A contrite JetBlue offers a plan
Hoping to salvage its reputation as a passenger-friendly airline, JetBlue Airways Corp. unveiled a plan Tuesday for compensating customers hit with flight delays or cancellations.
The plan, dubbed a customer bill of rights, promises compensation ranging from travel vouchers to full refunds and also spells out procedures for limiting the time passengers spend on airplanes on the ground.
“I wanted to create something in writing that we would have a laser-beam focus on,” JetBlue Chief Executive David Neeleman said. “It’s an effort to let our customers know that we’re serious about this stuff.”
The plan landed as JetBlue had its first day of normal operations after a six-day ordeal during which about 1,100 flights were canceled and more than 130,000 passengers affected.
Most airlines have written policies describing how they respond to a variety of issues affecting their customers, including canceled or delayed flights. However, few list exact compensation for inconvenienced customers, preferring to work out settlements case by case. It appeared that few airlines intended to match JetBlue’s new policy.
“The real difference is that JetBlue is instituting a policy that says, ‘If this happens, this is what you’ll get,’ and that’s what really sets it apart,” said Alan Sbarra, a principal with Roach & Sbarra Airline Consulting in San Francisco.
Neeleman said the airline was unprepared to deal with the Valentine’s Day ice storm that struck its hub at New York’s John F. Kennedy International Airport. The storm grounded aircraft, and the resulting cancellations set off a chain reaction as flights from other cities had to be scrubbed for lack of planes and crew.
To make matters worse, passengers were stranded aboard some planes for several hours while waiting to take off or return to the terminal.
Under JetBlue’s new policy, retroactive to Feb. 14, compensation will be based on the length of the delay and whether the customer is waiting in the terminal or in a parked aircraft.
In the case of terminal delays, JetBlue will provide compensation only if the delay is caused by an issue under the airline’s control, such as maintenance or crew scheduling. A passenger who suffers an on-plane delay will be compensated even if the delay was caused by bad weather or something else beyond JetBlue’s control.
Compensation ranges from a $25 travel voucher to a voucher worth the value of the customer’s round-trip fare.
JetBlue also pledged to allow customers to get off planes that are stranded on the ground for more than five hours.
Brand strategist Eli Portnoy, founder of Portnoy Group Inc. in Los Angeles, said JetBlue’s plan was fine as far as it went. However, he likened it to “fixing potholes.”
A company such as JetBlue that has based its brand identity on caring for its customers should take more dramatic action, Portnoy said, such as issuing a “brand manifesto” that goes beyond compensating for past problems and signals its commitment to preventing a recurrence of the crisis.
Many passengers interviewed during the meltdown said they would remain loyal to JetBlue despite the recent problems.
Neeleman said the airline would spend $26 million to compensate customers affected by the recent disruptions and $4 million on such storm-related expenses as employee overtime. JetBlue’s fourth-quarter net income was $17 million.
Neeleman said the carrier was shoring up its reservations center in Utah, which was overwhelmed during the crisis, and was improving its training so that employees could perform more than one job when extra hands were needed.
Some analysts cut their 2007 profit estimates for the airline. Ray Neidl of Calyon Securities USA Inc. said he expected JetBlue’s expenses to rise as it worked to improve its systems.
“This is a one-time incident, which over time is forgivable by the traveling public,” Neidl wrote in a research note to clients. “If such situations happen consistently, though, then a problem will develop.”
JetBlue’s stock fell 66 cents, or 4.9%, to $12.90.
