JetBlue's Fiasco Could Improve Flying

As the discount airline scrambles to repair its business and retain customers, new service efforts put rivals on notice: Changes are needed

by Justin Bachman

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It's the new must-share video for airline executives. In a two-minute clip posted Feb. 20 on his company's home page, a contrite and fatigued JetBlue Airways (JBLU) Chief Executive David Neeleman apologizes to passengers for the airline's six-day meltdown and vows that such an operational disaster will "never again" befall the company and its passengers. Packed planes sat near empty gates, in some cases for 8, 9, and 10 hours. Irate passengers screamed at workers and security guards. A few JetBlue employees started to cry, according to media reports. It was the sort of operational catastrophe that no traveler or airline wants.

Neeleman, in the clip, said the company was going through "the most difficult time in our history." He added, "I wanted to assure you as the CEO of this company that the events that transpired last week, and the way that they transpired, will never happen again." In a later press release, Neeleman also apologized to employees, and promised "to get the right resources, tools, and support for them."

PR Offensive

So what exactly went wrong at a business that bills itself as a "customer service" company that just happens to fly airplanes? In a word, everything. An organizational bias against flight cancellations—JetBlue scrubs the fewest flights in the industry—collided with an infrastructure too lean to manage the mix of poor weather and cascading flight delays and cancellations.

Now the New York-based company is jumping into a high-profile public relations campaign, hiring new staff, doling out refunds and free flights, and hoping the public doesn't turn away from what once was a runaway success story. Still, despite the shrill feel of its new "customer bill of rights" and no shortage of skeptics, JetBlue has a good shot at fulfilling Neeleman's pledge. What turned into a $30 million February disaster for JetBlue could, in the end, make the U.S. airline industry a more hospitable environment for passengers.

Why? Fear and fortuity. The airlines are petrified that politicians, itching to jump on the service issue, will try to impose new government mandates, so they may be more motivated than ever to make real changes. Neeleman looks like just the person to push for changes and make them industry practice. He's an industry outsider with a successful track record, the CEO most closely associated with a U.S. airline since Herb Kelleher of Southwest Airlines (LUV). The impatient, hands-on, get-'er-done CEO grasped the severity of the situation immediately and has, with a high-profile response, helped keep the issue in the public eye. He emitted a flood of daily apologies, declaring himself "mortified" by the operations and declining to defend his company's performance.

Cash Refunds

The airlines' trade group, the Air Transport Assn., opposes any new regulation, even as it concedes problems and promises changes. "We appreciate that Congress, responding to public concerns, will want to know more about the airlines' plans. We look forward to substantive discussions," ATA President and CEO James May said in a Feb. 19 statement. "One thing we all want to avoid is the imposition of inflexible government standards, which could unintentionally result in greater customer inconvenience."

For its part, JetBlue claims not to care whether Congress wades into the issue. "From the start, our customer bill of rights was designed to be broader, deeper, and more meaningful for our customers than anything that will come out of Congress," says JetBlue spokesman Don Usselman. JetBlue will deplane passengers on flights that have been sitting at least five hours, unless the pilot has been notified of a pending "wheels up" time. After arrival, passengers will get a refund, from $25 to the full amount of their round-trip ticket, if a flight waits for an open gate for more than 30 minutes.