I.

Case Problem: The Hands-On CEO of JetBlue

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 n the doorway rim
that says the Airbus A320 was delivered 1 month ago. Other notable features are the free
cable on your personal video screen and the leather seats. Flight attendants are trained on
how to give service with a retro flair. All attendants have to learn to strut proudly, as if
there were an imaginary string between chin and belly button.
Jetbue attendants have a sense of fun about their jobs, and can do pilot informs over the
public address system that yes, theres a major storm coming into the New York City area
but that well get their on time anyway. And the plane and passengers do. So the
traveller wonders. Is this for real? Or maybe the right question is, how long can they
keep up this nonsense? Jetblue was rated highest in customer satisfaction of all US
airlines in Conde Nast Traveler magazines 2005 Business Travel Awards- the fourth time
in 6 years.
Just as discontent with airlines was mounting in 2000, Jetblue Airlines came into being
with a new attitude, new planes, and a new concept of service. What perfect take off
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 a high
level of efficiency.
Jetblue has achieved an impressive profit picture. Of hundreds of start-ups since the
industry was deregulated in 1978, only Southwest Airlines and Jet blue have sustained
their success. For 2005, Jetblue had a net income of approximately $60 million for $1.3
billion in revenue with over 80 percent of seats being filled.
Credit CEO David Neeleman, who founded the firm at age 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 crush.
Consumers are usually concerned about the safety issue with new airlines that fly 25
year old planes. Jet blue flies only factory-fresh, state of the art A320s. Neeleman has
lifted each with 162 seats- versus the A320s 180 seat maximum. Flyers are ecstatic about
the Jetblue experience. It begins with pricing, which is competitive and doesnt torture
consumers with requirements like Saturday night stays. Jet blue is attracting business
travelers, the industrys most valuable passengers and the source of up to 50 percent of its
profits.
A Jetblue spokesperson said, 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 if thinking
drove decisions like Jet blues choice of leather seats instead of less expensive cloth. Its
a nicer look, a better feel, says Neeleman, in full salesman mode. Nevertheless, as
Jetblue became several years old, their sections of airline terminals, such JFK (serving
New York City), had the same worn-down look with cracked leather seats as other
airlines.

Neeleman obsesses over keeping employees happy, and with good reason. Airline
watchers say Jetblues ability to stay union-free is critical to its survival as a low cost
carrier. The industrys labor-relations record is weak. But if there is anyone who
realizes the importance of treating their employees right, its the management team at
Jetblue, says airline analyst Holly Hegeman.
Jetblue employees get profit-sharing checks, amounting to 17 percent of their salary in
recent years. Also, 84 percent of Jetblue employees participate in a company stock
purchase program, in which they can but stock at 15percent discount.
On September 21, 2005, Jetblue Flight 292 in Los Angeles narrowly escaped a crash
when its front landing gear struck sideways, so the place had to land while metal scraped
the runway instead of the wheels rolling in their intended manner. The day after the
mishap Neeleman released a statement acknowledging the problem, and thanking
everyone concerned for their assistance and emotional support. Neelemans public
statement included these words:
The Crew of flight 292 has asked us to communicate their appreciation to the 140
customers n board for their cooperation, ad they are also grateful messages of support
sent to JetBlue by thousands of people. The Crew looks forward to returning to their
families and loved ones and to their normal lives as quickly as possible.
Neeleman is one of seven siblings, and has nine children of his own. He has been
dreaming about airplanes since he saw a red one on his second birthday cake. A serial
travel entrepreneur, he launched four airlines, including Morris Air and Canadas West Jet
Airlines, with each one being more successful that the last. Neeleman, with a strong
interest in information technology, developed the computer system that became the basis
for e-ticketing.
Neeleman notes that despite heavy competition, Jetblues profit margins are the highest in
the industry. He attributes part of the companys success to selecting the right people,
which is especially important because an airline is a people business.
We have a saying at Jetblue that youre either serving a customer or serving someone
who is serving a customer.
An example of the selection process at JetBlue was an applicant pilot who was furious
about being rejected. The pilot telephoned Neeleman and explained that he had 15000
hours of flying experience. Neelman then spoke to the interviewer, who said that she
asked the pilot. Youve flown for 15000 hours; tell us one thing that youve done
besides just sitting there and flying the airplane. He couldnt come up with a single
example. He retorted, What d you mean by that? Im a pilot and thats what I Do. The
interviewer explained that the pilot was not somebody Jetblue wants in the company.
To manage the company, Neeleman emphasizes the quality of supervisors. The company
has one supervisor for 80 employees. The company has one supervisor, You can know
80 people. You can know who theyre married to; you can know who their kids are, and
what their challenges are. In this way Jetboue employees know there is a personal touch
to the company.

I. Case questions
1.
2.
3.

In what way does Neeleman demonstrate an understanding f organizational

behaviour?
So whats wrong with a pilot staying in the cockpit in terms of being a
contributor to a people oriented business?
How else might Neeleman make use of organization behaviour knowledge to
improve he chances of Jet blue staying successful?

II. Questions and Activity

1. Find somebody in your network who works for, or worked for, Starbucks
(including you) to comment on employee treatment by management.
2. What contributions might organizational behaviour knowledge make in the
internet age?
3. What does it mean to say that organizational behaviour relates to the process as
opposed to the content of a managers job?
4. Give a possible explanation why meta-analysis is considered so important in
evaluating effectiveness of prescription drugs.
5. Work by yourself or form a small brainstorming group, to furnish an example
from physical science in which common sense proves to be untrue.
6. Get together with a few classmates. Develop a list of strength of your group
members that you think if further developed would be career assets and explain
why these strengths might be assets.
Deadline for case problem is on July 9, and July 16 for the questions and activity.
Use our classroom as your venue for brainstorming and group dynamics.