Blue Skies

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Neeleman has raided rivals for employee-focused top executives, including COO Dave Barger, a key part of the team that turned around Continental Airlines. Neeleman lured chief financial officer John Owen from Southwest, "because there is no one else in the world who is better at buying airplanes and running a successful financial operation." For his people person, Neeleman chose the only executive who ever fired him. That was Ann Rhoades, who helped develop the airline industry's happiest employee group at Southwest. But in 1994 she pink-slipped Neeleman after Southwest bought Morris Air, another low-price airline he had started.

Neeleman obsesses over keeping employees happy, and with good reason. Airline watchers say JetBlue's ability to stay union-free is critical to its survival as a low-cost carrier. The industry's labor-relations record is famously toxic. "But if there is anyone who realizes the importance of treating their employees right, it's the management team at JetBlue," says airline analyst Holly Hegeman, the editor of planebusiness.com.

Neeleman, who wants to take JetBlue public within two years, is just as obsessed with keeping costs down. Like Southwest, JetBlue flies only one type of aircraft, which keeps a lid on training and maintenance expenses. With flight attendants and even executives like Barger chipping in to help clean the jets even before they have landed, turnaround times average just 35 minutes, as fast as industry leader Southwest.

Despite the focus on cost, JetBlue has expenses that most other airlines have rejected. It has configured its planes with emergency equipment such as life rafts and beacons for flying over water, thus allowing its flights to swing out over the ocean to avoid congestion on crowded East Coast routes. It has worked closely with controllers to "tunnel" to its upstate New York destinations. That means flying at 10,000 ft., rather than the usual altitudes above 18,000 ft., which enables JetBlue to avoid traffic jams in the air lanes. "It costs us about $400 more per flight," says Chris Collins, vice president of operations. "But getting to your destination early is priceless."

The best thing JetBlue may have going for it is Neeleman. One of seven siblings, who has nine children of his own, Neeleman has been dreaming about airplanes since he saw a red one on his second birthday cake. A serial travel entrepreneur, he started his first business as an accounting undergraduate at the University of Utah. He has launched four airlines, including Morris Air and Canada's WestJet Airlines, each one more successful than the last. Neeleman, who retains such geeky attributes as wearing a calculator-watch combination, even developed the computer system that became the basis for e-ticketing.

According to his father Gary, a journalist turned publishing executive, David got his entrepreneurial drive from his grandfather, who opened what Neeleman pere claims was the country's first convenience store, on South Street in Salt Lake City. David certainly learned frugality: of the $3,000 his parents sent him during his year on a Mormon mission in Brazil, he saved $1,300. He has retained that trait. He gets around New York City by subway.

Herb Kelleher, founder of Southwest Airlines, considered Neeleman such a threat that after buying him out, he forced his young rival to sign a five-year noncompete agreement in 1994. "David's a genius," Kelleher says of Neeleman. "There's no question about it." The hiatus gave Neeleman a lot of time to plan every last detail of his dream airline.

In the opinion of those who work with Neeleman, that may translate into a new detail every few minutes. JetBlue's CFO Owen says dealing with Neeleman is "like trying to put a bridle on a wild mustang." Even Neeleman admits that lots of his ideas won't work (including serving pizza on planes, allowing only those passengers who book online to get seat assignments and having men's and women's lavatories). "That's why I make sure there are people around me who push back," says Neeleman. Owen does his part: "I tell him it's O.K. to think outside the box, but we have to be able to see the box."

It took a Westerner like Neeleman to see the beauty of the New York air-travel market, which was certainly lost on New Yorkers. From 1986 to 1997, high prices in the largest domestic market had stifled growth. Neeleman and his management team figured that thousands, if not millions, of New York-area passengers could be enticed back with low fares and excellent service. Says Owen: "Essentially, New Yorkers were prisoners. They had only low-quality, high-fare airlines to choose from. Their expectations were at bottom."

Bypassing delay-plagued La Guardia Airport, Neeleman based the airline at John F. Kennedy, an international gateway that is crowded only a few hours per day. But it's also eight miles farther from Manhattan and more expensive to get to, a potential hurdle for low-fare domestic customers. Nonetheless, JetBlue lobbied the Clinton Administration for a remarkable 75 slots (takeoff and landing rights) at J.F.K., enough to allow robust airline growth through 2005. J.F.K. has proved a smart move: when congestion choked La Guardia to a standstill last year, JetBlue launched a marketing campaign that called J.F.K. "New York's most on-time airport."

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