JetBlue’s CEO, Robin Hayes, says the carrier has evolved to offer international partners access to the US market
What is the secret behind JetBlue doubling its operational income in 2015?
I would say there are three things behind the success. First is very strong revenue execution, which is the result of a combination of network maturity, good fare options for our customers and consistently outstanding service by our crew members. That creates a lot of demand for the product. Second is keeping our own costs low and we have worked hard to get them even lower. And third is the low cost of fuel, which is helping all airlines.
What is more important to you – improving revenue or lowering costs?
At the end of the day, you have to do both because we are in a margin-driven business. You have to keep a close eye on revenue and costs at all times.
Of course, the whole JetBlue mission is about this – offering a better product at a lower fare – and we can only fulfil our mission if we have good revenue and keep costs as low as possible.
How has JetBlue evolved since to its founding and are there any changes you are looking to implement?
JetBlue has certainly evolved since we started flying 16 years ago. We have strengthened our product and we are flying internationally, for example.
But, I think we are still being true to the vision of the airline when it was created. At that time, JetBlue targeted markets that were overpriced, underserved, or both. Unfortunately for the traveling public, there’s still plenty of that for JetBlue to chase.
JetBlue was designed to bring humanity back to air travel. It is a brand that wants to continue to innovate and continue to serve the customer.
What does the US-Mexico Treaty mean for JetBlue’s network development?
We welcome open skies between the US and Mexico. It is a good move for US aviation and good for JetBlue.
Open skies with Mexico will certainly give us a huge opportunity to expand our services into the country, but the problem is that Mexico City is a very congested airport.
We are trying to gain further slots at the airport and that is why we are opposed to the proposed Delta-Aeromexico joint venture, which would allow their further growth while others are unable to grow. If it goes ahead, these airlines will control more than half of the slots at the airport. JetBlue, on the other hand, has some challenging slots times, leaving early in morning.
It is an opaque process, but we think that if the joint venture is approved, it should either be for a limited time to ensure the best interests of the customer continue to be served, or the airlines involved have to divest slots.
So, while we welcome open skies with Mexico, we need more access to Mexico City.
How has the US market changed following consolidation?
It’s interesting that the US has gone from being the least healthy airline region in the world to being probably the healthiest. Consolidation has played a huge part in that. But, the question is whether or not this has now gone a step too far. The three major legacy carriers dominate the landscape and they all have significant market share. The misleading thing about that market share is that in certain key airports they have a far larger share than they do generally. These carriers are also involved in immunized joint ventures and so they control far more of certain market than they should.
In that sort of environment, carriers like JetBlue have a very important role to play. We have to ensure that consumers continue to get a good deal, that fares are kept down and product quality is kept up.
Does the consolidation therefore provide JetBlue with opportunities for growth?
It does, in a couple of ways. To start with, we are the alternative to the larger carriers in the domestic US market.
But, because these larger US airlines are blessed with the strongest domestic market in world, many international non-partner airlines find it really difficult to get access.
So, that means those airlines come to us to provide a solution to the access problem. We are an obvious choice for many carriers. We have an open architecture system and JetBlue isn’t in any alliance or joint venture. It has worked out very well for us. It means that JetBlue is in a position to work with airlines to connect customers to our extensive network through JFK and Boston.
What is your view of the proposed spin-off of the Federal Aviation Administration’s (FAA) air traffic control function?
We support it. Don’t get me wrong – the FAA does a terrific job; the air traffic controllers do a terrific job. But, America has a problem with funding. The funding source is inconsistent and subject to political deal making and budget cycles. It’s a stop-start process that leaves everyone guessing when the funding will be in place.
The industry has to go through a technological transformation in the next 5-10 years in terms of air traffic control and to put NextGen in place. But, that will be very hard to do if you don’t have a regular funding cycle.
So, we support taking the responsibility for air traffic control off the FAA and moving it to a non-profit entity comprising a board of stakeholders with a vested interest in ensuring the system progresses.
After all, we all want an ATM system that is safe and efficient and that includes our customers. They simply want to get to where they want to go as quickly as possible.
Given the number of new regulations in recent years, is there a danger that the Department of Transportation (DOT) may undo the success of deregulation?
DOT recognizes the concerns they hear from airline customers. A lot of airline people don’t like the tarmac delay rule.
But, I think that problem came about because, as an industry, we failed to self-regulate, we failed to come up with a good solution. However, it has had unintended consequences.
What we have to do as an industry is explain that we have a great safety record, a great product and low fares, and we don’t need to be regulated so much.
The trouble is that consolidation has put us in a difficult situation in that regard.
The traditional mantra of “let the market decide” is no longer good enough because the market simply isn’t as competitive as it used to be.
JetBlue has a reputation for innovation in technology, so what will be the next big breakthrough?
We are going to continue to innovate with the JetBlue customer experience. That means even faster Wi-Fi and even more entertainment options. We have just launched JetBlue Tech Ventures, which will form partnerships with a number of technology start-ups in the hospitality and travel sectors. The idea is to leverage their ideas to help us to solve some of our challenges and, of course, help them progress as companies in the process.
Data is another big area where we need progress and, of course, we desperately need the NextGen technologies to be available for improved air traffic control efficiency.
How important is a global market-based measure (MBM) to aviation’s environmental strategy?
A global MBM is very important. We know we are a source of carbon emissions and that those emissions are growing as air traffic grows.
The industry has a responsibility to its customers and shareholders to do something. So, I fully support a global MBM. We can’t have governments legislating locally because that would create a real spaghetti nest.
A global MBM isn’t the only hope. There are many other environmental initiatives that will help the industry grow responsibly, but it is definitely the key development in the short term.
How can IATA stay relevant to the industry?
IATA has been tremendously helpful to JetBlue. We started out as a domestic carrier, but we now have an international network and 45 partners around the world. IATA has been essential in this expansion.
2015 Appointed JetBlue’s Chief Executive Officer and a member of the Board of Directors in February 2015.
2013 Became JetBlue President for commercial activities and operations.
2008 JetBlue Executive Vice President and Chief Commercial Officer.
1989-2008 British Airways career, culminated as Executive Vice President for The Americas.