When bad times turn out good strategy
JetBlue founder and CEO tells how crisis provided a chance to improve airline’s customer service By Adrienne Murrill
3/30/2007 - David Neeleman said his company’s climb to the top of the airline industry is “worth the view,” but he hasn’t always been flying in friendly skies.
The CEO and founder of JetBlue Airways addressed students and faculty March 30 at the kickoff event for the newly formed Northwestern University Transportation Society and Icarus Society.
The hour-long talk, held in the Owen L. Coon Forum at the Kellogg School’s Donald P. Jacobs Center, focused on the aftermath Neeleman and JetBlue faced when an East Coast storm hit the company’s hub at New York’s John F. Kennedy airport this past Valentine’s Day.
JetBlue faced negative charges from the media when it cancelled 250 flights that day and several of its planes and customers were left stranded on runways for more than six hours. The events cost the airline an estimated $30 million, including ticket refunds, travel vouchers and internal costs such as fuel and overtime crews.
“What’s been most surprising for me as CEO is the amount of publicity we got from that event,” Neeleman said. “Everywhere I go now, people say, ‘I was really impressed with how you handled that.’ But I don’t know how I could have done anything differently.”
Neeleman said the seven-year-old airline carrier holds a reputation for excellent customer service, which he worked to uphold in the aftermath. “When you mess up, you first say you’re sorry, you explain to people what happened, you tell them why this will not happen again and what lessons you learned.”
He believes that JetBlue will be a better company for having gone through those difficult times. “In certain cases you have to almost go through a crisis (for improvement).” A few days after the event, Neeleman and JetBlue released a customer “Bill of Rights” to ensure customer satisfaction should a similar situation occur again, and it did.
Just a month after the February storm, the East Coast was deluged again, forcing JetBlue to cancel 400 of its 550 flights on March 16, but this time the company was better prepared. Neeleman said he gives a “tremendous tribute” to the company’s employees, collectively referred to as “crew members,” including the reservations call team. He said that employees logged nearly 4,000 hours in overtime to connect with customers about flights that were canceled — this time in advance — and gave customers the choice to rebook travel for a later weekend.
“Down deep in our core we are a customer service company,” he said. “We don’t like cancelling flights. That policy hasn’t changed at JetBlue.” The company is working toward improved online reservations and assistance in terminals to stay better connected with its customers.
Neeleman said JetBlue wants to continue doing its job, which is flying planes, and he hopes that Congress doesn’t interfere. Some senators and citizens’ coalitions are pushing for legislation that mandates a three-hour cap on runway wait times, requiring passengers to deplane and airlines to incur fines.
“I hope we can regulate ourselves,” Neeleman said. “If there’s a bill that says after three hours on the runway you have to bring the plane back, that would be the worst thing to do to customers. Let the customers vote with their business.”
Before his talk, the CEO was introduced by Kellogg Professor of Management & Strategy Aaron Gellman, who spoke highly of Neeleman’s response to JetBlue’s recent events.
“Uniquely in the history of the airline industry, David took full responsibility for a debacle,” Gellman said. “Airline executives usually run the other way if an airline has a problem. He faced the music admirably, and in doing so he helped to make JetBlue stand above other airlines.”
The Transportation Society is a new university-wide organization that promotes interest in transportation and logistics. An industry-focused discussion group, the Icarus Society is the Transportation Center’s “ad-hoc aviation think-tank,” whose steering committee includes Kellogg graduates Vicki Bretthauer ’82 and Ed Rafacaz ’98, current Kellogg students Mark Ahasic and Reed Tanger, and Transportation Center Assistant Director Diana Marek.
Ahasic, a 2008 MBA candidate, said the Transportation Society’s objective is to provide a conduit between the student body, the alumni and the faculty and staff of the Transportation Center. “The goal is to bring in really high-profile speakers like Neeleman and also to help with career advice and resources for students who want to go into the field of transportation and supply-chain.”
A question and answer session and luncheon at the Transportation Center followed Neeleman’s talk.