Blue Skies

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The first thing you notice when getting on board is the new-car smell. "No wonder," says the flight attendant, hearing your remark. She points to a metal plaque on the doorway rim that says the Airbus A320 was delivered only a month ago. Then there are the blue potato chips from naturally blue potatoes. The free cable TV on your personal video screen. The leather seats. Flight attendants with a sense of fun about their jobs and a can-do pilot who informs over the p.a. system that yes, there's a major storm coming into the New York City area but that we'll get there on time anyway. And we do.

So the traveler wonders, Is this for real? Or maybe the right question is, How long can they keep up this nonsense?

Just as the country's hatred of airlines was exploding last year, JetBlue came into being with a new attitude, new planes and a new concept of service. What perfect takeoff timing for a carrier that is trying to bring pleasure and even style back to flying. JetBlue is low-price and all-coach, like Southwest Airlines, yet hip and sassy, like Virgin Atlantic. In the air, JetBlue offers the plush seats and satellite TV; on the ground, it offers hyperefficiency and--are you ready?--candor about delays. You could call it the antiairline.

The rapidly expanding company is flying 80% full, vs. an industry average of 68.4%, and it recently booked its seventh straight month of profits, even as major carriers have struggled to stay in the black. From its base in New York City, JetBlue currently flies to 14 destinations, including Oakland, Calif.; Denver; Orlando, Fla.; Seattle; and Salt Lake City, Utah. Last month the company became the most ambitious start-up in U.S. aviation history when it ordered 48 new Airbus 320 jetliners--valued at $2.5 billion--to go with the 68 planes on the way and 15 in service. That's just part of JetBlue's full-throttle flight plan. In August the carrier will open a second home base, in Long Beach, Calif.

Which is to say that JetBlue is flying into dangerous territory. Of the hundreds of start-ups since the industry was deregulated in 1978, only America West has grown into a major company--and it has flown in and out of Chapter 11 bankruptcy. New carriers tend to fall victim to pernicious competition as well as their own incompetence. Last month, for example, the Justice Department decided to appeal a judge's dismissal of a predatory pricing case against American Airlines for running smaller carriers out of Dallas.

Credit CEO David Neeleman, 41, for piloting JetBlue past the early disasters that typically befall fledgling carriers. For starters, Neeleman raised $160 million from investors--almost triple what other new airline entrants have managed to obtain. The hefty sum is insurance against any unforeseen cash crunch; last year start-up National Airlines veered into bankruptcy because of surging jet-fuel prices.

Then there's the safety issue, a big one for consumers who are leery of "new" airlines that fly 25-year-old planes. JetBlue flies only factory-fresh, state-of-the-art A320s. Neeleman has fitted each with 162 seats--vs. the A320's 180-seat maximum.

Flyers are raving about the so-called JetBlue experience. It begins with pricing, which is competitive and doesn't torture consumers with requirements like Saturday-night stays. There are 12 one-way fares from New York City to Orlando, for instance, ranging from $70 to $199. On Delta, by comparison, there are 41 fares between the two cities ranging from $70 to $584. Result: after just one year of operation, JetBlue debuted as No. 2 on the Zagat 2001 customer-satisfaction survey (bested only by Midwest Express). That satisfaction has JetBlue en route to tripling revenue to $300 million and passenger rolls to 3 million this year.

The early accolades wouldn't bother the big airlines if only students and grandmothers were flying JetBlue. But the carrier is pulling in business travelers, the industry's most valuable passengers and the source of up to 50% of its profits. "We were starved for an airline like this," says Christopher Hayes, the chief investment officer at Rulison & Co., a financial firm based in Rochester, N.Y. Hayes, who has lately forgone his frequent-flyer perks on JetBlue rival US Airways, has already flown the newcomer 12 times: "It's hard to compare flying JetBlue to other airlines."

JetBlue's marketing is another radical departure. The carrier aims its product at the frugal yet style-conscious consumer. "We want that 'aspirational' audience," says Gareth Edmondson-Jones, the airline's spokesman and one of many employees who came from Virgin Atlantic. "We see our customers as the same ones who can afford more but shop at Target because their stuff is hip but inexpensive." That kind of thinking drove decisions like JetBlue's choice of leather seats instead of the less expensive cloth. "It's a nicer look, a better feel," says Neeleman, in full salesman mode. "Of course, it's also easier to clean when people puke on it."

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