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«JetBlue: Bringing Humanity Back to Air Travel By Susan Fournier and Concetta Rini “It is hard to remember such a popular American company ...»

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Case Study #10-002

JetBlue: Bringing Humanity Back to

Air Travel

By Susan Fournier and Concetta Rini

“It is hard to remember such a popular American company undergoing such a spectacular crisis.”i

-Brian Williams, NBC Nightly News on February 19th, 2007

On February 14, 2007, a Northeastern ice storm left more than 1,000 JetBlue passengers stranded in

nine aircraft for up to 10 hours on the tarmac at New York’s John F. Kennedy airport. Over the next five

days, which included the President’s Day holiday weekend, JetBlue canceled more than 1,000 flights as it struggled to reset operations and bring planes, customers, and personnel back into scheduled positions.

The crisis flew in the face of JetBlue’s brand mantra—“Bringing Humanity Back to Air Travel”—and threatened the reputation for outstanding customer service that underscored its brand.

JetBlue History In July of 1999, David Neeleman announced JetBlue: a low-fare airline with unique amenities, including leather seats, more legroom than competitors, and 24 channels of live satellite TV in every seat. CEO Neeleman pledged that JetBlue would “bring humanity back to air travel,”ii and offered a service guarantee to back up the promise in his brand. Every JetBlue flight would be completed; passengers would never have to wait in line to check-in or receive their bags. JetBlue would service approximately 500 flights daily from 50 destinations. With over $130 million dollars raised prior to launch, JetBlue was the most richly capitalized airline in aviation history. Within its first six years of operations, JetBlue had won over 90 awards for customer satisfaction, innovation and creation of customer value. In a February 2007 Consumer Reports survey, JetBlue was ranked Number 1 in customer satisfaction among all     airlines, with a score of 87 out of a possible 100.iii As of end December 2006, the company boasted a market capitalization of $3.6 billion; stock traded at $14.24 a share.

The Perfect Storm On February 14, 2007 a severe winter storm was predicted to hit the northeast. Delta, American, and other major carriers cancelled flights into and out of the New York metropolitan area as a precautionary measure. But JetBlue, with its policy that every flight would be completed, did not follow suit. The company opted to continue operations, expecting the ice would turn to rain. Temperatures continued to drop and conditions worsened. Four arriving flights, five departing flights, and the equipment used to move them and de-plane passengers froze solidly in place. With their gates blocked by other planes that sat awaiting boarding, more than 1,000 JetBlue passengers were left stranded on the tarmac. As the storm continued, FAA regulations forced JetBlue to cancel over 250 of its flights.

As JetBlue management assessed the situation, flight attendants aboard the stranded planes tried to calm passengers while distributing snacks and soft drinks. But as the hours ticked by, the trapped passengers became increasingly frustrated. A female passenger described the conditions onboard her plane. “It was hot. There was no air. They kept having to open the actual plane doors so we could breathe.” A male passenger commented that things were, “disorganized. No one knows anything.

Maybe one person cares.” Another frustrated woman explained her experience. “Boarded the plane around 8:00. Taxied out, and that was basically it. We were left here.”iv Sarah Greenberg called CNN from her plane on the tarmac and said. “One of the pilots or managers should get out here and have a mini-press conference. The longer they wait, the more people are going to get upset. It's Psychology 101.”v Approximately five hours into the crisis, JetBlue called The Port Authority of New York and New Jersey, the organization responsible for maintaining the region’s transportation centers, to request they send buses onto the runway to evacuate trapped passengers. By the time the last plane was emptied, passengers had been trapped for an average of eight and a half hours; some endured over 10 hours in the ordeal. (Exhibit 1) Customer reactions varied according to their experience with the airline. Passengers’ trapped onboard planes were most critical, with comments such as, “Based on my experience today, I’d never flight JetBlue again” “If the CEO of JetBlue is watching, I’d like to say, either your resignation should be tenured or you should implement a new dynamic within JetBlue.”vi Greg Fila, age 28, who sat for nine hours on a plane initially bound for Cancun, Mexico, eventually left JFK after spending the night sleeping on the floor of the airport. “They had been promising us another flight, so we slept here. But it was all lies. We are still here. We are all screwed – and the worst part of it

–  –  –

Passengers who were inconvenienced to a lesser degree remained positive about the airline. Mary Rogelio, age 53, was returning to upstate Fayetteville after being stuck for eight hours at Syracuse's airport on her way to New York. “I'm still a JetBlue groupie. Everybody messes up once in a while. I can't wait to sit in the blue leather seats, put the headphones on and watch television.” ix Later that evening, JetBlue announced that customers stranded on-board for more than three hours would be issued a full fare refund and a free round-trip ticket to any U.S. destination served. In addition, the company stated it would waive change fees and fare differences for customers whose travel plans





were affected by the storms. Late-night comedians reveled in the event:

“JetBlue Airlines is experiencing more flight delays and cancellations because of another winter storm. In their defense, JetBlue says, ‘we’re really more of a May through August airline.’”x (Conan O’Brien) “Passengers on six Jet Blue airplanes were trapped on the runway on the tarmac inside the airplanes for 10 hours. But Jet Blue is pretty good and they're very PR savvy. So to make it up to the passengers, here's what they're going to do: each passenger gets a free voucher to sit on a runway for 10 hours in Miami.”xi (David Letterman) The next day, Thursday February 15, JetBlue CEO David Neeleman reached out in multiple press interviews to detail the situation and to extend his apologies to inconvenienced JetBlue customers. In an

interview on CNBC’s Closing Bell, Neeleman explained:

“We had other planes arrive and they blocked the gates. So our pathway back to the gates was blocked. It was ice all over. We were concerned that people would fall. And you know, basically we didn’t do a good job. I mean we did a horrible job, actually, of getting our customers off those planes. So, you know, it was something that we are sorry for, feel embarrassed about, and regret. This situation was totally unacceptable. We are sorry. And we’re going to work really hard to make sure that never happens again….This is going to be a different company because of this. It's going to be expensive. But what's more important is to win back people's confidence.”xii With the storm finally subsiding, Neeleman promised that normal operations would resume the next day, February 16th.

“It Ain’t Over Until the Fat Lady Sings” Full operations were not restored at JetBlue until Tuesday, February 20th; six days after the ice storm gripped the Northeast. The crisis hit on the cusp of the President’s Day weekend, which brought with it increased air travel bookings from the February school vacation week that bookended the long holiday     weekend. JetBlue worked diligently to reset operations, but demands were overwhelming. Operational issues included a lack of trained personnel, displaced pilots and flight attendants, and planes out of position. JetBlue information systems and reservation agents were unable to handle the spike in call volume from passengers trying to rebook their flights; as a result, passengers had to wait an hour or more to get through to Reservations. Returning baggage from stranded planes piled up in the terminals; many did not receive their luggage until three days after the initial crisis. Over 20% of JetBlue flights were cancelled in the wake of the crisis—1,104 in total—as the company struggled to bring passengers, planes, and personnel back into scheduled positions and recover lost ground.

In a February 20th interview, Matt Lauer questioned David Neeleman. When asking how an ice storm that hit on a Wednesday could still have an impact on operations five days later, Neeleman offered the

following explanation:

“On Friday night (February 17th) we made a decision to put some flights on the ground, the 23% of the 190s, just to try to reset the airline. It was probably an overreaction, probably in hindsight we didn’t need to go that far. But we had put our customers and our crew members through so much over the last three days we needed to give time to get back to normal.”xiii The crisis fueled preexisting sentiment for a federal government-mandated Passenger Bill of Rights. The proposed regulations would effectively mandate how airlines treated passengers. News reports speculated that regardless of whether federal standards were implemented, this incident could compel all airlines to set a new standard for customer service. xiv Complications from the ice storm were costly. JetBlue company officials said they expected to issue over $10 million in refunds and $16 million worth of vouchers for future travel. Additional crew expenses were anticipated to be in excess of $30 million. When asked whether the crisis called into question his ability to lead the company he founded, Neeleman said he was “uniquely qualified”xv to run JetBlue. He said he was focused on returning to normal operations and restoring the carrier's reputation. Later that same week, JetBlue reduced its first quarter earnings forecasts, anticipating a $37 million reduction in its first quarter results.

JetBlue’s Recovery Plan On February 20th, Neeleman held a press conference in which he announced the JetBlue Customer Bill of Rights (Exhibit 2). Neeleman described to the document as way of holding the company accountable to its customers; a way of saying that the company was fully committed to its consumer base. According to the Bill of Rights, JetBlue promised to promptly notify customers of any delays or cancellations. If a customer was bumped from a flight, JetBlue promised to pay them $1,000 as reimbursement. Also, customers would be financially compensated if their flights were delayed due to circumstances within JetBlue’s control. “We made a mistake,” Neeleman admitted in the conference call. “We should have had contingency plans. We should have called the Port Authority quicker. I am sorry and embarrassed for that.”xvi

–  –  –

Lauer: “Is your “Bill of Rights a preemptive strike, so that Congress doesn’t get involved and impose a Bill of Rights that’s being talked about? Congress might say, ‘wait, we’ll pass a Bill of Rights for passengers?’ As the CEO of a major airline, how would you feel if Congress got involved?” Neeleman: “Well, I’ve been to Washington a lot and I’ve listened to a lot of people down there, and basically I want to take care of our own customers. I know what’s right for our customers. We don’t set out to not take care of our customers. Why should Congress tell us how to treat our people? We should be able to do that. And we want to do that because it’s the right thing to do. And it keeps up focused on the future and that’s the most important thing. Our customers understand a one day event. Okay, we had a snow storm, we cancel our flights and you know that’s just a bad luck thing.

But then the next day, and the day after, they don’t understand, and that’s why, that type of situation we will not tolerate in the future and we have lots of contingency plans and we’re going to be communicating that with our customers as we go forward.

Lauer: “And yet no one loses their job?” Neeleman: “No.” That same day, Neeleman also apologized in a video posted on YouTube entitled, “Our Promise to You” (Exhibit 3). In his statement, Neeleman apologized for the crisis and outlined steps the company was taking to ensure a crisis of this magnitude would not be repeated. He alluded to the JetBlue Customer Bill of Rights and the fact that the company would hold itself accountable in the event that operations were adversely. That evening, Neeleman appeared on Late Night with David Letterman where he again addressed the public and accepted responsibility for the crisis.

In their efforts to apologize to the passengers who were trapped on planes during the crisis, JetBlue customer service representatives also made phone calls to all affected customers. When the customer could not be reached, the representative emailed to schedule a time for a call. In these conversations, the representative apologized for the customer’s bad experiences and asked for their opinions regarding what went wrong. Customers were probed for what the company might do to fix things. They were asked for feedback on the steps the company was planning to take to remedy the situation, and asked whether they thought the company was doing enough to make amends. The representative thanked the customer for their help and patience, and, in closing, asked that they give JetBlue a second chance.

Additional company communications included a newspaper advertising campaign targeted at 15 market cities and 20 major newspapers on Wednesday February 21st. The print ad consisted of a full-page letter of apology that began: “We are sorry and embarrassed, but most of all, we are deeply sorry” (Exhibit 4).

–  –  –



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