JetBlue Airlines 2015 Annual Report Download - page 3

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Targeted High-Value Geography
JetBlue continues to concentrate its network assets in lucrative, densely populated areas with higher than
average disposable incomes. In 2015, nearly 98% of JetBlue’s capacity or available seat miles started or
ended in one of our six focus cities. This discipline drives focus city relevance, route maturity and, we believe,
enhanced unit revenue.
In 2015, we started service to six new BlueCities; by the end of the year we served 93 BlueCities in 20 countries.
Our targeted growth is producing: each of the six focus cities were profitable and saw margins expand in 2015.
Mint continues to illustrate our successful network: a targeted product and experience tailored to specific
markets having significant premium demand. Revenue and customer feedback have far exceeded our initial
expectations leading to our decision to expand Mint. In 2015, we started additional frequencies from New York
to Los Angeles and to San Francisco. We also launched seasonal Mint service from New York to Aruba and
year round service to Barbados.
In 2016, we are thrilled to bring Mint to Boston, with year round Mint service between Boston and San Francisco
and seasonal Mint service from Boston to Barbados. We intend to launch Mint service between Boston and
Los Angeles later this year.
Most of our 2016 capacity growth is expected to be in Fort Lauderdale-Hollywood (FLL) which remains a central
component of our long term domestic and international growth strategy. In New York-JFK, a slot constrained
environment, we expect to fuel our growth by up-gauging as more A321s join the fleet and we offer additional
Mint frequencies.
Competitive Costs
I firmly believe maintaining a cost advantage over larger network airlines is an imperative to drive profitable growth.
We are very pleased with our 2015 cost performance: total unit costs decreased year-on-year by more than
ten percent. While falling fuel prices certainly played a big role, I would also highlight our controllable cost
performance, with unit costs excluding fuel, profit sharing and related taxes growing just 0.5% and coming
in at the lower end of our street guidance range. This cost performance was primarily driven by an improved
operation, investments in our fleet, such as the Airbus A321s, and IT investments, including the Customer
Technology Refresh.
A Look Ahead
We exceeded our 2017 ROIC goal of greater than 10% by two years. We recognize fuel was a significant tailwind
and remain focused on driving non-fuel based returns higher. Looking to 2016 and beyond, Fare Options is
expected to continue to contribute. We will be executing other return enhancing initiatives including:
•
Cabin Restyling: Our new innovative cabin will improve our bottom line and customer experience at the
same time. Customers will benefit from new seats, larger TV screens with more than 100 channels of DirecTV,
free gate-to-gate Fly-Fi, and we will continue to offer the most legroom in core or coach. New cabin interiors
will allow us to increase the seat count from 150 to 162 on our A320 aircraft and from 190 to 200 on our
All-Core A321 aircraft. The retrofit program starts mid-2016 and is expected to generate incremental annual
operating income of $100 million upon completion of both fleet types in 2019.
•
Co-Brand Credit Card: We recently launched our new co-brand partnership with Barclaycard on the MasterCard
network. We are very excited with the agreement’s structure and improved economics. Equally important, the
updated customer features will allow us to enlarge our cardholder base. We expect a fully-ramped annual
incremental operating income benefit of $60 million from this new partnership.