But what is its secret? What is the…
While airlines are floundering in red ink, a new industry breed continues to flourish. With several successful discount airlines, one in Kew Gardens, Queens has its very own success story in the name of JetBlue.
But what is its secret? What is the company doing that the big boys are not? Is it just price that results in JetBlue’s success? With earnings at 87 cents a share, the company’s stock price could be considered expensive at nearly 49 times earnings. But investors don’t appear to think so, with shares rising $15.52 year to date, hovering at $42.50 a share.
Like its aircraft, JetBlue’s revenue and profits continue to gain altitude with between 60 percent and 100 percent in sales increases. This has been its steady pattern since going public last year, while the major carriers continue to struggle or are on life support.
Let’s take a look at what makes the company tick regarding its success. In our search we can use one example of this past May, when a storm with heavy rain and fog had many passengers stranded at the Fort Lauderdale-Hollywood International Airport in Florida. Passengers were not happy campers. So what does JetBlue do?
Crew members went to a local pizzeria and passed out the food to the waiting passengers. In addition, they rolled out TVs and VCRs so the kids could watch movies. Was this special? No, JetBlue calls it routine and labels it a “delayed service recovery program.”
This goes beyond their modern new aircraft, leather seats and satellite TV screens in front of every seat. At a recent chamber of commerce meeting, I listened to the company’s CEO, David Neeleman, who said, “We are in the people business.”
Price does play a role, but when you couple it with the many amenities in the JetBlue package, it is quite easy for the company to become the carrier of choice. Of those I have spoken with who have flown JetBlue, I have yet to hear a compliant. That can be further confirmed in JetBlue’s scoring second in having fewest complaints, just behind Southwest Airlines.
Based out of Kennedy Airport and first starting out small, JetBlue maintains 20 destinations, five of which are in Florida. So how’s business in the discount airlines arena of JetBlue?
The company has clearly illustrated that it is not just price that generates the success of sales; it is customer satisfaction in service and value that drives repeat business and referrals. These are the components of profitable growth.
Joe Palumbo is the fund manager for The Palco Group, Inc. and can be reached at palcogroup@aol.com or 718-461-8317.
