Jetblue's Cost Structure - Good Article

[General Lee]

FLB,

Watch out man, you're getting really cocky. First of all, your "INTEL" is telling you what? We are full, and we have had a great June and July at the company, so good infact that management wants to rap up negotiations quickly. Have your spies seen our INTL traffic out of ATL? Absolutely full, but you don't go there yet, right? Your spies are everywhere watching all of our flights, right? Yeah, sure, ok. When is that other terminal going to be built in ATL? 5 or 7 years?

Since you really don't go to LAS, your buddies at RYAN really do, you would see if you flew there that National Airlines left a whole lot of gates open next to ours in that terminal. I am sure the city would let us borrow them for cheap.

FLB, most of your posts are informative and worthwhile. Then you get giddy and cocky. Come on man, you're making fun of the biggest dog on your block. We are the strongest major, and we aren't going away anytime soon. We acknowledge that you guys are doing well, but simmer down down, ya hear?

Bye Bye--General Lee

 

[FlyDeltasJets]

Re: Song and TV's????

We keep hearing how Song is going to have live TV but have you done your homework? First off, Direct TV has already declined an offer from Song to provide service. Direct TV is a service, you can get the signal from PrimeStar or countless others. What Song does not have, and doubtful if they will ever get, is satellite equipment. They have monitors, wiring, but the only place to get a satellite antenna (a necessary piece of hardware) is from the only company who has one approved by the FAA. I think that company is called Live TV (wholly owned by none other than jetBlue).

Food for thought.......

From the Song press release:

¨ The most advanced in-flight entertainment technology available (October 2003). Song is partnering with Matsu**CENSORED****CENSORED****CENSORED****CENSORED**a Avionics Systems and EchoStar Communications Corporation (NASDAQISH) and its DISH Network™ satellite TV service to provide a complement of on-board amenities, which will include:
· Personal video monitors at every seat with "touch screen" technology and credit card "swipe" capability.
· Live, all-digital satellite television programming from DISH Network.


I'm not sure where you heard about DirectTV, but we already have a deal with Dish Network.

Please tell me your source, as it appears your info is incorrect.

 

[AJWick]

Though LiveTV is wholly owned by JB....It's still a business and JB is not the sole airline using the service. So....Jetblue 320....I thought you may want to read this PR. Since you hadnt quoted your sources of DirectTV declining Songs offer for service.


LiveTV Press Release....In case anyone was wondering or "didnt do their homework."

www.livetvifs.com


LiveTV lands third airline

Canada's WestJet will use Melbourne firm's in-seat TVs

By Jennifer Wirth
FLORIDA TODAY

A new contract between Melbourne-based LiveTV and Canada's WestJet Airlines will mean 25 more jobs for the local high-tech company.

Last month, LiveTV, a wholly owned subsidiary of JetBlue Airways Corp., announced it would be looking to fill 25 job openings in Melbourne and Orlando after JetBlue purchased 100 planes that needed to be outfitted with LiveTV's satellite-television system.

Now, another 25 jobs are expected to open up, as word comes that LiveTV will provide in-flight satellite-television installation for 40 planes owned by Canadian low-fare carrier WestJet.

"We're delighted to add WestJet to LiveTV's growing customer base," said LiveTV Vice President Glenn Latta. "We're proud to be the supplier of choice when low-cost airlines choose in-flight entertainment."

Under the terms of the agreement, LiveTV will install and maintain the satellite receiving and distribution system equipment enabling WestJet to receive Bell ExpressVu satellite programming at every seat-back on its Boeing 737-700 aircraft.

Specific financial terms of the agreement were not disclosed.

"We have been monitoring for some time the attractiveness of this product on JetBlue and have been very impressed with the results, both from a reliability perspective and from the enthusiasm in which the public has embraced this product," said Clive Beddoe, WestJet's president and chief executive officer.

The agreement also carries the option to install the system on future aircraft.

Installation of the equipment on WestJet's existing fleet is scheduled to begin in the fourth quarter of 2003 and will completed by the first quarter of 2004.

WestJet serves 26 Canadian cities and is publicly traded on the Toronto Stock Exchange under the symbol WJA.

The airline currently plans to offer the entertainment service to its passengers free of charge. The service, which provides a selection of 300-plus channels, will be supplied by satellite provider Bell ExpressVu.

Currently, LiveTV provides all satellite-television installation for JetBlue's fleet of 44 aircraft, as well for 36 planes in the Denver-based Frontier Airlines fleet.

LiveTV officials said this is the first time in-flight satellite television has been available in Canada following JetBlue's United States debut of the system in 2000.

Before the staff expansions, Live TV had 75 employees, including 50 in Orlando and 25 in Melbourne.

Latta said about five of the new jobs will be based in Melbourne, with the balance based in the company's Orlando location, where installation work will take place. He said the company will be looking for program managers, engineers and installation technicians to fill the positions.

"These positions are open now, " Latta said. "And we are looking to fill them immediately."

JetBlue stock closed Wednesday at $43.58, up 47 cents from Tuesday's close, in Nasdaq Stock Market trading, while WestJet stock was up 20 Canadian cents at $16.70 Canadian in trading on the Toronto Stock Exchange.

 

[skirt]

David Neeleman was involved in WestJet's startup, and I am sure he maintain's close contact with Clive Bledsoe (sp?) their CEO. No doubt WestJet got the LiveTV because David Neeleman wanted them to have it. Furthermore, WestJet does not compete with JetBlue, and has a similar culture/business plan. I wonder when/if JetBlue will fly to YYC or YVR to hook up with WestJet (just thinking outloud).

Frontier also has LiveTV, but I believe that relationship began before JetBlue bought LiveTV.

Skirt

 

[jetblue320]

Re: Re: Song and TV's????

From the Song press release:

¨ The most advanced in-flight entertainment technology available (October 2003). Song is partnering with Matsu**CENSORED****CENSORED****CENSORED****CENSORED**a Avionics Systems and EchoStar Communications Corporation (NASDAQISH) and its DISH Network™ satellite TV service to provide a complement of on-board amenities, which will include:
· Personal video monitors at every seat with "touch screen" technology and credit card "swipe" capability.
· Live, all-digital satellite television programming from DISH Network.


I'm not sure where you heard about DirectTV, but we already have a deal with Dish Network.

Please tell me your source, as it appears your info is incorrect.

No sir, my info is not incorrect. Yes, you have struk a deal with DISH Network. DISH network is a satellite signal service. Last I heard you need a satellite "antenna" to recieve the signal. The only maker of satellite"antennas" is LiveTV. It was made by them and Harris Corp. who used to be partnered with them. jetBlue purchased LiveTV, which has proprietary rights to the antenna that is mounted on every JB A320, and soon a few Frontier planes. And I remember seeing something about us cutting a deal with Westjet in Canada. We did the STC, the proving runs, the works to get it. To my knowledge (and the knowledge of our Tech Ops Dept.) no one else on the planet has such an antenna. You didn't need to censor your Matsu******. It is public info that they are partnered with Song to try to "develop" the hardware.

I never doubted it could happen, but my thoughts are that it more than likely won't happen by October of this year, like was promised to the flying public. It only took us 18 months and countless trials.

I wish Song the best of luck in their TV acquisition. From what I have seen and heard, they need it.

 

[General Lee]

JetblueA320,

OK, can you explain your statement:"I wish Song the best of luck in their TV acquisition. From what I have seen and heard, they need it."

What have you seen? You have seen the 757 taxi by? You have been in one? You bought a ticket? You know the product? You are in the meetings with management? You don't know Jack Schitt, do you? No you don't, and I probably don't know much more. I have been briefed on some of it, and our entertainment systems will be a lot better than yours. How do I know? My brother, an airplane nut himself, rode on you guys a couple times, and liked it. But, he said that everytime your bus turned, the screen would blank. Apparentlly, ours will not do that. (That is what it said in the brochure) We will also have a song library where the pasenger can choose his/her own song list for the flight. There will eventually be email ability, and the food passengers can pre-order and pay for at the gate is supposedly gourment. (People buy airport food anyways that is expensive) The TV system (made by Matsu$hitsa (SP)???) is supposedly top of the line. Add on a better frequent flyer program and service to all 3 NYC airports, and Jetblue has a competitor on its hands. But, it takes a while to get it up and running, 1 757 per week joins the Song fleet. At the end of the year, there will be 36 Song 757s, and 70 more possibly waiting. That will affect your bottom line, do doubt.

FLB717,

Another thing I forgot to say to you before concerns your remark about Delta Express. Everybody loves to harp on it, but it was actually profitable. The loads were always full, and I flew it for a full year. The only thing wrong with it was that it had the wrong aircraft type, and the 737-200 was a gas guzzler. The 757 will have 80 more seats, one more flight attendant, and burn the same gas as a 737-200. We also didn't really market Delta Express. Our Marketing department will do more for Song to get the word out. It will take those people who want the cheap fares on the east coast and fly them nonstop, avoiding our hubs so more expensive seats can be sold for people connecting from RJ's in ATL/CVG. There you go.

Bye Bye--General Lee

 

[kwijybo]

Song stuff

I don't know. General Lee, I have begun to agree with you more and more which is what scares me, but I wanted to jump in. I think the entertainment system is more than all the bells and whistles. I am sure the FAA et al is real interested in the whole inflight setup, especially since the Swiss Air Accident, and the recent USA Today article on all the extra wiring involved and the potential for problems. The FAA doesn't exactly move at a rapid pace. Originally, the inflight stuff for song was set for Oct 03, now it says on the Song Website early 04. Has there been any word yet on any kind of design, testing, etc? Not picking, just wondering. I know the technology for talking to the satellites is the major hurdle.

I talked with some of the tech guys about the bank angle black out on the TV's (in laymens terms, because that is what I am), some systems are 'tighter' than others and can maintain their aim better than others. I have been on some that never lose signal, and some that are always pausing. Word on the street is that there are Version 1.0, 2.0, and now a 3.0 to the system to help fix that problem and upgrades. This includes the possibilities of such things as more channels, the DVD option (for SJU) and others. Who knows, a bigger screen, and if satellite TV, why not satellite radio? XM radio is great on long the road trip. JB is always looking forward.

AJ you should do a little homework as well. Skirt hit the nail on the head. That is exactly what happened, Frontier was a prior commitment, and West Jet and Dave N. go way back and are north of the border. For all you business majors, what does 'wholly owned subsidiary' mean?

I am sitting here in the middle of July 03. Anyone have an over/under bet for when the first Song Flight with the operational entertainment system will be? I say June 04 for starters.

I taxied by a Song flight the other day, but I think their radios weren't working. All I heard talking was a Delta flight somewhere near by

 

[General Lee]

Kwijybo,

Thanks for sort of agreeing with me often, I think. I just spotted this "Delta Ad" on Yahoo Finance and it gives some details. Ofcourse, this is all Delta propoganda for Song.


"Our customers will play a major role in the development of Song," said Selvaggio, a 30-year veteran of the airline industry. "They will be able to vote products and services onto the aircraft. They will be able to make each flight what they want it to be."

Selvaggio added, "We've put a great deal of thought into everything we will offer, understanding that each time a person flies, he or she has different expectations. They may be on business and want the ability to prepare for a meeting. They may be flying with children and need something to keep them entertained. Or they may be flying for pleasure and are looking for a way to relax on board. We will be able to serve each of those customers on Song, on every flight."

Assets Unique Among Low-Fare Segment

Technology: Unlike its competitors, Song has the advantage to leverage Delta's world-class technological infrastructure to create the world's first all-digital airline product, thereby offering customers a wide-range of conveniences, including:

Dedicated Web site - www.flysong.com. On the Web, Delta's technology infrastructure will support flysong.com, a simple, easy to use, information-rich site on which customers can purchase tickets, find lower fares, check-in for flights and print boarding cards from the convenience of their home or office.
First-ever book to ticket automation. (Available in fall 2003) Over the phone, customers will book and complete purchases directly with Song through voice-recognition technology.
Self-service kiosks. At the airport, self-service kiosks will continue to help customers avoid lines by electronically executing high-demand transactions.
Efficient gate and boarding. At the gate, exclusive gate information displays will ensure that customers remain informed up-to-the-minute. Additionally, gate and boarding technology will facilitate efficient, expedited boarding.
Cost savings through higher aircraft utilization: Delta has developed a process that facilitates Song's aircraft utilization rates to be among the highest in the industry - 12.7 hours per day, a 22 percent improvement over mainline Delta's average 757 aircraft.

"Song is an aggressive initiative to compete in the low-fare market," concluded Selvaggio. "We will not only offer low fares but lower operating costs, so we can be successful where previous attempts by other major airlines have failed."

Song is an innovative low-fare service, which will provide non-stop flights between the Northeast and key Florida leisure destinations, plus Atlanta, Las Vegas and San Juan, with over 142 daily flights on 36 Boeing 757."


Bye Bye--General Lee

 

[FL717]

I am of the opinion that all these new technology in-flight entertainment systems will eventually become a liability in terms of cost. I am of the belief that if you keep it simple, then you can keep costs down and that will always keep people in the seats. As various costs go up for these on-board systems, and they WILL, regardless of what many people think, then they become a big liability, and when the economy downturns (just like now), and it always does, then the carrier that has kept the simple is better principle will thrive. (ie SWA, AirTran). While I like jetBlue and I'm a supporter, I feel that their success right now doesn't reflect the costs associated with an aging entertainment system that will become obsolete during the next downturn years ahead, even if they own it. It just reeks of continual maintenance costs, and customer service headaches.. (ie .. "Why doesn't my screen work??" or possibly if its in the MEL.. "Whats this red sticker on my screen??").

People will like it, and it will become more commonplace, but I hope my carrier continues with the concept of low cost air travel for everyone, during all economic times. Let them bring their own CD or DVD player if they want. They're becoming dirt cheap, and then the airline doesn't have to incur all the cost and logistics associated with that.

Case in point... remember when airlines all started competing for hot inflight meals. Where'd that go, and why??

 

[FLB717]

General,

If you want to call me cocky sure go ahead but I think you missed the point and My Grandma used to say somthin about the pot calling the kettle... As far as you being the big dog ...great good for you. Many other carriers past and present can claim that distinction. If Delta is so God Da4n tuff why are we still here? Am I afraid of Delta, nope. Leo and company have done avery good job of trying to hurt us and mainly hurting you. As far as us not really flying to LAS LAX ok then you dont really fly to EVV, ROA, because thats ASA or CMR, or Skywest or Chit who are not owned redheaded stepchildren, or any code share point served by your sky team eh? Both airlines use contract carriers. But I guess we contine to function in ATL By your good graces? Back to the point.

My intell is from sources is the media etc and that point is that while Delta is doing ok (what is the current definition of good not looseing 1/3 to 1/2 Billion dollors? per quarter) traditional Main Line is not so hot, the cash (profit) is beeing generated by DCI mostly. Those are my opinions from sources in media print, not this forum. So I ask you the same question again.. IS SONG MAKING MONEY? HOW WELL. Im not trying to piss you off, sleep with your sister or tell you your company sucks! I just want to know if resources are being used wisley at DAL. So that people I know can retrun. Your loads are full, whos, Songs, DCI, Delta..all or some I dont know. I just want to know about Song? If you dont know or dont want to say ok..just say so..

Fly Safe General, while I may not agree with your post or your points on all things great or small I have not tried to pick a fight, your call.

 

[jetblue320]

JetblueA320,

I have been briefed on some of it, and our entertainment systems will be a lot better than yours. How do I know? My brother, an airplane nut himself, rode on you guys a couple times, and liked it. But, he said that everytime your bus turned, the screen would blank. Apparentlly, ours will not do that. (That is what it said in the brochure)
Bye Bye--General Lee

You sound like my mother-in-law, who says "they have the best steaks in town, they must, it says so right there on the sign"

I am sure the brocure says a lot of things. Time will tell, and then we'll see. As far as what I know about Song, you are right, I have never been on the plane itself, but I have a few friends that work there and have heard some grumblings from them about how much BS it is.

Remember one thing, Song copied us (just ask the guys who founded it, they said that, not us) and we stay focused on our business. We have enough to do just keeping ourselves straight let alone worry about how you guys run your show. But if it makes you feel better, you're right, I don't know JS.

 

[Dizel8]

I think y'all are being a bit hard on General Lee, after all, he is just a line puke like the rest of us.

Song is a competetive response to the LCC's, particularily jetBlue. Obviously the jetBlue concept is working and, imitation being the sincerest form of flattery, Delta has chosen to emulate. Nothing wrong with that. jetBlue emulates SWA, with a few added beenies for good measures.

We will probably never know, if Song generates a profit, the numbers for just DLX was never posted to my knowledge, I do not anticipate Song being any different. Song has good loadfactors, but as we all know, that does not mean profits.

If Song does nothing other, than to stymie the growth of jetBlue, that would be considered a victory. But there is plenty of customers and business to go around. Before jetBlue entered the BUF market, there were 500 pax a day, now there are 1200. The SWA effect is well known, perhaps we can borrow that concept and call it the LCC effect. The market was price stimulated under all circumstances.

The management at Song are smart people, they know whether or not the TV's will show up and more specifically, when. Yes, jetBlue owns the technology for their system, I am sure someone sees a market for this and wishes to have their own system to offer. Boeing is supposedly working on it and they certainly have the know-how. Having said that, I have no doubt, that jetBlue will go tit for tat with Song on amenities. The current jetBlue system has plenty of upgradeability: Video, streaming MP3, email etc.

I will not talk about Songs "technological advantage", have not seen much other that the "boarding monitor" and cannot comment on the effectiveness of it. As far as utilizing the planes longer, not sure you can get much higher numbers than jetBlue, but time will show.

Kind of curious though, why Delta decided to rename it Song and not keep Delta Express, but perhaps that is like GM, knowing that many people were disgruntled, decide to call their new car a Saturn. It did however work.

 

[NYRANGERS]

Remember one thing, Song copied us (just ask the guys who founded it, they said that, not us) and we stay focused on our business. We have enough to do just keeping ourselves straight let alone worry about how you guys run your show. But if it makes you feel better, you're right, I don't know JS.

As far as I can tell, the only thing Song may have copied from Jetblue is IFE in EVERY seat. Although I think our 777's have it in every seat.

Other than that, it's just flying from A to B. I guess you could say Jetblue copied flying from A to B from the Wright bros. Although many Jetblue guys seem to think they invented that as well.

Jetblue is most evidently a great company to work for, but your innovations are only "ground breaking" to the media ( and we know they are always correct).

If you want to claim "uniqueness" then I suggest claiming superiorty with regards to your management/ labor relation. Otherwise, give us all a break. You fly from one place to another, just like the many airlines that have done so for nearly 100 years.

Take care and fly safe,

NYR

 

[JayDub]

As far as I can tell, the only thing Song may have copied from Jetblue is IFE in EVERY seat. Although I think our 777's have it in every seat.

Then what was that whole Yoga demonstration for on the first day of Song's operation? You know, the one that complemented the cards in the seat back? Where have I seen that beforee...?

JayDub

 

[CU@OSHKOSH]

Big picture

I does not matter what ingenious advertising, fleet plan, modifications to operations, or amazing technological gadgets any airline comes up with. Whether an airline makes it in the long run has everything to do with how the employees are treated and how employees treat each other.

That, combined with management that has a clear vision for the airline (not just their own pockets) and are in touch with what passengers really NEED, those are the carriers that will thrive. No matter what the airlines' size.

IMHO, the bottom line.

 

[OakRBust]

I have been thinking alot about the 199 seat 75's. We are racing to turn a 137 seater in 25 minutes. I would be really surprised to see Song turn a 199 seater in much less than 45 minutes or so. Anybody know what the planned turn times are going to be?


A 20 minute difference in turn times for lets say a scheduled 8 flight day would be a whopping 2:40 minutes lost in available flight time per jet. That might make the extra seats a disadvantage.



Just a thought


Oak

 

[skirt]

I have been thinking alot about the 199 seat 75's. We are racing to turn a 137 seater in 25 minutes. I would be really surprised to see Song turn a 199 seater in much less than 45 minutes or so. Anybody know what the planned turn times are going to be?


A 20 minute difference in turn times for lets say a scheduled 8 flight day would be a whopping 2:40 minutes lost in available flight time per jet. That might make the extra seats a disadvantage.



Just a thought


Oak

I just finished a study on exactly this topic. From memory, I believe the Song leadership was quoted saying they were "going to try for a 50 minute turn". I do not know what they are currently doing in actual operation, but it would be easy to go to Song's website to see.

Yes, there is a huge hit in lost productivity from long turn times, until you operate all nighters to make up for it.

Comparing notes with a Southwest crew and a United crew, both flying up and down the west coast. Where we fly 5 legs, they fly can fly 6. Our duty day is 2 hours longer, for 1 hour less pay (after figuring the trip-hour conversion for SWA pay). The reason SWA is more "productive" than us (UAL) is the average 55 minute turn times. This was an easy apples to apples comparison, because we both fly 737's. The only extenuating circumstance is that they fly through OAK and we fly through SFO, which often has delays and needs "pad" built into the turn times to keep on schedule.

Skirt

 

[G4G5]

I read that Song was considering the all night trans cons, similar to B6's. This would allow them to increase the utilization.

The other thing that a DAL buddy of mine was telling me was that mgt was looking into the Jet Bridges with the aft exits. This would allow them to turn the aircraft much quicker.

One more thing to consider is that B6 is not all that concerns Song, they have Airtran in ATL to deal with. Airtran is not going to get a 717 out of LGA to ATL any faster then Song is going to move a 757 out of JFK. Samething with ATL, by the time Airtran turns a 717 in ATL, Song could be moving a 757. Especially if they have dedicated Song 757 double jet bridge exits.
Maintianing market share in ATL is probably a greater concern then JFK for DAL mgt.

 

[General Lee]

G4G5,

We know that Airtran is becoming more of a threat in ATL, but until they build the new terminal on the Southside of the airport, Airtran will have a hard time growing or adding capacity due to the lack of extra gates. We know that they will expand more when they get that terminal, and hopefully by then (3 years atleast---they haven't built the extra runway either) we will be leaner to compete with them. They added Ryan A320's to LAX and LAS, and we have also increased our service to the LA Basin to 22 daily flights.


OAKRBUST,

Well, I have heard and seen what they are doing for the quicker turn times, and it mainly involves deplaning the people out of the L2 or Left 2 door with the front of the plane exiting first, and as they leave we have cleaners come in the front right service door and start to clean immediately. Then cleaners also invade the back of the 757 as those people move forward, and the cleaners try to meet in the middle. The passengers are also boarded a little different to expedite the process. Yes, there have been some kinks, but they are learning how to get it done.

Bye Bye--General Lee

 

[OakRBust]

Here is something to ponder...

We have about 2700 flights per day. Our typical turn time is 25 minutes. Each 5 minute increase in turn time costs us 13,500 minutes in the daily schedule (2700 daily flights * 5 minutes = 13500 minutes). That equates to 225 hours that the planes aren't flying.

We currently have 379 planes. Lets say that each of our flight segments averages 1.5 hours. 2700*1.5 = 4050 flight hours per day. 4050/379 = 10.68 hours / plane/ day

To cover the same schedule with a 5 minute longer turn time...

We would still need to cover 4050 flight hours. We lose 225 flight hours for every 5 minute increase in turn time. 4050-225 = 3825
3825 /379 = a new a/c utilization of 10.09 hrs/plane/day.
If we take the lost 225 hours and divide it by the new utilization rate of 10.09.... 225/10.09 = 22.29 additional planes required to complete the same flight schedule. (WOW)

Five minutes seems like mothing but all I can say is WOWOWOW. Every minute really does count.

NOTE TO EVERYBODY!!!! I am not a math major so there could be a few flaws in my calculations. I also am not saying that our average flight is 1.5 hours as I am sure that it is quite a bit higher. 1.5 just made the math easy.


Oak

 

[skirt]

OakRBust,

Actually, your average stage length is 723 miles. Looking for a good comparision for that, I chose MCO to HOU which is 740 miles. According to your schedule, that takes 2:25 block to block. Turn times are especially important at SWA, but are important everywhere. Only three ways to increase aircraft utilization:

1. Lengthen stage length
2. Decrease turn time
3. Fly as much around the clock as possible (all nighters)

JetBlue's average stage length is 1169. United's domestic stage length is about 1010 (numbers fluctuating daily). USAir is around 650. I'll let someone else crunch the impact on these airlines for their turn times.

End product is that JetBlue has the highest utilization (see three reasons above) at 13.1, SWA is next with 11.5, and United is below 8. Simple, keep the airplanes flying and they make money.

Skirt

 

[airbus331]

Jetblue internet

Jetblue is now testing wireless internet on one plane. With maybe a fall announcement of fleetwide capability.

 

[banger]

Shhhhhhhhhh!!!!!!!!!!