praise and criticism when they felt it appropriate.

I've talked about a lot of other carriers here. Jet Blue happens to be in the news now. It's been others before and will be again.

Now, about employee satisfaction or disatisfaction. Part of what's going on is the inevitable growing of a company from a small company to a large one. With that comes a change in employee culture. It's not good, nor bad, it just is. I've been through it myself, and seen it, in many, many businesses -- not just the airline industry. Believe me, everyone swears that their situation will be different, but history always seems to win out.

Joey, I no more think everyone hates their employer than I think everyone loves their employer. I'm not that foolish or naive, and I would hope you aren't either.

Please don't believe everything you read online -- whether from a crew forum, a blog, or certainly not from me. Do the research in the financial pages and stock charts. Read what the money people have to say. Look at the SEC filings. They'll tell the story.

And for the record, the continued success, and the resulting growth, at SWA has resulted in a major change in employee culture. It's not the big, happy family that it once was. And if their CEO played a big part of the SWA story, then that change is part of his doing as well.

JoeyC said...

I agree with everything you said.

But bare in mind that, as you've said, TIME WILL TELL. Not you, I, Wall Street, or what have you.

Changes will occur. Without a doubt. But you know, I dont have a feeling that the changes are all that bad.

As far as my comments about forums, I'm talking about basically... okay, a crew forum is the closest you will ever get to hearing the true, unbiased opinion of an employee. Sometimes good, sometimes not.

Even though they're growing exceptionally fast, I'd have to say that the culture as far as jetBlue's attitude towards employees continues to grow stronger. There is a sense of unity at jetBlue that my mom didnt experience at either of her two previous airlines.

Me, you, and EVERYONE else can hold our breaths... time wont rush, and only time will tell.

Do me a favor, Yuhu, and keep flying safe. No one truely understands the boatloads of sh*t you people get thrown at all day. Literally.

Take care!

-Joey

Anonymous said...

jetblue sucks and it won't be around long!!!

Fly Girl said...

Anonymous: Interesting that you feel this way. Most people like Jet Blue.

Genevieve said...

I have to say I have never been entirely impressed with Jetblue's supposedly low prices. As someone who lives on the West coast and has to fly out to the East coast on occasion or when I fly my starving actor brother home for the holidays from NY and I like to find him cheap flights, JetBlue has never really done it.

I have a friend who works for Jetblue and as an employee they have treated him rather well and he loves it there. Which is great to hear in this day and age of airlines.

JoeyC said...

Genevieve:

Did you make sure you're not flying on a blackout day?

I got ONT-JFK nonstop for $209 roundtrip. Maybe a weird day or something, but I got it.

Compared to $800+ R/T on some carriers - coach - with multi stops.

Make sure you're flying on a Wednesday, if possible. Probably the best day, IMHO.... Everytime I've flown on Wednesday, I've gotten low fares. I dont know if thats the case, or just my luck.

-Joey

Bone said...

Well I wish JetBlue would come here before they go down the toilet. I'd just like to know what it's like :-)

Genevieve said...

I have tried all the tricks I know. Including the whole flying on a Wednesday thing. But the fares didn't impress me that much. It might be luck for you.

Strangely enough I have found some dirt-cheap direct flights through American of all places. I flew my brother home direct last year at Christmas. I found him a flight (and I admit I was lazy this time and booked it only a three weeks before,) for 230 r/t including taxes and fees.

I think finding any kind of cheap flight is just luck half of the time.

Anonymous said...

in regardes to "interesting most people like jetblue" .... NOT I!!! i freaking hate them!!! the absolute worst! i flew them for for 3 years! never ever ever again! they have attitude that wont stop, they make up their own rules. (they meaning each emp) they are rude, they never go out of their way to help anyone, the think their jet fuel dont stink!!! well im here to tell everyone i meet NOT to fly jet stupid!!!!

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Anonymous said...

Jetblue does sux. I will never fly them again. Cancelled our flight saying weather problems in the area but no other carriers were cancelling just them... the only option given to us by them was fly into a smaller apt within the same city that the cancelled flight's airport was in (less than 50Miles away). Strange?? Weather seemed to be fine there???

This all happened around the time of the new passenger rights rules came into affect (no longer than 3 hr waits on the tarmack). Seems to me that Jetblue has found a way around the new rules.

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