JetBlue Airlines 2009 Annual Report Download - page 3

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manage capital expenditures. We are committed to sustainable growth, which is based on earnings and asset
efficiency. As part of this focus, we have carefully managed our fleet and significantly reduced our aircraft
capital expenditures from previous years. During 2009, we took delivery of nine net aircraft and modified our
aircraft order book by deferring delivery of both Airbus and Embraer aircraft.
Slower and more sustainable growth has afforded us the opportunity to rationalize capacity and strengthen our
core network. During 2009, we continued to build on our success in the Caribbean and Latin America where
our brand and customer service experience resonate well. Of the eight cities we opened in 2009, six were in
the Caribbean and Latin America. We increased our presence in leisure-driven markets, such as Montego Bay,
Jamaica, while continuing to build on our strength in Visiting Friends and Relatives markets such as Bogota,
Colombia. We also launched service to Barbados, Kingston, Jamaica, Saint Lucia and San Jose, Costa Rica.
We continued to leverage our presence in New York, Boston, Florida and on the West Coast. We launched
new service from Boston to Baltimore, our 32nd destination served from Boston. Our Boston success has
driven significant growth over the past six years; we now serve more destinations and offer more seats out of
Boston’s Logan Airport than any carrier, and we are proud to be the official airline of the Boston Red Sox. In
addition, we began new service to Los Angeles International Airport (LAX) from our Boston and New York
focus cities, expanding our presence in the L.A. Basin.
During 2009, we launched our codeshare partnership with Deutsche Lufthansa AG, Europe’s largest airline
and our largest shareholder. This partnership provides our customers with convenient connections at 12 of our
domestic locations to Lufthansa’s network of over 400 locations worldwide. We also continued to benefit from
our partnerships with Aer Lingus and Cape Air. Our new terminal at JFK and our growing presence in Boston
provide a unique foundation for these and other partnerships, as evidenced by our recently announced
agreement with American Airlines in Boston and JFK. We will continue to explore other opportunities to
monetize our valuable presence at these airports and link our network with other airlines.
Revenue Maximization
During September, we launched our innovative All-You-Can-Jet pass promotion offering a month of unlimited
travel for $599. This was by far the most successful promotion in our company’s history, generating
tremendous media attention and introducing a significant number of new customers to JetBlue.
We also remain focused on building customer loyalty. This past year, based on extensive customer research
and feedback, we made significant enhancements to our customer loyalty program, TrueBlue. Customers now
earn points based on the value paid for a flight and also benefit from more flexible redemption opportunities –
including last seat availability on any flight. Our TrueBlue loyalty program now totals approximately eight
million members.
We believe our value proposition is unique and differentiates us within the industry. Our goal is to preserve
the award-winning core JetBlue Experience and enhance it with optional product offerings customers value
and are willing to pay for. The Even More Legroom product is one such enhancement, and customer response
has been overwhelmingly favorable. As a result of these and similar efforts, 2009 ancillary revenues increased
over 2008, helping to offset industry-wide fare weakness.
Cost Control and Productivity
Our ability to deliver exceptional customer service at low cost differentiates us from the rest of the industry.
Despite a large concentration of operations in high cost cities, we maintain one of the lowest cost structures in
the industry due to the young average age of our fleet, a productive workforce and cost discipline.
Our most significant cost is fuel, which represented approximately 30% of our total operating expenses in
2009. Fortunately, we have a fuel-efficient fleet with an average age of approximately four years – the
youngest fleet of any major U.S. airline. We also continue to focus on fuel conservation techniques to help
reduce aircraft fuel burn. In addition, we have built a portfolio of fuel hedges to help us manage fuel price
volatility and supply interruptions.