JetBlue Airlines 2006 Annual Report Download - page 19

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Customer Loyalty Program
JetBlue’s customer loyalty program, TrueBlue, 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 services. 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. We now have over four million TrueBlue members, which we expect will
continue to grow.
The number of estimated travel awards outstanding at December 31, 2006 was approximately
188,000 awards and includes an estimate for partially earned awards. The number of travel awards
used on JetBlue during 2006 was approximately 153,000, which represented 2%of our total revenue
passenger miles. 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.
We have an agreement with American Express, under which it issues co-branded credit cards
allowing cardmembers to earn points in TrueBlue. In September 2006, we expanded our offerings with
American Express to include the JetBlue Business Card, which provides small business owners with a
5%discount on JetBlue travel and automatic enrollment in the American Express OPEN Savings
®
program. In addition, small business owners with any American Express OPEN small business card
will receive a 3%discount on JetBlue travel. Every time cardmembers holding either a JetBlue Card
or a JetBlue Business Card from American Express earn the equivalent of one TrueBlue point or
purchase travel on JetBlue before their points expire, all the points in their TrueBlue account are
extended for another 12 months. We also have an agreement with American Express allowing its
cardholders to convert their Membership Reward points into JetBlue TrueBlue points. We intend to
pursue other marketing partnerships 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 day-of-flight, or
walk-up, fares in each of our markets. Our fares increase as the number of days prior to travel
decreases, with our highest walk-up fare generally at approximately three times 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. We are committed to offering our customers lower fares, especially
with respect to our walk-up fares, than those of our competitors. We believe the difference between
our lowest and highest fare for a given flight is significantly smaller than our competitors.
All of our fares are one-way and never require an overnight stay. Our fares must be purchased at
the time of reservation and are non-refundable, but any booking can be changed or cancelled prior to
departure for a nominal fee. Based on published fares at our time of entry, our advance purchase
fares have been 50%to 60%below those existing in markets prior to our entry, while our walk-up
fares have generally been up to 60%to 70%below other major U.S. airlines’ unrestricted ‘‘full coach’’
fares.
Revenue Management
Revenue management is a process that helps enable us to maximize passenger revenues by flight,
by market and across our entire network. Our revenue management team strives to increase our
overall average fare through optimizing our fare mix while continuing to provide our customers with
low fares and, in certain markets, by using our network to maximize connecting opportunities.
We determine the number of seats offered at each fare through a continual process of forecasting,
optimization and competitive analysis. Generally, in established markets we use past booking history
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