New York, NY (March 27, 2015) – Original article at: Business Observer
I have loved JetBlue since the beginning of time — JetBlue’s time that is. I thought the concept of founder David Neeleman was simply ingenious — to offer a low-cost airline, but also a pleasant customer experience. JetBlue managed and nurtured that customer experience from the first time you visited its website to look for tickets to the time you got off the plane at your destination. It was brilliant, differentiating and successful; it earned the airline “most admired” status.
Neeleman often flew on these flights to actually experience “the customer experience.” Not only that, but he served beverages and snacks to the travelers and talked to them all — every single one on the flight. I know because that is how I first met him. He sat in the last row of the plane. Why? Because that is row 27 and it doesn’t recline. He wanted to make sure he understood the experience. Pleasing the customer was paramount; pleasing the CEO was not so important.
The idea of giving reasonable legroom to customers was more important than losing a row of revenue. Putting video monitors at each seat to allow streaming of 36 television channels was a novel idea at the time. If a monitor didn’t work and you couldn’t get another seat, then you would get a refund for a portion of your trip. Unbelievable.
JetBlue was an airline that understood customer experience, and it earned my brand loyalty. Its “True Blue” rewards program was a relatively quick way to get free tickets for loyal customers. It was a simple and easy way to get miles and to cash them in. Everything operated through the company’s website, which was intuitive and easy to use.
Not only did Neeleman put customers first, he also put employees at the top of the pyramid — one of the first airlines to do so. In 2002, he put his entire salary and bonus into the JetBlue Crewmember Crisis Fund, which was established for employees who had fallen on financial hardship. Employees loved, respected and wanted to work for him.
Unfortunately, when an epic ice storm stranded JetBlue passengers on the runway on Valentine’s Day in 2007, it led the company’s board of directors to oust Neeleman as CEO in what seems to be a bit of an overreaction. Certainly there were operational deficiencies, and Neeleman’s response that he was “mortified” didn’t help. In any event, with new management in place, changes started to come to JetBlue…slowly at first, but the pace of change picked up and like a jet reaching takeoff the acceleration is continuing.
Under the new management, prices started inching up at a steady pace. JetBlue was known for very competitive fare, but that was changing and prices went from inexpensive to downright steep. If a customer wanted to make changes to an itinerary it used to cost only a minimal amount. After all, what does a change truly cost an airline when the customer does the work online? Now, changes to itineraries were becoming significantly more expensive. Exit rows were long sought after by the taller passengers, and the airline decided to charge more for the “extra legroom seats.” While just slightly more expensive at $10 in the beginning, they became much more expensive over time at $40 — a 400% increase.
When many of the other airlines added baggage fees, JetBlue resisted. But rumors persist that they will begin charging for checking bags in the near future. Shareholders have been demanding revenue and cash flow improvements, which is fine, but it shouldn’t be coming at the cost of the brand. These nickel and dime changes are having an impact on the atmosphere of the customer experience. The fun is fading on JetBlue and it is becoming a generic airline. With each change the brand is becoming a little more tarnished and a little more pedestrian. In the past I always talked about and promoted JetBlue — I even featured it in one of my books. Unfortunately, my brand loyalty is fading.
You can always tell when a company’s brand is going through a brand inflection point. It begins to hype things that don’t seem natural to the brand. JetBlue is currently promoting a concept called, “Flying it Forward,” which feels a little more like a publicity stunt than a genuinely altruistic good deed. Decide for yourself here:
The most painfully obvious move of its desperation is JetBlue’s plan to add a first-class section to its seating. This destroys the last vestige of its original, simple and brilliant brand concept of egalitarian seating. JetBlue is losing what got it to the party — its differentiated brand.
How do all of these changes affect the bottom line performance? JetBlue (JBLU) stock is up 100% over the past 52 weeks. The shareholders are clearly pleased with the changes. Butif JetBlue’s all-important on time arrivals start slipping, then I’m definitely going to look for airline alternatives for my travel.