MIAMI — New JetBlue CEO Robin Hayes said his carrier can handle both increased demand from Wall Street and retain its goal of bringing humanity back to air travel in remarks at the JP Morgan Aviation, Transportation and Industrials conference today.
“I get this same question from a lot of our crewmembers,” Hayes told JP Morgan analyst and host Jamie Baker. “The goal to provide a return on investment to our owners and also maintain our customer centric brand are compatible.”
Customers also ask the question and complain about less legroom, Hayes said. “I ask them if they’ve flown our Core product on the [Airbus] A321? They say yes, and I tell them that’s our new product,” he said. “On our customer surveys, our passenger ratings remain high. So we can build returns and maintain our customer base.”
When asked by Baker if it was a mistake to have such a big lead time between the announced changes on fares and seat pitch and implementation, Hayes said no. “Training is already underway for our fare families. Plus it takes time to reconfigure aircraft,” he said. “The news would have come out anyway, so we wanted to own the message.”
On the labor front, Baker noted that the pilot group at JetBlue is now unionized and asked Hayes what that means for the airline. “Early last year, our pilots voted for union representation with ALPA. But we are still committed to having direct communications with our employees,” he said. “We have a values committee that addresses crewmember issues in a very dynamic and ongoing process. Our pilots went on a different route and we respect that. We’ll have a different negotiating model with them going forward.”
Baker noted the different models of airline profit-sharing program, ranging from nothing at American Airlines to generous at Delta Air Lines and asked how JetBlue fits in the industry. “We collaborate with our values committee. We just announced our profit-sharing this year,” said Hayes. “We have a hybrid model where we also link performance to pay goals by work group.”
There’s a bifurcation in the airlines’ business models, from network carriers to ultra-low-cost carriers, said Baker. “The don’t come to the center ring often to tussle with each other,” he said. “But JetBlue and Virgin America are willing to stand in the middle of the ring with both sides. Is that a greater competitive risk in the long term?”
Hayes doesn’t think so. “If I look back at the last few years, you see legacy carriers looking after a few customers very well while the ultra-low-cost carriers go after price-conscious passengers,” he said. “Most people prefer a better experience at a better price and that’s what we do. We can build a defensible network doing that.”
In light of Delta’s effort to get a waiver on the perimeter rule out of LaGuardia airport, Baker asked Hayes for his thoughts. “The Port Authority is the only one who can change it, but you have to think about the risks of changing the perimeter rule and its impact on LaGuardia,” said Hayes. “If airlines are allowed to upgauge, that could create a lot of congestion.”
LaGuardia’s Central Terminal has been a saga for years, Hayes said. “The redesign of it was not done with bigger aircraft footprints in mind. A lot of water has to come under the bridge to see if it’s feasible,” he said. “If it happens, it would change the competitive dynamic in New York, and we would push for a solution that would allow for smaller operators of slots to also benefit and level the playing field for all at LaGuardia.”
United Airlines is bringing its premium p.s. product into the Boston market, said Baker. “If Mint works this well in the JFK market, what’s to keep it from expanding into Boston,” he asked.
Mint has done incedibly well for JetBlue, said Hayes. “We’re getting great customer feedback, especially for our inflight crew, who are doing an amazing job for passengers,” he said. “I said before that there are additional routes that we can look at for Mint in new markets, like Boston-San Francisco and Boston-Los Angeles, could potentially do very well, but nothing has been announced yet.”