weasel_lips
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- Jan 21, 2006
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Singing the JetBlue blues
Posted Jan 07 2008, 03:38 PM by Robert Walberg
Filed under: FedEx, Travel, JetBlue, AMR, Continental Airlines, Alaska Air
In response to a public relations nightmare last February, JetBlue's management team enacted a customer bill of rights to help restore confidence in the airline. It was a bit gimmicky, but the effort seemed to work as the company just announced a 15% year-over-year jump in revenue passengers for 2007.
Hopefully, management has another gimmick or two up its sleeve to address the nightmarish performance of its stock. Despite the operational improvement, JetBlue's stock is now trading at about $5 per share -- down a whopping 64% over the past 52 weeks. Being trapped on a grounded plane for 10 hours seems painless by comparison.
Of course, JetBlue isn't the only airline to see its stock crash and burn over the past year. AMR Corp, Continental Airlines and Alaska Air Group have tumbled by 60%, 55% and 43%, respectively. High fuel prices, an uncertain economy and changes in regulations have contributed to a very turbulent year. Yet JetBlue was supposed to be different. With leather seats, expanded leg room and free satellite TV/radio for all passengers, this company was supposed to revolutionize the airline industry. So why has JetBlue been more revolting than revolutionary?
First and foremost, the company failed to do anything truly revolutionary. Adding creature comforts is nice for the passenger but it doesn't change the business model -- and it's the business model in the domestic airline industry that's broken. Let's face it, most of us have very little loyalty to an airline anymore. Unless we've racked up hundreds of thousands of miles on a given carrier, price is the only real issue that matters when picking an airline. Scheduling might come into play, but, bottom line, the service is so mediocre-to-lousy across the industry these days that we really just want to get from point A to point B as cheaply and quickly as possible. Oh yeah -- and don't lose our luggage!
So what can JetBlue do to turn fortunes around for its shareholders? Start to think outside, or in this case maybe inside, the box. That TV screen in front of every passenger would make a great place for advertisements. As last year's flight problems prove, we are a captive audience, so take advantage of that fact and put some advertising on the screen. For that matter maybe use one or two channels to sell us something directly. Find a way to monetize that feature.
Maybe try looking at outsourcing baggage delivery. Passengers can carry on up to two bags but anything more gets shipped by someone else (FedEx maybe) at a price to the passenger. Passengers can set up service on airline's Web site at time of booking. Then use the storage space for nonrevenue-generating passenger baggage for revenue-generating cargo. Baggage is a customer relations nightmare for most airline companies so it could be a win-win situation for all involved.
Basically, the company needs to return to the spirit of innovation it showed early on, rather than simply being a dressed up version of the same-old experience. The infusion of cash from Lufthansa, which recently acquired 19% of Jet Blue for $300 million, buys management some time -- but not much. If JetBlue is to soar once again it needs more than a gimmick this time, it needs a bold plan of action. Otherwise, the company can forget about its bill of rights, as customers and investors will end up declaring their independence.
http://blogs.moneycentral.msn.com/topstocks/archive/2008/01/07/singing-the-jetblue-blues.aspx
Posted Jan 07 2008, 03:38 PM by Robert Walberg
Filed under: FedEx, Travel, JetBlue, AMR, Continental Airlines, Alaska Air
In response to a public relations nightmare last February, JetBlue's management team enacted a customer bill of rights to help restore confidence in the airline. It was a bit gimmicky, but the effort seemed to work as the company just announced a 15% year-over-year jump in revenue passengers for 2007.
Hopefully, management has another gimmick or two up its sleeve to address the nightmarish performance of its stock. Despite the operational improvement, JetBlue's stock is now trading at about $5 per share -- down a whopping 64% over the past 52 weeks. Being trapped on a grounded plane for 10 hours seems painless by comparison.
Of course, JetBlue isn't the only airline to see its stock crash and burn over the past year. AMR Corp, Continental Airlines and Alaska Air Group have tumbled by 60%, 55% and 43%, respectively. High fuel prices, an uncertain economy and changes in regulations have contributed to a very turbulent year. Yet JetBlue was supposed to be different. With leather seats, expanded leg room and free satellite TV/radio for all passengers, this company was supposed to revolutionize the airline industry. So why has JetBlue been more revolting than revolutionary?
First and foremost, the company failed to do anything truly revolutionary. Adding creature comforts is nice for the passenger but it doesn't change the business model -- and it's the business model in the domestic airline industry that's broken. Let's face it, most of us have very little loyalty to an airline anymore. Unless we've racked up hundreds of thousands of miles on a given carrier, price is the only real issue that matters when picking an airline. Scheduling might come into play, but, bottom line, the service is so mediocre-to-lousy across the industry these days that we really just want to get from point A to point B as cheaply and quickly as possible. Oh yeah -- and don't lose our luggage!
So what can JetBlue do to turn fortunes around for its shareholders? Start to think outside, or in this case maybe inside, the box. That TV screen in front of every passenger would make a great place for advertisements. As last year's flight problems prove, we are a captive audience, so take advantage of that fact and put some advertising on the screen. For that matter maybe use one or two channels to sell us something directly. Find a way to monetize that feature.
Maybe try looking at outsourcing baggage delivery. Passengers can carry on up to two bags but anything more gets shipped by someone else (FedEx maybe) at a price to the passenger. Passengers can set up service on airline's Web site at time of booking. Then use the storage space for nonrevenue-generating passenger baggage for revenue-generating cargo. Baggage is a customer relations nightmare for most airline companies so it could be a win-win situation for all involved.
Basically, the company needs to return to the spirit of innovation it showed early on, rather than simply being a dressed up version of the same-old experience. The infusion of cash from Lufthansa, which recently acquired 19% of Jet Blue for $300 million, buys management some time -- but not much. If JetBlue is to soar once again it needs more than a gimmick this time, it needs a bold plan of action. Otherwise, the company can forget about its bill of rights, as customers and investors will end up declaring their independence.
http://blogs.moneycentral.msn.com/topstocks/archive/2008/01/07/singing-the-jetblue-blues.aspx
