Regaining Altitude after the Valentine’s Day Massacre of 2007

1. Regaining Altitude after the Valentine’s Day Massacre of 2007 A Submission to the Arthur W. Page Society Case Study Competition

2. Agenda JetBlue Takes Off The Perfect Storm JetBlack and Blue Misery Loves Coverage The Redemption Plan Image Restoration Strategies Discussion Questions

3. JetBlue Takes Off • 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

4. JetBlue Takes Off “It is a business whose margins are so razor thin that a couple of passengers on each plane can spell the difference between profit and loss and where a one-cent rise in the price of jet fuel can cost the industry an added $180 million a year." – Airline Industry Expert Barbara Peterson

5. JetBlue Takes Off • 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"

6. JetBlue Takes Off • 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

7. The Perfect 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

8. The Perfect Storm • 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

9. The Perfect Storm • According to Passengers Stranded Inside JetBlue Planes "This has been one of the worst experiences of our lives." "They are right on the edge of human-rights violations… They have no contingency plan at all. When they say no frills, they mean it." "It was like – what’s the name of that prison in Vietnam where they held [Senator John] McCain? The Hanoi Hilton.”

10. JetBlack and Blue • 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

11. JetBlack and Blue • The Primary Culprits • Bad Weather • Flawed Decision-Making • Inadequate Communication Processes • Overwhelmed Reservations System • Lack of Cross-Trained Personnel

12. Misery Loves Coverage "Call it the perfect storm, the imperfect storm, the Valentine’s Day Massacre." – A JetBlue Vice President • Media Interest in the Crisis • 5,000 Phone Inquiries Over Six Days • Battling Misperceptions • Concern on Wall Street • Congress Comes Calling

13. The Redemption Plan "This is going to be a different company because of this. It’s going to be expensive. But what’s more important is to win back people’s confidence." – JetBlue Founder and CEO David Neeleman

14. Image Restoration Strategies • 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"

15. Image Restoration Strategies • Selected Key Publics • Customers Impacted by the Crisis • Unaffected JetBlue Customers • Employees • Shareholders • Government • Industry Authorities • Eager Legislators • Media

16. Discussion Questions What image restoration strategies should JetBlue Airways employ to rebuild its reputation as a customer-centric company? 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? How could JetBlue have better communicated with its internal stakeholders across the country on Valentine’s Day and during the days that followed?

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

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

19. Discussion Questions 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? Could JetBlue ever retract its Customer Bill of Rights once it is made public? If implemented, how would you market the JetBlue Customer Bill of Rights to external and internal stakeholders?