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JETBLUE AIRWAYS: STARTING FROM SCRATCH: CASE ANALYSIS

JetBlue Airways: History and Growth JetBlue Airways was founded in 1999 by charismatic airline veteran David Neeleman to “bring humanity back to air travel”. His idea was to capture the niche market of airline travel between the New York metropolitan area and underserved smaller cities (e.g. Buffalo, Rochester, Syracuse, Burlington, Orlando). Neeleman had been at Southwest for about a year, and hoped to follow the example of Herb Kelleher’s successful startup by stimulating demand with low fares in underserved markets. At the time of JetBlue’s founding, most of these smaller markets were serviced by large airlines who charged high fares and were not focused on customer service. Neeleman’s idea was to provide an enjoyable flying experience at a low cost by using innovation, common sense, technology, happy productive employees and new efficient aircraft.

JetBlue was the best funded US start up airline ever. Neeleman raised $130 million (including $10M of his own money) to start the company, allowing an initial public offering to be delayed until the most opportune time after the company started to do business. In the first year of operation (2000) JetBlue grew from 2 planes and 9 daily departures to 10 planes and 50 daily departures. The business plan called for the addition of 10 new planes and 1000 new employees per year for the first four years, a growth rate of 100% in 2001, 50% in 2002, and 25% in 2003.

Neeleman put together a senior management team of like-minded airline veterans. David Berger, president and COO, had spent the last 10 years running the Newark hub for Continental. John Owens, CFO, was treasurer at Southwest for 14 years. Tom Kelly, executive VP and counsel, was a partner of Neeleman at Morris Air and Open Skies. Al Spain, Vice President of Flight Operations, had been a Continental pilot. Ann Rhoades, executive VP of human resources, had spent 30 years in service based businesses,...