JetBlue Airlines 2005 Annual Report Download - page 18

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services through advertising and promotions in newspapers, magazines, television, radio and outdoor
billboards, and through targeted public relations and promotional efforts. We have also relied on
word-of-mouth to promote our brand.
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 November 2005, we introduced JetBlue Getaways, which is a one-stop, value-priced vacation
website designed to meet customers’ demand for self-directed packaged travel planning. Vacation
packages offer competitive fares for air travel on JetBlue, a selection of JetBlue-recommended hotels
and resorts, and car rentals.
In order to attract customers to our website, we provide double TrueBlue points to customers
who book reservations on www.jetblue.com. We do not participate in any global distribution system
and book 100%of our reservations ourself through a combination of our website and our agents. The
percentage of our total sales booked on our website continues to increase and averaged 77.5%for the
year ended December 31, 2005. Our agents accounted for the remaining 22.5%of our sales in 2005.
Our distribution mix creates significant cost savings and enables us to continue to build loyalty with
our customers through increased interaction with them.
Customer Loyalty Program
JetBlue’s customer loyalty program, TrueBlue Flight Gratitude, 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. Points are accumulated in an
account for each member and expire after twelve months. 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.
The number of estimated travel awards outstanding at December 31, 2005 was approximately
142,000 awards and includes an estimate for partially earned awards. The number of travel awards
used on JetBlue during 2005 was approximately 88,200, which represented less than two 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.
Beginning in December 2004, we entered into an agreement with American Express allowing its
cardholders to convert their Membership Reward points into JetBlue TrueBlue points. In June 2005,
we entered into an agreement with American Express Travel Related Services Company, Inc. and
American Express Bank, F.S.B., under which they began issuing a co-branded credit card to
consumers in July 2005 that allows cardmembers to earn points in TrueBlue. We now have over three
million TrueBlue members, which we expect will continue to grow. We intend to pursue other
partnerships similar to these in the future.
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 ‘‘walkup’’ fare generally at approximately twice the amount of our lowest 14-day advance
purchase fare. In addition to our regular fare structure, we frequently offer sale fares with shorter
advance purchase requirements in most of the markets we serve and match the sale fares offered by
other airlines.
Most other major U.S. airlines have numerous fares carrying multiple, complex restrictions in any
given market, many of which require a non-refundable advance purchase and a one night stay in order
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