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 80 cities with 850 daily flights 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.
JetBlue flies to about 80 cities with 850 daily flights in more than 20 US states, Puerto Rico, Mexico, and about a dozen countries in the Caribbean and Latin America. It concentrates primarily on the cities of Boston; New York; Long Beach, California; Fort Lauderdale and Orlando, Florida; and San Juan, Puerto Rico.
The US represents nearly 75% of total sales, while Latin America and the Caribbean account for 25%.
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.
JetBlue has experienced unprecedented growth over the last three years. Revenues jumped 11% from $4.5 billion in 2011 to nearly $5 billion in2 2012. Profits soared by nearly 50% from $86 million in 2011 to $128 million in 2012. Both these totals for 2012 represented historic milestones for the company.
The growth in 2012 was led by a 12% spike in passenger revenue and a 14% surge in revenue from the Caribbean and Latin America. Jet Blue was also helped by an increase in overall capacity for 2012 and by keeping a tight lid on costs. Aircraft fuel expenses represented 40% of its total operating expenses for 2012.
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 and partnerships, rather than through acquisitions. By 2012 it had established a total of 22 partnerships with other airlines for extending its flight reach.
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.
Deutsche Lufthansa AG and Donald Smith & Co. own about 17% and 10% of the company, respectively.