JetBlue Airlines 2012 Annual Report Download - page 12

JETBLUE AIRWAYS CORPORATION-2012 10K08
PART I
ITEM 1Business
We strive to provide a superior air travel experience, including communicating
openly and honestly with customers about delays and service disruptions.
We introduced the JetBlue Airways Customer Bill of Rights in 2007. This
provides for compensation to customers who experience avoidable
inconveniences (as well as some unavoidable circumstances), commits
us to perform at high service standards and holds us accountable if we
do not. We are the fi rst and currently the only U.S. major airline to provide
such a fundamental benefi t to customers. In 2012, we completed 99%
of our scheduled fl ights. Unlike most other airlines, we have a policy of
not overbooking our fl ights.
Brand Strength. JetBlue is a widely recognized and respected global
brand. We believe our brand differentiates us from our competitors and
identifi es us as a safe, reliable, high value airline. Our brand has evolved
into an important and valuable asset. Similarly, we believe customer
awareness of our brand has contributed to the success of our marketing
efforts. It enables us to promote ourselves as a preferred marketing partner
with companies across many different industries. In 2012, we once again
received several prestigious awards, including being voted “Highest in
Airline Customer Satisfaction among Low-Cost Carriers” by J.D. Power
and Associates for the eighth consecutive year.
Our customers have repeatedly indicated the JetBlue Experience is an
important reason why they choose us over other airlines. We believe our
high satisfaction rating serves as evidence our customers value what we
have to offer. We measure and monitor our customer feedback regularly
to achieve a primary goal of continuously improving customer satisfaction.
One way we do so is by measuring our net promoter score, or NPS. This
metric is used by many industries to gauge customer experience. Our
internal measurement shows improvements in our NPS score from 2011
to 2012, and we are focused on being an industry leader in this metric.
Many of the leading brands consumers are most familiar with receive high
NPS scores and are recognized for great customer service. We believe
a higher NPS score leads to higher customer loyalty which results in
increased revenue.
Marketing and Distribution
We market our services through advertising and promotions in various media
forms including using increasingly popular social media outlets. We engage
in large multi-market programs, many local events and sponsorships as
well as mobile marketing programs. Our targeted public and community
relations efforts refl ect our commitment to the communities we serve, as well
as promoting brand awareness and complementing our strong reputation.
Our primary and preferred distribution channel is through our website,
www.jetblue.com, our lowest cost channel. We re-designed our website in
2012 to ensure our customers continue to have as pleasant an experience
booking their travel as they do in the air. Our participation in global distribution
systems, or GDSs, supports our profi table growth in the corporate market.
We fi nd that business customers are more likely to book through a travel
agency or a booking product which rely on a GDS platform. Although
the cost of sales through this channel is higher than through our website,
the average fare purchased through the GDSs is generally higher and
often covers the increased distribution costs. We currently participate
in several major GDSs and online travel agents, or OTAs. In 2012, we
launched mobile applications for both Apple and Android devices designed
to enhance our customers’ travel experience. These applications have
robust features, including real-time fl ight information updates. Because
the majority of our customers book travel on our website, we maintain
relatively low distribution costs despite increases in recent years in our
participation in GDS and OTA.
We sell vacation packages through JetBlue Getaways™, a one-stop,
value-priced vacation website and service designed to meet customers’
demand for self-directed packaged travel planning. JetBlue Getaways™
packages offer competitive fares for air travel on JetBlue, along with a
selection of JetBlue-recommended hotels and resorts, car rentals and
attractions. We also offer a la carte hotel and car rental reservations through
our website which generates ancillary service revenues.
Route Network. We believe knowing our customers and understanding
the purpose of their travel helps optimize destinations, strengthen our route
schedules and increase unit revenues. Historically, we have been a strong
leisure focused airline resulting in high seasonality in our business. In recent
years, in order to offset this seasonality, we have increased our relevance to
the business customer, particularly in Boston. Additionally, we have continued
profi table growth in the Latin America and Caribbean region, with a mix of
leisure and visiting friends and relatives, or VFR, travelers. VFR travelers tend
to be slightly less seasonal and less susceptible to economic downturns than
traditional leisure destination travelers. We have also expanded our portfolio
of strategic commercial partnerships, which generate incremental customers
throughout our network and help to increase load factor during our off-peak
travel periods. We are focused on continuing to grow our network and further
reducing our seasonality by targeting new customers in the leisure, business
and VFR areas. Our operations primarily consist of transporting passengers
on our aircraft. Domestic U.S. operations, including Puerto Rico, accounted
for 84% of our capacity in 2012. The historic distribution of our available seat
miles, or capacity, by region is:
Capacity Distribution
Year Ended December31,
2012 2011 2010
East Coast – Western U.S. 32.1% 32.4% 34.5%
Northeast – Florida 30.6 32.2 31.4
Medium-haul 2.9 3.2 3.3
Short-haul 7.2 7.5 7.6
Caribbean, including Puerto Rico 27.2 24.7 23.2
TOTAL 100.0% 100.0% 100.0%
As of December31, 2012, we provided service to 75 destinations in 23 states, Puerto Rico, the U.S. Virgin Islands, Mexico, and 12 countries in the Caribbean
and Latin America. In 2012, we commenced service to fi ve diverse new destinations, including Dallas/Fort Worth, Texas and Grand Cayman, Cayman Islands.
We also reduced service tactically across our system, where the markets were not performing adequately. In 2013, we intend to begin service to the following
destinations:
Destination ServiceScheduled to Commence
Charleston, South Carolina February 2013
Albuquerque, New Mexico April 2013
Philadelphia, Pennsylvania May 2013
Medellin, Colombia June 2013