An Extraordinary Stumble At JetBlue

You've got to give the guy some credit. It's not every day that the CEO of a public company--especially a CEO who's just emerging from a crisis like the one JetBlue Airways CEO David Neeleman weathered recently--shows up on the Late Show With David Letterman. But there he was on national TV just after midnight on Feb. 21, suffering through guffaws at his expense ("We'll make him wait for a change," Letterman told Barbara Walters, who preceded Neeleman as a guest) and somberly promising that his airline would do better. "What will you do now," Letterman asked as the crowd roared, "to keep JetBlue from being the punchline to a joke--which is my contribution?"

Good question. Since Feb. 14, when a devastating ice storm struck JetBlue's home base, New York's John F. Kennedy International Airport, the airline has been digging itself out of an operational and public-relations quagmire. Suddenly the carrier that was going to "bring humanity back to air travel" was trapping passengers on planes for hours, canceling more than 1,000 flights over six days, and admitting to near-chaos in its operations. "We should have acted quicker," says Neeleman. "We should have had contingency plans that were better baked to be able to [unload] customers. We should have called the Port Authority quicker. These were all lessons learned from that experience." (Read Maria Bartiromo's interview with Neeleman.)

Sharpen your pencils, business school profs. JetBlue's service recovery has all the makings of a Tylenol-caliber case study, starring a repentant CEO, a host of grand gestures to customers, and a few daring publicity coups (like Letterman). Still, the road to recovery isn't paved with TV appearances. What matters most is execution--doing the deep, hard, organizational work to ensure the crisis never happens again. While JetBlue recognizes that fact, it still has plenty to prove, especially to those passengers fuming over their ruined vacation or time forever lost to the inside of an airplane.

That's why we decided, despite its initial No.4 spot on our ranking, which was based on consumer responses from the first half of 2006, to yank JetBlue from our list of Customer Service Champs. It was a tough call. JetBlue has piled up service accolades faster than most airlines collect complaints, winning the University of Nebraska's national Airline Quality Rating study each year since 2003, a Readers' Choice Award from discerning Condé Nast Traveler for five years running, and ranking high in every measured category in the airline satisfaction ratings by J.D. Power & Associates.

All that, plus JetBlue's own trumpeting of its customer-friendly approach, means its passengers' expectations are inevitably higher. Other airlines, after all, had long waits at JFK, too: JetBlue's average delay between Feb. 13 and 15 was 230 minutes, according to FlightStats, a travel data company, while Delta Air Lines' was 205 minutes and American Airlines' 202. But interminable delays, cancellations, and service snafus, says UNC Kenan-Flagler Business School marketing professor Valarie Zeithaml, can be "more detrimental [to JetBlue] than to a larger airline. It runs totally counter to who they are coming out and saying they are and what they live."

That means JetBlue has to respond differently. Its first step toward apologizing was to offer immediate refunds and travel vouchers to customers stuck on Valentine's Day planes for more than three hours--far more than Northwest Airlines handed over following its infamous plane delays in 1999, and quicker than American's response to its December flights full of customers stranded on the runway for as long as eight hours. But the centerpiece of Neeleman's strategy is a new Customer Bill of Rights, a written policy unique among U.S. carriers that JetBlue announced on Feb. 20. It requires the airline to dole out vouchers or refunds in certain situations, such as $100 for passengers on arriving flights unable to reach their gates in one to two hours or $50 for any two- to four-hour delays caused by events under JetBlue's control (see, 03/01/07, "Passengers' Rights Need a Big Lift").

Creating a "service guarantee" is a smart move, says Leonard L. Berry, a Texas A&M University marketing professor and author of books on customer service. His research shows that the two biggest ways a company can destroy a service reputation are when its service proves unreliable--as JetBlue's did recently--and when the company doesn't seem to be fairly resolving its problems. Berry warns, however, "that a well-executed service guarantee is very clear on what is guaranteed and what is not." Currently, JetBlue's policy doesn't outline what is under its control and this could cause confusion. It says it will be adding more details.

Neeleman is doing far more than just apologizing and outlining refunds and guarantees. He's making a host of changes he believes will help JetBlue keep future weather-related operational snafus from spiraling out of control. He's overhauling information systems that track crew whereabouts, upgrading JetBlue's Web site to allow online rebookings, and training workers at New York headquarters to help out at the airport. When future disruptions occur, a SWAT team of corporate types will head to the airport--JFK is just seven miles from JetBlue HQ--to load bags, man computer stations, and help get incoming planes ready to leave again. "Had we been able to go out and help those [employees] who were exhausted to turn planes quicker, we could have been back to normal by Friday or Saturday"says Neeleman, rather than the following Tuesday. On Letterman, he vowed that "we are going to rebound from this." If he can make good on that, JetBlue will indeed be a Customer Service Champ--and Neeleman need never again ask for forgiveness on late-night TV.

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By Jena McGregor

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