Regaining Altitude after the Valentines Day Massacre of 2007 A Submission to the Arthur W. Page Society Case Study Competition

Regaining Altitude after the Regaining Altitude after the Valentine’s Day Massacre Valentine’s Day Massacre of 2007of 2007

A Submission to the Arthur W. Page Society Case Study Competition

1. JetBlue Takes Off

2. The Perfect Storm

3. JetBlack and Blue

4. Misery Loves Coverage

5. The Redemption Plan

6. Image Restoration Strategies

7. Discussion Questions

AgendaAgenda

JetBlue Airways Launched Operations in 1999

Improbable Early Success Despite:

Track Record of Start-Ups Since 1978

Barriers to Entry for Industry Newcomers

• High Fixed Costs & Volatile Expenses

• Intense Competition

• Industry Sensitivity to Economic Cycles

September 11, 2001

JetBlue JetBlue Takes OffTakes Off


““It is a business whose margins are It is a business whose margins are so razor thin that a couple of so razor thin that a couple of

passengers on each plane can spell passengers on each plane can spell the difference between profit and the difference between profit and loss and where a one-cent rise in loss and where a one-cent rise in the price of jet fuel can cost the the price of jet fuel can cost the

industry an added $180 million a industry an added $180 million a year."year."

– Airline Industry Expert Barbara Peterson


Founder/CEO David Neeleman's Vision

Bringing the "Humanity Back to Air Travel"

• Paperless Ticketing

• Extra Legroom and Wide Leather Seats

• Satellite TV Feeds

• "Customers" not "Passengers"

Operating revenue for 2006 totaled $2.36 billion

Represented 39% Growth Over 2005

By 2007 JetBlue Airways:

Served 52 Domestic and International Destinations

Operated More Than 575 Daily Flights


The The Perfect StormPerfect Storm

Valentine's Day Winter Storm in Northeast U.S.

Deteriorating Weather Conditions at JFK Airport Gridlock on the Tarmac

Frozen Ground Equipment

Delay in Calling Port Authority for Assistance

Problems with JetBlue Reservations Hotline

Inaccurate Flight Info on JetBlue Web Site

Passengers Stranded Inside Planes

Horror Stories

• 9 JetBlue Flights Sat on the Tarmac at JFK in Excess of 6 Hours

Hero Stories

• Pilots and Flight Attendants Get Creative

• The $360 Cab Ride


According to Passengers Stranded Inside JetBlue Planes


"This has been one of the "This has been one of the worst experiences of our worst experiences of our

lives."lives."

"It was like – what’s the name of that "It was like – what’s the name of that prison in Vietnam where they held prison in Vietnam where they held

[Senator John] McCain? The Hanoi Hilton.”[Senator John] McCain? The Hanoi Hilton.”

"They are right on the edge of "They are right on the edge of human-rights violations… They human-rights violations… They have no contingency plan at all. have no contingency plan at all.

When they say no frills, they When they say no frills, they mean it."mean it."

Lost Luggage Piles Up

JetBlue Planes and Flight Crews Out of Place Throughout the U.S.

The "Reset" Plan

Cancellations

1,200 between February 14-19

$20 Million in Lost Revenue

$24 Million in Refunds and Vouchers

JetJetBlack and BlueBlack and Blue

The Primary Culprits

Bad Weather

Flawed Decision-Making

Inadequate Communication Processes

Overwhelmed Reservations System

Lack of Cross-Trained Personnel

JetJetBlack and BlueBlack and Blue

Misery Loves Misery Loves CoverageCoverage

Media Interest in the Crisis

5,000 Phone Inquiries Over Six Days

Battling Misperceptions

Concern on Wall Street

Congress Comes Calling

"Call it the perfect storm, the imperfect "Call it the perfect storm, the imperfect storm, the Valentine’s Day Massacre."storm, the Valentine’s Day Massacre."– A JetBlue Vice President

The The Redemption PlanRedemption Plan

"This is going to be a different "This is going to be a different company because of this. company because of this. It’s going to be expensive. It’s going to be expensive. But what’s more important is to win But what’s more important is to win

back people’s confidence."back people’s confidence."– JetBlue Founder and CEO David Neeleman

Image Restoration Image Restoration StrategiesStrategies

Shift the Blame to the Weather

Reduce the Perceived Magnitude of the Crisis

Make Sincere and Repeated Apologies

Compensate Customers Impacted by the Crisis

Take Corrective Action

Neeleman: Let's Issue a "JetBlue Airways Customer Bill of Rights"

Selected Key Publics

Customers Impacted by the Crisis

Unaffected JetBlue Customers

Employees

Shareholders

Government

• Industry Authorities

•Eager Legislators

Media

Image Restoration Image Restoration StrategiesStrategies

1. What image restoration strategies should JetBlue Airways employ to rebuild its reputation as a customer-centric company?

2. If you were in charge of JetBlue’s external communication effort, how would you try to make amends with customers who were delayed aboard planes or in terminals for hours?

3. How could JetBlue have better communicated with its internal stakeholders across the country on Valentine’s Day and during the days that followed?

Discussion Discussion QuestionsQuestions

4. When addressing the company’s stakeholders, how much blame for the crisis would you place on the inclement weather on Valentine’s Day?

5. What is the best way to publicly explain the hundreds of additional flight cancellations that were necessary because of JetBlue’s decision to “reset” its operations?


6. Should the corporate communications team at JetBlue arrange for CEO David Neeleman to appear on the national television news and talk show circuit following the crisis? What are the potential benefits and risks to the company’s reputation?

7. What are the financial and reputational risks of publicly committing to an initiative like the JetBlue Customer Bill of Rights?


8. What concerns might JetBlue’s shareholders as well as members of its legal and finance departments have about a proposed JetBlue Customer Bill of Rights?

9. Could JetBlue ever retract its Customer Bill of Rights once it is made public?

10.If implemented, how would you market the JetBlue Customer Bill of Rights to external and internal stakeholders?


Documents

Regaining Altitude after the Valentines Day Massacre of 2007 A Submission to the Arthur W. Page Society Case Study Competition