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New Hope for JetBlue

CHARLOTTE, N.C. -- JetBlue (JBLU) needs another miracle, and it may well get one.

When it began flying in 2000, JetBlue quickly achieved improbable success by turning two devoutly held industry beliefs upside down -- first by showing that New York's Kennedy Airport could be used for domestic flights, and second by proving that comfort and amenities in coach could be made to work.

Seven years later, it is one of the big four carriers in the world's largest aviation market. The next youngest, Continental (CAL), was founded in 1934.

But JetBlue is also frayed around the edges, a victim of cost-cutting competitors, Kennedy's congested airspace, a February ice storm that exposed ugly operational shortcomings and the sort of overly rapid growth that has doomed promising startups in industry after industry.

Hope, however, is on the horizon. Late in 2008, JetBlue expects to open a spectacular $740 million Kennedy terminal that will enable it to once again overturn conventional wisdom, this time with innovative design and an effort to eliminate waits in airport lines.

CEO Dave Barger, who took over for founder David Neeleman in May, says the new terminal is just one of the cards he will play as he seeks to return JetBlue to its former glory. For now though, he said in an interview, he is busy "calming it down" at the carrier, which added 16 new cities in 2006.

His cards, he says, also include the new 100-seat Embraer 190, "the perfect airplane" to open new markets, a cost per available seat mile of just 5.34 cents excluding fuel, and a product that remains largely unique.

In the new terminal, ticket counters will be relics, tucked away in the corners. Most passengers will use kiosks for ticketing, rebooking and lost-baggage claims and will put their own baggage on conveyor belts. Nearly 200 kiosks will be scattered around the building.

Sure, Alaska (ALK) has already opened a new-age passenger terminal, but it is in Anchorage. JetBlue's innovations will be on display at the busiest airport in the world's media capital.

And innovation will be everywhere, Barger says. For instance, airport concession workers may deliver food to customers who place orders with handheld devices. The new terminal will be so attractive, he says, that "people will want to fly JetBlue not just because of the flight experience but also because of the ground experience."

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