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JetBlue President and Chief Operating Officer Joanna Geraghty knows the airline’s recent role in leading a round of checked bag fee increases isn’t going to be a fan favorite. But she said Thursday that the carrier is still determined to win customers’ hearts and minds.
“Let’s face it, nobody likes fees,” she said at Skift Global Forum in New York City. “Fees are something that is necessary because it enables carriers to better manage inventories and things like that … but we’re going to be competitive in fees, and we’re going to win on product and the service that we offer.”
That’s crucial for the carrier, which has just a 5 percent market share in the U.S., with heavy concentrations in high-traffic areas such as Boston and New York City.
“We’ve long said that we have a brand and culture that boxes above our weight,” Geraghty said. “If you look at our network and where we’re concentrated, we are in very high-value geography where a lot of people want to fly to and fly out of.”
One geography JetBlue hasn’t yet entered: Europe. While discussion around the airline’s potential entry into the transatlantic space has been heating up in recent months, Geraghty had no news to disclose Thursday.
Still, she said she had done a little research before getting on stage and found that business class flights from JFK to London Heathrow on other airlines were selling for $8,000 — a number that she believes could use competition.
“When we think about transatlantic, we do think we can disrupt — and we think we can disrupt largely around a Mint-like product,” she said, referring to the airline’s high-end product that is available domestically on more than 80 flights a day.
That product, she said, has proven successful because of the service that it provides, enabling the airline to compete on more than price. Moderator Brian Sumers, Skift’s senior aviation business editor, reminded her of an old airline joke, that people pick flights based on four attributes: “price, price, price, and schedule.”
Geraghty said JetBlue’s whole mission has been to break away from the idea that the airline industry is a commodity. She said when she tells people where she works, the reaction is generally “Oh my God, I love JetBlue.”
“That love and sense of feeling toward a brand, I think, is frankly absent when you think about some of the other airlines in the industry,” she said. “We position ourselves as this brand that has established that an airline is more than a commodity, that you can differentiate on product and service.”
One other point of differentiation: Geraghty is a woman in an industry that is heavily male. She is believed to be the first female president of a larger U.S. airline since 2008.
“It’s humbling to be the most senior woman in the airline industry,” she said. “It’s also frustrating, though, because at the end of the day, it shouldn’t be that way.”
She said JetBlue is full of female crew members and leaders, and that she wants to ensure that women have opportunities and mentorship — and that leadership teams value diversity in all forms.
Geraghty’s own experience gave her a backstory that no male colleague could replicate: She revealed that she went into labor in the same room where the Forum was being held at Jazz at Lincoln Center.
“Hopefully it’s less painful today than it was then,” she joked.
Here’s a lightly edited transcript of Geraghty’s talk:
Skift: Hello everyone. It’s good to be here with Joanna. I learned something very interesting, backstage. Joanna went into labor here at Lincoln Center
Geraghty: I went into labor in this room, so hopefully it’s less painful today than it was then.
Skift: Let’s hope so. I’m looking forward to this. I find JetBlue very interesting. One, because you have a lot less market share than most people think. Do you know how much market share JetBlue has in the domestic market? It’s 5 percent. So when you’re competing with these behemoth airlines, how do you do it?
Geraghty: We’ve long said that we have a brand and a culture that boxes above our weight. And I think if you look at our network and where we’re concentrated, we are in very high value geography, where a lot of people want to fly to and fly out of, and so I think that naturally gives us a greater reach than perhaps what our market percentage would otherwise indicate.
I think the question that we struggle with is not, “How big do you need to be?” But, ‘At what point is [an airline] too big?’ Because it’s so important from JetBlue’s perspective to ensure that there is competition. Because that’s what disciplines carriers to provide great service and keep prices down.
Skift: You recently led on something that I didn’t expect. You were the first airline to charge $30 for a checked bag, if purchased at the airport. Why?
Geraghty: We study very carefully the things that our customers value the most. And in this environment, with rising fuel prices and being the 5 percent player, it’s really important that we ensure we are addressing our customer’s needs.
Our customers, based on all the research that we continuously do, they very much value the entertainment on board, the most legroom in coach that we offer, and our inflight experience. And our great inflight crew members.
When we think about where we want to double down, it’s on that inflight experience. As we think about fees, that’s something that, from our perspective we want to be competitive with. Let’s face it: Nobody likes fees. Fees are something that are necessary because they enable carriers to better manage inventory. We’re going to be competitive in fees and we are going to win on the product and the service that we deliver.
Skift: There are a few things that differentiate you from the competition, as you say. You have more legroom, one or two inches. You have free TV. You have WiFi. Nobody really expects free WiFi on an airplane. It’s a nice perk. Why not charge for it? Or why not densify your seating, like other airlines have done?
Geraghty: We were founded back in 2000 and our mission was to bring humanity back to air travel. If you think about 2000 and what it was like back then, there were a lot of competitors out there. There was a lot more carriers, but the service that was delivered was pretty poor. We made our mark with leather seats, unlimited snacks, the full can of Coke. I don’t know if you remember, even today, you get that little cup [on some airlines]. We had some ads for a while that were making fun of, ‘I can actually get the whole can of Coke.’
We want to continue with that vision. Our mission is to inspire humanity. Our mission is to make sure that that onboard product is just great. And that’s why we don’t compromise on things like legroom, and snacks, and onboard WiFi and entertainment. It’s an opportunity to capture a customer for three hours and make that experience really enjoyable and hope that they come back again.
Skift: We talked about how your competitors are ruthless. Sometimes, it seems like schoolyard bullying. We were talking before about how JetBlue has been trying to get into Atlanta. You finally got in. You’ve been flying, I think from Boston and JFK to Atlanta. Delta essentially runs that airport and they have more than a thousand departures a day. They don’t really want you there, right?
Geraghty: Yeah. It’s a competitive environment and I think some of the larger legacy carriers like being very dominant in those markets. Delta currently occupies 75 percent of Atlanta Hartsfield. We stated an intention to go in several years back. We were promised we’d be able to operate out of Concourse F, and two weeks before we were set to start operation, we were advised, “F’s not available. Maybe you can go to D and E.”
Now it’s a split operation. At times we have three flights on the ground, which makes it incredibly difficult for our crew members to provide that great service. Also customers arrive and they’re surprised that it’s not as seamless in experience as we would like to offer. From our perspective, we continue to trail blaze in these areas where maybe we’re not wanted, because we do view ourselves as a force for good in this industry.
Take the competitive effect we’ve had in Boston-La Guardia. Fares before JetBlue entered that market exceeded $450 for a walkup fare. They’re now more than half that price. The change that we can effect going into markets that are dominated by just one or two large carriers is remarkable. This industry needs competition. This industry needs companies that offer a better product because it forces everybody to raise their game and that’s sort of our philosophy and our view.
Skift: You know what else needs competition? The U.S. to Europe routes. Not necessarily in economy class, because those fares are shockingly cheap, but up in the front of the airplane. How about making some news for us today? You’ve been teasing Europe. Are you going to Europe? And if so, when?
Geraghty: We haven’t made any decisions yet. I want to be very clear. This gets headlines all the time. For years, it’s been headlines like, ‘JetBlue flies to Europe.’ We’re not making any news today, I’m sorry. But I went online this morning, anticipating this might be a question asked, and to fly business class from JFK or New York to Heathrow is $8,000, if you went today and booked a flight. I don’t know about you, but I’m not paying $8,000. Even though I’m sure the experience will be a nice business class experience.
JetBlue looks at Europe and thinks, ‘Yes. There is definitely an opportunity to potentially disrupt the transatlantic market.’ We’ve been — it’s no great secret — looking at the A321 long range aircraft, which is the 321 platform with an auxiliary fuel tank, and we think it could be a pretty interesting option. But that particular aircraft is a very valuable asset for us. So we need to make sure that the highest and best use would be Europe as opposed to another market in the United States. Our teams are actively looking at it. We think there is a pretty cool opportunity there and hopefully we’ll see.
Skift: Let’s play this out. You go into that market that now has $8,000 business class fares and you can disrupt it and that’s great. But I’ve been following this industry long enough to know what happens next. The established airline just lower their prices. They match you, they add seats, they add capacity, and then they try to push you guys away. Is that a fear?
Geraghty: Look at what we’ve been able to accomplish with Mint. We launched our premium product, called Mint class, a couple years ago, and originally the intent was to fly JFK, Boston, to San Francisco and Los Angeles, and we are now in 18 routes.
We’ve got more than 80 flights a day that have Mint class and we’ve succeeded tremendously, and it’s largely because of the product and the service. You can match prices, but it’s very difficult [to compete on experience] when you have created a company from the ground up that focuses on people and focuses on that differentiated experience inflight. It’s hard to match that. At the end of the day, our inflight crew members are delivering an exceptional service.
I read all of our Mint surveys. They come into my phone everyday, and [crew members] are mentioned by name in nearly every survey, and I can’t think of other industries, let alone other airlines, where the people delivering the service are doing it in such a remarkable way that customers actually write in and say, ‘Jennifer did a fantastic job.’
When we think about transatlantic, we do think we can disrupt, and we think we can disrupt largely around a Mint-like product, because we’ve been so successful flying to the West Coast with Mint.
Skift: Conventional wisdom has always been, you can only fly flatbeds domestically to the three U.S. cities where people have way too much money. I live in one of them, L.A. New York is another one. The other one, San Francisco. You’re flying these flatbed seats, with suites with doors Seattle, Vegas, and Phoenix, right?
Geraghty: No, not Phoenix.
Skift: Not Phoenix.
Geraghty: San Diego, Las Vegas, Seattle, JFK San Francisco, Los Angeles.
Skift: Does it work outside of the three big markets?
Geraghty: It does. Before JetBlue entered that market, there were very few flatbed products, even on the JFK, L.A. and San Francisco routes. When we came in, the industry essentially matched the flatbed product, across a number of different routes. We now have flatbed seats on 18 of our routes. There are 10 now that did not have lie-flat product before that now have it.
We have 16 [seats] and some of them have a little door, so it’s a single suite. Customers love that. That always sells out, like that. I guess maybe they don’t want to fly with their friend. But it’s been tremendously successful. Now, will it work everywhere? No. There needs to be enough of a first class premium market for it to work, but we’ve demonstrated that it can work in a lot more places than originally anticipated.
Skift: One thing that you have not been particularly successful on, recently, is on-time performance. I checked, the new numbers came out for July, it looked like you were last among airlines, including the codeshare partners. What’s going on?
Geraghty: We weren’t last.
Skift: Who was last?
Geraghty: I don’t want to say who’s last. I know who was behind us, but I’m not going to say who’s last.
Here’s the challenge that we have. We are the single carrier that flies in the most congested airspace in the United States. At JetBlue, 70 percent of our routes hit congested airspace.
The next carrier after us is United, largely because of their New York and San Francisco operation. But at the end of the day, customers who fly into JFK and Boston, I think are savvy enough to know that laws of supply and demand. These are markets where there are likely going to be delays. And if you actually look at JetBlue’s performance in those markets, relative to the rest of the industry, it’s about on par. We very much measure our performance on a relative basis, in the markets that we operate. It’s really hard to compare JetBlue with Hawaiian. They will always be more on time than JetBlue, because of their network. We manage as best we can in this environment. We run a great operation in these markets.
We’re great at recovering when there are disruptions, and we are making investments that we need to make, very strategically to ensure that our on-time performance does improve.
Skift: I was just looking at the July numbers. You were just about 60 percent in on-time arrivals at JFK. The competitors were slightly better. Is this a number that you have to improve?
Geraghty: We are always focused on improving our on time performance. We want to be better. And that’s where the efforts of our team are focused right now. Listen, everybody would love to be 100 percent, but the reality is that there are [air traffic control] delays.
Yesterday, JFK is a great example of just [having] a tough operation and we do our best to manage through it.
Skift: Let’s switch topics. You’re a woman. This is extremely rare in the airline industry. Maybe not in other industries. As far as I can tell, you’re the only president of a U.S. airline, since Colleen Barrett at Southwest Airlines, and she left in 2008. There’s nobody else at this level. What does this mean for you? And then why is this the case?
Geraghty: That’s what I’m told, too. Wow. It’s humbling to be the most senior woman in the airline industry. It’s also frustrating though, because at the end of the day it shouldn’t be that way. And as I look across JetBlue and the tremendous female crew members and leaders that we have, making sure that every level of the organization has better gender parity is so important. Because you’re not going to solve the issues at the CEO level, at the president level, without every level having 50 percent men, 50 percent women.
I don’t know how it got here, in terms of this industry in particular. I happened to notice, we have a dinner tonight and there’s two presidents of cruise lines, and they’re both women. And I kind of looked up a little bit about the cruise line industry, and I guess that’s actually very different there. There’s a lot more women at the top leadership levels.
There’s a lot of work to do in the airline industry. A lot of work to do. And I think it’s about making sure that the talent pipeline is rich with diversity, but also making sure that at every company there’s champions for women, across the organization so that they feel they have a voice and a path and see people that look like them and support them as they work on their career and their upward trajectory.
Skift: Are there any specific policies that you have in place, about trying to recruit a certain number of women?
Geraghty: We haven’t put into place any specific targets, like 50 percent at the leadership level by a certain date. We have not done that yet. It’s not to say we won’t. For us, it’s about exposure. It’s about opportunities. Mentorship is a component of it, but it’s really about education and making sure that leadership teams appreciate that, even beyond gender, it’s so important to have a team that has diversity of thought. It’s easier to have people around you that’ll agree with what you say, right? It makes it easier to get your job done. But at the end of the day, you don’t get to the best decisions, and you don’t get to the smartest answers, when you don’t have really diverse views across the table, pressure testing ways of thinking and pressure testing different approaches. And so, I look at Robin [Hayes], who’s our CEO. He’s been very focused on diversity of women, but also diversity of thought, and everybody’s opinion matters, and everybody needs to feel safe to speak up and not feel stupid making a comment that some might role their eyes at, because everything really matters when you’re working as a leader and making big decisions that affect your company.
Skift: You have another senior leader here, who is a woman, Bonny Simi, she runs JetBlue Tech Ventures. She flew here yesterday. She’s a captain of E190 which I think is pretty cool.
Geraghty: She’s remarkable.
Skift: Yes. I’ll segue here to JetBlue Tech Ventures. Why do you have this platform?
Geraghty: We saw an opportunity several years ago, to create a company based in Silicon Valley, that focuses on innovation in travel. How cool would it have been for an airline, 10 years ago, to have invested in like an Uber or an Airbnb? We were too late to the scene, but there are some really great ideas out there, from maintenance planning to how we distribute and sell airline tickets, to weather, to training, that we think if we’re at the front end of working with some of these companies that we can take advantage of that.
It is not only about making investments. We’re not particularly focused on returns. We’re focused on trying to put our money into smart companies that have great ideas that will benefit the industry as a whole. It’s also about how do we help incubate some of their ideas.
We’ve got a number of very cool organizations that we are incubating with and that we are working with to help them build their products so that it can solve real life issues for airlines and other organizations in the travel space.
One of them is something called Gladly. What do they do?
Geraghty: Gladly is very cool. Think about when you call an airline. There’ll be a record of that phone call. You may email them after, and there’ll be a record of an email, and then you might tweet something. Right now, a reservation agent doesn’t have visibility into all of those points of interaction with the customer. And so what Gladly does is it’s a platform that essentially takes all of those different points of interaction and consolidates them into a single customer view, so that the reservation agent can pull up, and say, ‘Oh, Brian. I see you flew us on Mint yesterday.’
Skift: He complains a lot, that Brian guy.
Geraghty: He complains a lot, so be very careful, and he’s got a lot of followers, so be really careful. But it enables a reservation agent to actually have a full view of the customer. And it makes their job a lot easier. It also enables us to serve the customer much better, because we know and have a full picture of their experiences.
The other component of Gladly is it also sources answers to questions that might come up involving that customer. It has a learning component that scans the emails and scans the texts and says, ‘Oh we lost your bag.’ So it may pop up, ‘Lost bag. Here’s how the customer will go and file a claim for it.’
It’s a phenomenal tool. We’re sort of in the early stage of rolling it out. We’ve also invested in it. And by partnering with Gladly, we’re able to make sure that the needs of JetBlue are reflected in the tool and how it’s being built.
Skift: Before this, you really had no idea who the customer was?
Geraghty: Yeah. Before, this was very disjointed. You would spend the time to actually try to pull together the different touch points. But in this case, we can have this single customer profile and all cases.
The other piece that’s very cool, is it has an online chat feature. And that gets pulled in as well. One of the other interesting things we’re noticing is, it’s also going to change the role of the reservation agent, because their job will be much less about answering phone calls and much more about communicating through different modes. And that requires a slightly different skill set than answering a phone.
Skift: Here’s an unrelated question. You’ve been at JetBlue for more than a decade, and that means that you overlapped with the greatest airline entrepreneur of our time, David Neeleman. Folks may know that he started JetBlue. He left in about 2007. By 2020, he’s going to be back with his own new airline, and they may be a new competitor for you. How do you feel about David coming back?
Geraghty: Yeah. I’ve been with JetBlue since 2005, so I overlapped with him, I was a lawyer at the time for a few years, and I had the pleasure of working for Dave Barger, the CEO after David and now Robin.I can tell you, David is a phenomenal entrepreneur. If he has a great idea, it’s likely a really great idea.
I think I’ll ladder back to my comment about competition. We welcome competition in this space. Competition, fundamentally, is better for consumers and the traveling public. I think airlines need to differentiate themselves on the product and the service they offer. Obviously, price is a consideration. But I welcome him back into the U.S. airline market. We partner with him right now with Azul and with Tap. He’s involved with both of those, and it’s been a great relationship, and it’ll be interesting to see where they go and potentially fly head to head.
Skift: It’s going be very interesting. He hasn’t said much about what he plans.
Geraghty: No he hasn’t.
Skift: We have some audience questions here. Let’s take a look. Here’s one. What partnerships or marketing campaigns have proven to be exceptionally successful for JetBlue?
Geraghty: We have a campaign, right now, called You Above All, and that is a campaign we’ve had for a quite a while. It has had a lasting effect across both our customer base but also internally. It really resonates. We’re looking at what that evolves to. We know that it resonates extremely well with our Caribbean markets.
We had one, gosh, probably 10 years ago called Happy Jetting. I don’t know if anybody remembers that one. That did not resonate so well. It was, ‘Thank you for jetting.’ Not flying. It was kind of a nuance that was hard to pick up on for our crew members, frankly, as they delivered service. But the You Above All campaign has proven to be great.
And we have a number of fantastic partnerships. We currently partner with more than 40 airlines around the world. We have a great partnership with some of the signature brands on our flights. I’d say Dunkin’ Donuts, but it’s now Dunkin’. So we partner with Dunkin’. We have a number of great partnerships.
Skift: There’s an old joke in the airline industry that people pick flights based on four attributes —price, price, price, and schedule. You go to Google flights, you see what’s cheapest, you do it. And yet you have all these great marketing campaigns that are trying to make me feel good. Is it worth it? Is there a rate of return?
Geraghty: I think the long held belief is that the airline industry is a commodity. And for 18 years, JetBlue has proven that it’s not a commodity. When you talk to people about, or when I say I work at JetBlue, I generally hear, ‘Oh my God, I love JetBlue.’ And that love and just sense of kind of feeling towards a brand, I think is frankly absent, when you think about some of the other airlines in the industry.
We position ourselves as this brand that has established that an airline is more than a commodity, that you can differentiate on product and service. We position ourselves kind of right between the legacy carriers and the ultra-low-cost carriers, and I think we’ve done a really good job. We are an incredibly trusted brand.
If you look at some of the work we did in Puerto Rico, last summer, coming out of the hurricanes, we step into communities when they are down and come and support them. The communities we fly to, it’s more than just putting flights in the air. It’s about building a relationship and a commitment to that community. During the Puerto Rico hurricane last year, we actually had brands reaching out to us, asking us whether they could donate money to JetBlue, who would in turn support Puerto Rico, or whether we could recommend charitable organizations that they could donate to. I don’t know many airlines that are viewed as sort of this intermediary for not for profits. Right?
I think that goes back to the trusted brand that we’ve created, and the fact that we have over 18 years proven that customers care about service. Now price is important and schedule is important. Those are the two large drivers of customer choice, but once you get past that, we know for JetBlue it’s our onboard entertainment, it’s our legroom, and it’s our service. So we think we’ve proven the model is different for JetBlue and it can work really well.
Skift: The TV’s are staying?
Geraghty: The TV’s are staying, yeah. We’re actually upgrading. If anybody’s flown on our new 321, you’ll see that we’ve upgraded to the new LiveTV4 system, and in early 2018 we’ll be putting the [newest] system on our aircraft, which is pretty cool. It’ll have bluetooth streaming, 100 channels of DirecTV, and lots of assorted content. Then obviously we have our WiFi product which is absolutely, hands down, the best in the sky, and it’s free.
Skift: Of course, there are other airlines that have the same product.
Geraghty: It’s much better than theirs because it’s free.
Skift: We are out of time. Thank you so much.
Geraghty: Thank you.