Jetting to Greener Pastures
For one week in the summer of 2009, JetBlue sold All-You-Can-Jet (AYCJ) passes—magical tickets allowing purchasers to embark on September 8 and take an unlimited number of flights until October 8. Nothing similar at an equivalent price point had ever been tried in the United States, and when the airline launched this promotional bombshell, it struck a direct hit—with me.
Contrary to the level of promotional fanfare the airline had become known for since its inaugural flight in 2000, JetBlue only announced the offer in a press release and through its @JetBlue Twitter account—and yet it took less than 48 hours for national media coverage to explode. Major outlets in every major market nationwide—on television, in print, online, and even on the radio—had covered the story by the end of its second day.
The media began publicly wondering if the airline was crazy, desperate—or just crazily desperate. Within just a few days, MSNBC was saying, “If you haven’t heard about JetBlue’s $599 AYCJ pass…you haven’t been paying attention.” The business-content Web site Bnet.com claimed that anyone who didn’t know about the offer “lived in a cave” and was calling the promotion a “rockstar.” David Barger, the airline’s chief executive officer, called AYCJ “the most successful promotion in our company’s history.”
Time, meanwhile, had a different take. The magazine warned that the offer “is making some people act insane.”
The buzz surrounding the offer was sustained in large part by the sheer audacity, novelty, and absurdity of the AYCJ pass itself—unique attributes that ensured the campaign a great deal of free press. Another major factor in AYCJ’s success was the deep penetration of JetBlue’s social media strategy.
Long before the AYCJ promotion, the airline had been utilizing Twitter as a significant promotional vehicle. According to Twitter traffic-analysis site Twitterholic.com, JetBlue was the most widely followed nonmedia corporation as of February 2010, with more than 1.6 million followers. In the hours after JetBlue launched AYCJ, those 1.6 million twitterers (and, of course, their extended social networks) heavily redistributed the tweet, enabling the airline and its offer to fill both the fourth and fifth slots in Twitter’s “Trending Topics.”
A digital ad executive speaking to Bnet.com at the time ballparked that within seven hours of the announcement there were more than 10 million blog references and more than 31 million search-engine queries—much of that buzz attributable to Twitter.
The level of excitement is easily explained: The pass seemed like a fire sale. It gave the impression that the customer was getting the better end of a massively lopsided deal; exploiting the offer would enable the consumer to do a lot of traveling—and, if parlayed properly, much of it on JetBlue’s dime.
In truth, though, most people would have a hard time taking full advantage of the offer. How many consumers could simply drop everything for a month, just to travel? Just one or two or even three trips wouldn’t get you much bang for your buck—a fact noted in much of the maelstrom of coverage, including Smartmoney.com’s “Is JetBlue’s All-You-Can-Jet Deal Worth It?” Yet even for customers who didn’t end up buying the ticket—the vast majority of the campaign’s audience—the airline managed to buy itself serious mindshare in the form of online traffic by customers trying to gauge how successfully they could game the system.
The airline’s Web site saw a 700 percent increase in traffic in the days after the announcement, according to a report in Time. Perhaps most prominent on the site at the time was the airline’s “Where We Jet” button—an interactive map of JetBlue’s destinations. The feature enabled potential AYCJ buyers to easily map out possible connections. While most of the visitors in that burst of initial traffic never bought an AYCJ pass, they did get exposed to JetBlue’s maps and become familiar with the airline’s routes.
The timing of the AYCJ offer was also significant: The deal was sandwiched between eight new-destination announcements, most out on the West Coast of the United States and in the Caribbean. This meant that even longtime JetBlue flyers already familiar with its routes might take a closer look at its new flight map.
My introduction to the AYCJ pass was hardly unique, but timing worked in my favor. On the very same night that National Public Radio ran a piece about the pass, I had just been granted a sabbatical from work to finish my master’s thesis. The prospect of the boundless travel was an immediate thrill. I could write my thesis in a selection of the most spectacular libraries in America. In short order, I was phoning friends across the country and putting together my half-baked scheme. Before buying, though, I had to consider several restrictions:
- All booking had to be done over the phone;
- flights had to be booked at least three days in advance, but I was free to cancel or change plans as often as I liked (with the same three-day advance limit);
- I was responsible for any international taxes;
- I wasn’t allowed to pick up extra frequent-flyer points in the airline’s TrueBlue program along the way (aside from the 35 points I’d get for buying the AYCJ pass itself);
- I couldn’t leave from and return to the same city in a single day; and
- if I missed a flight I was subject to a $100 penalty and the possibility that JetBlue might revoke my entire pass.
These terms were ingenious on the airline’s end—even insidious. Making pass holders book three days in advance in combination with fees for missed flights provided travelers flexibility, but gave the airline room to prevent users from booking willy-nilly and clogging up its flights with trips they might not even take. Not allowing flyers to go back to the same city on the same day also prevented extravagant daytrips to, say, Brooklyn for cheesecake or San Juan for lechón—passengers were forced to stay overnight somewhere away from home. This seemingly enforced lodging expense surely reduced the number of flights many passholders would take.
Despite the restrictions, it didn’t take me long to decide. Within three hours of hearing about it, I had bought a pass. I wasn’t the only one buying that day, either. When I asked the contact center agent who sold me the ticket if she had been selling a lot of them, she sighed. “All day,” she told me. “You have no idea.”
I’d been a fairly regular JetBlue flyer before the promotion, but only to go from New York to visit some family in Florida. I had little sense of what other destinations the airline reached, and before the promotion I generally flew whatever airline came up cheapest in airfare-aggregation Web sites such as Orbitz. In my case, greater familiarity with JetBlue’s map proved significant because JetBlue is one of the low-cost carriers that doesn’t typically share access with the popular aggregators.
Now, however, in the months since the experience, no matter where I’m flying, if it’s a JetBlue destination (and I now know almost by heart the cities that are) I’ll check its site for comparison—and very often it has the cheapest fare. I’ve actually ended up using the airline for every trip I’ve taken since the promotion—including one during the über-expensive Thanksgiving season. In fact, on Thanksgiving, JetBlue was even a little more expensive than another carrier, but I was so close to earning a free flight (thanks, in part, to the 35 points earned buying the AYCJ) that I ended up booking on JetBlue anyway.
JetBlue’s returns on this promotion aren’t just of the soft, “better consumer awareness” variety, either. Barger describes AYCJ’s contribution to JetBlue’s third quarter as “net revenue positive”—though he refrained from specifically breaking down its impact, suggesting that he didn’t want to tip off the airline’s competitors. That said, the company posted profits of $15 million in the third quarter, compared to a loss of $4 million in the same quarter the year before.
Furthermore, according to the airline’s internal estimates, perhaps up to 50 percent of AYCJers had not previously been members of the airline’s TrueBlue frequent-flyer program. Citing competitive concerns, an airline spokesperson declined to disclose the exact number of passes sold or how many of those AYCJers registered for TrueBlue, but did make a rare acknowledgement regarding overall TrueBlue enrollment: At the end of the AYCJ promotion, TrueBlue had hit the 8-million-member mark. Regardless of the size or scope of the boost provided by AYCJ, one thing is clear: The airline’s database of its most-frequent passengers—recently ported over to a revamped TrueBlue program—is far more robust than it once was.
It’s a database that’s already, in many ways, the envy of the industry. For one thing, says Henry Harteveldt, vice president and principal analyst of airline and travel research for Forrester Research, “they have the email addresses of almost all of their customers”—a trick the airline pulled off, he adds, “because [JetBlue] sells about 80 percent of [its] tickets through jetblue.com.”
The online focus enables the company to respond quickly to its customers with email communiqués about weather conditions, possible cancellations, and promotional offers—all key assets given the slim margins that airlines now run on and the rough weather which can wreak havoc on flight schedules. (Consider this: February 2010’s weather-related chaos on the East Coast caused the worst disruption in U.S. aviation since 9/11.)
Also particularly helpful—especially to me during the mad relay of flights I took during my trip across America—JetBlue sends its customers email reminders of upcoming flights; that’s significant on both sides of the equation, because the airline doesn’t hedge its bets by overbooking.
The strongest indication of All-You-Can-Jet’s success, however, may be the airline’s own disclosure to CRM that it’s planning a sequel of sorts—perhaps a kind of All-You-Can-Jet, Jr.—sometime this year. According to JetBlue spokesperson Mateo Lleras, however, the airline expects some changes to the promotion—though JetBlue isn’t yet specifying what those changes may entail. Part of the uncertainty, Lleras says, stems from the fact that the airline is still parsing the numbers from the first offer.
According to some industry experts, a primary change may involve the pricing scheme. In the original promotion, flyers could travel to all of JetBlue’s destinations without much restriction. In the future, Harteveldt predicts, JetBlue may try to implement tiered passes. “I wouldn’t be surprised to see them offer a domestic package, another that included the Caribbean, and another to Colombia and anywhere else they might be expanding outside of the U.S. and the Caribbean,” he says.
Another change may be the way the tickets are sold and handled. During the first AYCJ, the airline’s bookings were handled through Navitaire. Due to technical limitations as well as difficulties stemming from JetBlue’s own Web portal, the airline had to process pass purchases and reservations manually through its Utah contact center. The center is famously competent and favorably rated by callers—but with 80 percent of tickets typically booked through jetblue.com, representatives at the Utah center are only accustomed to fielding approximately 20 percent of the airline’s overall bookings.
In fact, JetBlue usually levies a $15 fee for booking over the phone. The dominant use of the Web for booking allows the company to keep its contact center relatively lean and sharp—as well as its own costs down. To handle the AYCJ promotion, though, Lleras says the company prepared with extra staffing—and, no doubt, extra expense (though representatives declined to specify the support-related costs attributed to AYCJ).
Early in 2010, however—and just ahead of the airline’s 10th anniversary on February 10—JetBlue made a major system switch, joining the SabreSonic Customer Sales and Service engine. The new system will allow JetBlue to expand its pricing schemes and options. It could, for instance, sell tickets for less to travelers who don’t want to check any bags or for a little more to those who want to check two without having to just charge a flat fee. The engine and its network also have the advantage of being used by most of the airlines in the North American market. Rick Zeni, JetBlue’s vice president of change management/passenger service system, claims this will afford the airline new “interline opportunities.”
In any future AYCJ-like promotion, for example, Sabre’s ability to handle logistics may mean that bookings can happen online, which would reduce the airline’s administrative costs. It may also provide for some interesting cross-promotions with the “interline options” Zeni obliquely referred to.
On the other hand, the airline may simply be attempting to adjust to the different level of media attention that would be generated by a second go-’round of AYCJ. Relatively novel the first time out, the newness factor would be absent, lowering the chances that a repeat offer would garner as much buzz. JetBlue may not get the same kind of response without making the offer more compelling—either by upping the ante or lowering the fare.
That said, JetBlue’s standing seems fairly strong. Considering the boneyard of bankrupt airlines across the industry, merely reaching its 10th anniversary in February is a serious achievement, and the airline’s survival is evidence of a robust value proposition.
In fact, JetBlue has reaffirmed a stance of expansion—most notably with the October 2008 opening of its landmark Terminal 5 at New York’s John F. Kennedy International Airport. The airline’s optimism is also evident in its expanded route map. Traditionally focused on the Northeast, Florida, and parts of the Caribbean, the airline began beefing up its West Coast operations in 2009 with new gates at Los Angeles International Airport and in the Southern Hemisphere with a significant number of new routes into the Caribbean and Latin America.
Hispanic customers traveling to and from the Southern Hemisphere may play a significant role in the company’s future. Lleras says that, by the end of 2010, travel to and from South America and the Caribbean will make up nearly a quarter of all of JetBlue’s available seat miles.
In addition to tourists, many of JetBlue’s Southern Hemisphere seats will surely be filled by Hispanics traveling to their respective countries of origin to see family or vice versa. Lleras says that, particularly in urban centers, awareness of the airline is growing among Dominican and Puerto Rican populations—both of which are fixtures in the New York region, where JetBlue is (for the moment at least) headquartered.
“We try to be the best airline there is in the Americas,” Lleras says. “We try to give as much as we can to every customer, regardless of whether they’re from Puerto Rico or the United States. We try to include new products that appeal to our actual clientele.”
And yet, many experts say that greater attention to Spanish-speaking consumers would represent a real shift for the company, which some believe has had a spotty track record with Hispanic outreach. Among its airline peers, for example, JetBlue was relatively late to the fiesta in opening a Spanish-language Web site, in 2008.
At the beginning of 2009, Hispanic Market Weekly pointed to JetBlue, AirTran, Frontier Airlines, and Hawaiian Airlines as carriers that had done “little to target Latino travelers.” In 2002, JetBlue added Spanish-language channel Telemundo to its in-flight television lineup, but dropped the station soon thereafter. This time around, though, the seemingly inconsistent gestures being made to Hispanics may be the indicative of longer-lasting trends, especially given the airline’s massive and ongoing expansion into Latin America.
To take just one small example, JetBlue recently added plantain chips and Presidente beer to its existing in-flight snack-and-wine options as well as Spanish-language soccer programming.
JetBlue is also considering shifting its headquarters to tax-friendlier Orlando, Fla. The move would help with the airline’s razor-thin margins as well as appease shareholders, an important consideration given the stock’s relatively weak performance last year. Despite posting profits every quarter, JetBlue’s stock lost 21 percent of its value. The airline will have to balance any advantages against its expenses, which go beyond just those associated with physical relocation. There may be top staffers as well as next-generation leaders within the company who may not be keen to move from bustling New York to the more-sedate Central Florida.
As JetBlue enters that ever-awkward “tween” age, there are a number of economic and environmental factors that the airline will have to grapple with. One factor enabling the airline to keep its fares low is a small and nimble infrastructure that for the past 10 years has enabled the company to target high-traffic routes with very high efficiency. What remains to be seen is whether the successes of JetBlue’s first decade can translate to its second, as the airline scales up operations.
“If you take a look at JetBlue’s pricing, and exclude sales, you’ll see that it’s charging more now for tickets than when the airline started,” Harteveldt says, though he adds that JetBlue is still “very much a value-focused airline” and remains, along with Southwest Airlines and AirTran, a leader in low-cost airfares.
With expanded scope, however, comes expanded responsibilities. Increased flight traffic means a more significant emissions footprint. The airline has a green initiative, “Jetting To Green,” and a commitment to fly a “fuel-efficient fleet.” The company promises to cut back on electricity consumption, has done away with disposable headsets, and has stepped up recycling of packaging and jet fuel. Many of these efforts, while important, do not nearly counterbalance the emissions spent by more flying, though—and, it should be said, also have the added benefit of saving the airline money upfront. Lleras says that more measures are in pre-implementation testing but that it’s premature to discuss them.
Harteveldt insists JetBlue is genuine in its green efforts, and brushes off any speculation that “Jetting To Green” is public-relations gimmickry. “JetBlue was started with the notion of bringing humanity back to air travel,” he says. Still, he concedes that keeping green is a challenge for any airline. “Airlines fly airplanes; airplanes consume jet fuel; jet fuel emits carbons and other emissions,” Harteveldt says.
So while 2010 looks like a strong year for JetBlue, when it comes to the environment there still remain unanswered questions about aviation writ large.