JetBlue Airways is counting on more than low fares to make its ledgers jet-black. The carrier offers one-class service -- with leather seats, satellite TV from DIRECTV, satellite radio from XM, and movies -- to about 70 cities in more than 20 US states, Puerto Rico, Mexico, and about a dozen countries in the Caribbean and Latin America. Most of its flights arrive or depart from Boston, Los Angeles, New York, Orlando and Fort Lauderdale, Florida, and San Juan, Puerto Rico. JetBlue's fleet of about 170 aircraft consists mainly of Airbus A320s but also includes Embraer 190s. It owns one subsidiary, in-flight entertainment system developer LiveTV.
In many ways JetBlue has taken a lesson from -- and set its sights on -- Southwest Airlines, the guru of the low-fare airline world. Like Southwest, JetBlue works to keep costs down, eliminating amenities such as airport lounges and full meal service. It also relies on electronic ticketing and a non-unionized staff. JetBlue departs from the Southwest model, however, by assigning seats and by operating more than one type of aircraft. (JetBlue believes it can serve smaller markets more efficiently with the Embraer 190s, which have about 100 seats versus 150 for the A320s.) The company also prefers to expand its operations organically -- through its operations, rather than through acquisitions.
JetBlue's year-over-year 2011 operating revenues rose 19% thanks to an increase in passenger revenue as a result of more capacity and yield. Revenue from the company's Even More Space seats also contributed to the uptick. Higher fuel prices and maintenance for an aging fleet caused operating expenses to climb 21%, however. The contribution of fuel costs to operating expenses rose from 32% in 2010 to 40% in 2011. Among the measures JetBlue is implementing for greater fuel efficiency are winglets (vertical extensions of wingtips) on its Airbus craft and a new A320 engine that improves fuel use by 16%.
Also to keep its bottom line soaring against the weight of rising fuel costs, JetBlue has been launching a number of initiatives to improve the customer experience. In 2011 JetBlue rebranded its Even More Legroom option as Even More Space, which offers early boarding and first access to overhead storage in addition to more legroom. Also in 2011 JetBlue introduced another branded customer service, Even More Speed, which allows faster security processing. In late 2012 JetBlue will begin providing in-flight Ka broadband connectivity through ViaSat.
From the beginning, JetBlue was quicker than Southwest to enter major metropolitan markets. The New York-based carrier is the largest domestic airline at New York's JFK International Airport -- the US's biggest travel market. JetBlue's strategy has been to identify routes with high average fares and beat the competition on price, as well as to distinguish itself with service offerings such as TV and radio programming.
Traditionally focused on the leisure traveler, JetBlue has been developing more service for the business customer to offset the seasonal limitations of the vacation market. Also to develop more business beyond vacation travelers, JetBlue has been growing its operations in Latin America and the Caribbean (LACA), which has a strong presence of visiting-friends-and-relatives (VFR) travelers in addition to vacationers. LACA now accounts for more than 25% of JetBlue's revenue.
In 2011 JetBlue began offering service to seven new locations, including Anchorage, Alaska, Martha's Vineyard, Mass., Turks & Caicos, the Dominican Republic, Costa Rica, and the US Virgin Islands. It additionally added eight slots each at La Guardia Airport in New York and Ronald Reagan National Airport in Washington, DC. Also in 2011 JetBlue became the top carrier in San Juan and the Dominican Republic.
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