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TheStreet Open House

Candid JetBlue Learned From Its 2007 Mistakes

Stocks in this article: JBLU

NEW YORK (TheStreet) -- In the six days from Thursday through Tuesday, U.S. airlines cancelled about 20,000 domestic flights, including about 1,800 flights on JetBlue (JBLU - Get Report). Yet only JetBlue held a press conference to explain itself.

In fact, the harsh winter weather turned into an opportunity for JetBlue. It once again displayed why it is different than any other airline, just as it has been since it began flying in 2000, offering luxury service and low fares at an airport, JFK, which the rest of the airline industry then viewed as obsolete.

This week, as usual, JetBlue's effort to compensate passengers eclipsed what other airlines do: It offered a choice of refunds or rebookings, plus $50 credits or 5,000 frequent-flier points, plus extra credit for multiple cancellations.

Also, JetBlue took an unusual step when it shut down all Northeast operations for 17 hours from Monday afternoon into Tuesday morning. Lots of airlines shut down various operations -- some, in fact, acted more quickly at their hubs than JetBlue did, and suffered fewer problems -- but it was JetBlue that very publicly shut down nearly everything.

JetBlue's actions clearly showed the impact of the carrier's February 2007 operational meltdown at JFK, when the carrier seemed a bit too eager to operate in bad weather. Afterward, founder and then CEO David Neeleman apologized, very profusely and very repeatedly. The mistakes weren't repeated, but JetBlue's willingness to explain itself remains.

In recent years, the airline industry has moved to a policy of massive pre-cancellations in advance of weather problems on the theory that the worst consequences of a weather event would be to have passengers arrive at the airport only to find their flight cancelled, and to have airplanes and crews in the wrong places once operations resume.

JetBlue's shutdown was an effort to avoid those problems. Obviously, part of its rationale was that 80% of its operations involve two Northeast airports, JFK and Boston Logan. The four largest carriers are far more widely diversified in their geography, so a regional weather event will have less impact.

"If anything, JetBlue comes across as a little more honest than the other guys," said aviation consultant Robert Mann. "They were the only ones who were transparent about it. The other guys just hoped it would go away."

Also, Mann said, "What the other guys do is to cancel all their regional operations. Then they look great and their regionals tank." But JetBlue doesn't operate a regional carrier.

On the carrier's media conference call on Tuesday, Rob Maruster, chief operating officer, reminded listeners that JFK was shut down for four hours on Friday due to high winds and poor visibility, and for two hours on Sunday due to ice. He spoke of "a huge storm, followed by an ice storm, complicated by infrastructure challenges in the New York airports.


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