JetBlue Airlines 2003 Annual Report Download - page 18

• installation of four cabin security cameras on each aircraft with a live video feed to the cockpit
crew;
• creation of a new officer position, Vice President for Security; and
• construction of additional security screening check points at our JFK terminal.
In addition to these voluntary measures, we have complied fully with all new FAA and TSA
security requirements and will continue to abide by all future security enhancement requirements.
Marketing and Distribution
Our primary marketing strategy is to attract new customers by widely communicating our value
proposition that low fares and quality air travel need not be mutually exclusive. We market our services
through advertising and promotions in newspapers, magazines, television and radio, and through
targeted public relations and promotional efforts. We have also relied on word-of-mouth to promote
our brand. In 2004, we plan to launch Company Blue, a corporate travel booking program, which
should allow us to penetrate the managed business travel segment by offering corporate managers the
ability to better track, record and report on their company’s’ travel expenses.
We generally run special promotions in coordination with the inauguration of service into new
markets. Starting approximately five weeks before the launch of a new route, we typically undertake a
major advertising campaign in the target market and local media attention frequently focuses on the
introduction of our low fares.
In order to attract customers to our website, we run promotions that provide discounts to
customers who book reservations on www.jetblue.com. The percentage of our total sales booked on our
website continues to increase and averaged 73.0% for the year ended December 31, 2003. Our second
largest distribution channel is our reservation agents who account for 24.6% of our sales. This
distribution mix creates significant cost savings for us and enables us to continue to build loyalty with
our customers through increased interaction with them. Effective April 24, 2002, we eliminated
commissions to travel agents, following most major airlines, which has not affected our overall
bookings.
Customer Loyalty Program
JetBlue’s customer loyalty program, TrueBlue Flight Gratitude, was launched in June 2002 and is
an online program designed to reward and recognize our most loyal customers. The program offers
incentives to increase travel on JetBlue and provides our customers with additional conveniences and
features. TrueBlue members earn points for each one-way trip flown based on the length of the trip. A
free round trip award to any JetBlue destination is earned after attaining 100 points within a
consecutive twelve-month period. Awards are automatically generated and are valid for one year. Points
are accumulated in an account for each member and expire after twelve months.
The number of estimated travel awards outstanding at December 31, 2003 was approximately
58,000 awards and includes an estimate for partially earned awards. The number of travel awards used
on JetBlue during 2003 was approximately 21,000 which represented less than half of one percent of
our total revenue passenger miles for that year. Due to the structure of the program and low level of
redemptions as a percentage of total travel, the displacement of revenue passengers by passengers using
TrueBlue awards has been minimal to date.
Pricing
Our low cost structure allows us to offer simplified, everyday low fares to our customers. We offer
a range of fares, including 14-day, 7-day and 3-day advance purchase fares and a ‘‘walkup’’ fare in each
of our markets. Our fares increase as the number of days prior to travel decreases, with our highest
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