JetBlue Airlines 2005 Annual Report Download - page 11

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Differentiate Our Product and Service. We believe that a key to our current and long-term
success is that we offer customers a better alternative for air travel and a distinctive flying experience
that includes new aircraft, leather seats, simple and low fares, 36 channels of free LiveTV at every
seat, pre-assigned seating, movie channel offerings from FOX InFlight and reliable performance. We
place a very high emphasis on customer service. We strive to communicate openly and honestly with
customers about delays, especially when weather or mechanical problems disrupt service. We have a
philosophy of not canceling flights, unless absolutely necessary, in order to fulfill our commitment of
getting customers to their destination even if it means getting there late. Unlike most other airlines,
we have a policy of not overbooking our flights. Based on customer feedback, we believe our
high-quality service is an important reason why our customers choose us over other airlines. In 2006,
we plan to continue to improve our customers’ flying experience by equipping all of our aircraft with
larger 6.8 inch television screens and 100 channels of XM Satellite Radio, each of which is already
available on our EMBRAER 190 aircraft, and by offering rotating snack options and additional
premium inflight services.
Our Competitive Strengths
Low Operating Costs. For the year ended December 31, 2005, our airline cost per available seat
mile of 6.91 cents was lower than any of the other major U.S. airlines. Our low unit costs allow us to
offer fares low enough to stimulate new demand and to attract customers away from higher-priced
competitors.
The key to our low unit costs is the high productivity of our assets and our employees. Some of
the factors that contribute to our low unit costs are:
•We utilize our aircraft efficiently. For the year ended December 31, 2005, each of our A320
aircraft operated an average of 13.5 hours per day, which we believe was higher than that of
any other major U.S. airline. By using our aircraft more efficiently than other airlines, we are
able to spread our fixed costs over a greater number of flights and available seat miles. We
achieve high aircraft utilization in several ways. We operate a number of ‘‘red eye’’ flights,
which enable a portion of our fleet to remain productive through the night. In addition, our
aircraft are scheduled with minimum ground time to avoid unnecessary time spent at airport
gates. Quick, efficient airport turns increase the number of daily flights per aircraft. Our new
EMBRAER 190 aircraft operated an average of 8.1 hours per day, which we anticipate
increasing as we gain experience with this aircraft.
•Our workforce is productive. We take great care to hire and train employees who are
enthusiastic and committed to serving our customers and we incentivize them to be
productive. Our employee productivity is created by greater fleet commonality, fewer
unproductive labor work rules, use of part-time employees and the effective use of advanced
technology. For example, most of our reservation sales agents work from their homes,
providing us better scheduling flexibility and allowing employees to customize their desired
schedules. Our compensation packages are designed to align the interests of our employees
with our stockholders.
•We have low distribution costs. Our distribution costs are low for several reasons. We utilize
only electronic tickets which saves paper, postage, employee time and back-office processing
expense and all of our customers book travel directly with us, which saves computer
reservation systems fees. For the year ended December 31, 2005, 77.5%of our sales were
booked on www.jetblue.com, our least expensive form of distribution, and 22.5%were booked
through our agents.
•We currently operate only two types of aircraft with a single class of service. Operating a
limited number of aircraft types leads to increased cost savings as maintenance issues are
simplified, spare parts inventory requirements are reduced, scheduling is more efficient and
training costs are lower. A single class of service simplifies our operations, enhances
productivity, increases our capacity and offers an operating cost advantage. We consider the
recent addition of our EMBRAER 190 aircraft, although a second fleet type, to be an
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