By Alex Davidson
Before JetBlue Airways inaugurated its service three years ago from Kennedy Airport, Chief Executive Officer David Neeleman said he met with then-Borough President Claire Shulman to discuss the impact of headquartering a new airline in Queens.
Shulman was skeptical about adding another air carrier at the already crowded airport and increasing the amount of airplane noise that affects the airport’s surrounding communities of Howard Beach, Rosedale and the Rockaway Peninsula, Neeleman said.
But Neeleman decided to venture forward and open his new airline with its offices in Kew Gardens.
Three years and 12 million customers later, however, Neeleman said Shulman has congratulated him on the company’s economic success, the resulting boost to Queens’ economy and the airline’s use of planes that do not aggravate the noise problem. JetBlue’s engines use new technology that produces less noise than those of other airlines.
“Queens has been very noise sensitive, so it is important to have good quality air service,” said Neeleman, 43, who lives in New Canaan, Conn. with his wife and nine children. “We are committed to being good corporate citizens.”
During a presentation to stockholders in Manhattan May 21 at his company’s first annual meeting since it became a public company in 2002, Neeleman told investors that for 2002, JetBlue earned record profits, operated at low costs, filled more seats than any other U.S. airline last year and had the best on-time arrival and departure times among domestic carriers.
This performance was buoyed by an announcement June 10 that the company decided to purchase 100 mid-sized, Brazilian-made Embraer 190 planes for $3 billion in its effort to break into smaller markets, JetBlue officials said. The first shipment of the new planes will arrive in 2005 with 18 planes being added to the airline’s fleet per year until 2011.
That means the company could have a fleet of 290 planes by the end of 2012.
Neeleman then addressed specific issues affecting Queens in a private session with reporters.
He said he decided to first locate JetBlue’s headquarters in Kew Gardens because it is directly between JFK and LaGuardia airports. JetBlue moved its headquarters in January to Forest Hills at 118-29 Queens Blvd., a 112,000-square-foot facility three times larger than the company’s original building located across the street.
The CEO said Queens was an obvious choice for corporate offices because both the city’s airports are in the borough and New York City is the airline’s eastern base of operations.
Some 2,800 JetBlue employees live in New York City, and a large portion of them live in Queens, Neeleman said. Some of those who live outside the borough also rent apartments in the Kew Gardens area, he said, and thus contribute to the local tax base.
“There is a lot of economic stimulus by the 2,800 people based in New York,” Neeleman said.
JetBlue has become the 11th-largest passenger carrier in the United States, having doubled in size last year. And the company reported net income of $54.9 million for 2002 vs. $38.5 million a year earlier, coupled with an increase in operating reveues of 98.2 percent to $635 million from $320 million in 2001. These results were achieved in the wake of the Sept. 11 terrorist attack, which has American Airlines teetering on the brink of bankruptcy and two airlines, United and U.S. Airways, filing for Chapter 11 protection.
Neeleman said he is hoping to start two construction projects at JFK, including a new maintenance facility that will service the company’s fleet of 41 new Airbus A320 jets. The building of the facility is a sign of the company’s growing maintenance budget that Neeleman said has remained low because of the corporation’s young fleet.
The other project Neeleman said JetBlue is examining with the Port Authority of New York and New Jersey is the building of a terminal to replace Terminal 5 at JFK. The airline currently operates out of Terminal 6, Neeleman said, but could expand into empty slots available at neighboring Terminal 5.
“In the meantime, until we get the new terminal built, we can grow quite extensively with the terminals that we have,” he said.
All these and future projects, however, could be put on hold if there is not a prompt resolution to discussions between the city and state on a proposal to swap the land under JFK and LaGuardia for the ground under the World Trade Center site.
The lack of progress in the ongoing negotiations is preventing the construction of several industrial and commercial facilities, effectively paralyzing businesses’ efforts to build up areas surrounding the two airports, especially JFK, Neeleman said. Although the airline has no position on who should own the land under the airports, Neeleman said he wants a final decision soon.
“If there is not a resolution on the issue, there will not be a lot of construction at the airport,” Neeleman said. “It has been difficult to finance things going forward, and as we get closer to 2015, it will become more difficult.”
Mayor Michael Bloomberg has been speaking for months with state officials about the plan to give the state control over the city-owned airports in exchange for control of the World Trade Center site. Borough elected officials and civic organizations have criticized the deal because they fear it gives away city power to the state and does little to decrease unemployment in the airline industry in Queens, which is at record highs.
And regarding the AirTrain, Neeleman said he hopes the light-rail system, which will connect Jamaica and Howard Beach to JFK, is up and running soon and servicing Queens as well as other city residents. He said he is confident the system will work once it is proven in the next round of safety tests despite the accident in September that raised doubts about the system’s viability.
“We will be thrilled when it is done,” he said. “It is finished, so now let’s get the benefits of it.”
During the meeting, Neeleman said he would examine the possibility of introducing JetBlue service to and from Long Island’s MacArthur Airport. He said there are no concrete plans in the works for the new route.
The airline now flies to 21 cities in the United States, including Ft. Lauderdale and Long Beach, Calif. Neeleman said JetBlue will expand its service to San Diego June 26.
Neeleman, who sold his first airline, Salt Lake City-based Morris Air, to Southwest Airlines in 1993, modeled JetBlue on the business practices of Southwest: low maintenance costs, high turnover of airplanes and upkeep of employee morale. Since JetBlue began three years ago, it has expanded its service to include 19 U.S. cities and San Juan, Puerto Rico.
Neeleman was born in Sao Paulo, Brazil in 1960, the son of a United Press International bureau chief. He went to the University of Utah but later dropped out to instead to pursue a Mormon missionary project in Brazil.
JetBlue is the only airline in the world to offer its passengers up to 24 channels of television during its flights, on a system called LiveTV, which recently was purchased by Neeleman and his fellow business partners.
The airline relies heavily on the Internet to sell its tickets, all of which are electronic, as a way to keep overall operational costs low. JetBlue also uses unorthodox practices to save money, such as letting its employees who make reservations work from home rather than from a centralized call-in building and using airplane staff, even the captains and first officers, to help clean planes in between flight trips.
Reach reporter Alex Davidson by e-mail at TimesLedger@aol.com or by phone at 718-229-0300, Ext. 156.
