While "Hurricane Sandy
was the major headline for JetBlue during the fourth quarter," depriving
the carrier of an estimated $45 million in revenue, according to JetBlue
Airways CEO Dave Barger, a side note would be the airline's continued growth in
the corporate market, particularly in Boston. Building toward a plan to operate
in the coming years 150 daily departures from that city, a focal point
of the carrier's corporate cultivation, JetBlue has fortified its sales force
and bulked up its network there with newly launched or imminent additional
services to several key business markets, including Washington Reagan National,
Dallas-Fort Worth and Philadelphia.
"Our market share through
travel agencies, which frankly isn't even our major form of distribution, is
significantly higher in Boston than our seat share," an encouraging sign
of corporate sales efforts, JetBlue executive vice president and chief
commercial officer Robin Hayes said Tuesday during a quarterly earnings call.
"Phase one of this journey for us was, let's get the deal in place,"
said Hayes. "Now, phase two is, OK, we have the deals in place, but we
have to make sure that they perform. We're focused on the corporate customers
that are driving that incremental corporate business to us."
Vice president of sales and revenue management
Dennis Corrigan last week sat down with BTN
senior editor Jay Boehmer at the carrier's new headquarters in Long Island
City, N.Y., to talk about the carrier's growth in the corporate market and
approach to distribution. An edited transcript follows.
How is corporate account cultivation going?
I've had this role for about a year and a half. I'd say we're pleased with the growth we're seeing. We always felt like it could be better, and I think that just took bodies. I put money into the revenue plan so I could hire four more folks. We got those folks on board around October: Two more in Boston and two more in New York.
Also, one thing we heard when we were still kind of small was, "I love my account manager, but he's swamped." So we added a coordinator in Boston to handle the account servicing aspects. By adding more folks, it helps us not only grow the account base more quickly, but it also will allow for a bit more high-touch and more personalized service. We just have more time to spend on that.
Have you managed to grow corporate revenues?
We had a pretty good year in terms of growth. The year you go from zero to a dollar is great, but we've been doing this now for about three-and-a-half, four years. Last year was probably one of the bigger growth years we saw, and that was due not only to new accounts, but also spend from existing accounts. A lot of that is that we've just continued to grow the network—it's gotten more mature. We continue to add relevance, particularly out of Boston. Suddenly you add a Dallas, and you're more in the game. Same with Philadelphia. Credit to our corporate customers. When we hear from them, "we want Dallas" or "we want Philadelphia," we've been very gratified to see that they don't just say it, then continue to fly who they're flying. That helps me when I talk to people in the network [department]. They know our accounts have stepped up.
We've focused on Boston as your big point of sale for corporate business. What's New York looking like?
In terms of number of accounts, Boston is probably biggest, but in terms of spend, New York is up there. I think we are realistic in our expectations for New York, because of our footprint. There are markets where we have really good schedules—Fort Lauderdale, Tampa, Orlando, some of the West Coast stuff—but we're not here to serve Chicago 14 times a day or [Washington National] on the hour every hour. New York for us is primarily a leisure origin and destination, but there is plenty of business to Tampa, Fort Lauderdale and the West Coast. But when it comes to where we want to be the preferred carrier of choice for business customers, we're building that network [in Boston]. Whereas, anywhere you want to go out of LaGuardia probably already has that service.
How does corporate demand look now?
We feel really good about what we're seeing. Some of our best-performing markets all year were Boston shorter-haul business routes, to the point where I joke that the biggest problem I have in Boston right now is I don't have enough of it. We've been happy with what we're seeing and we've been happy about seeing more corporations receptive to having us in their program.
For a lot of other carriers, corporate deals are all about X amount of market share. Is share the basis of JetBlue agreements?
A lot of times in Boston, if we do a flat fare-type deal, we'll ask for a pretty decent commitment. For a carrier like a JetBlue or some of our more direct competitors, it gets tough when someone's leveraging international. With one account that we were fairly disappointed in the outcome, we had an initial read of, "We're big in all their markets, and price-wise, we're competitive." They had been tied to one of our bigger network competitors forever, so it's tough from that standpoint.
Some of the buzz I'm hearing in the travel management community is about the overreliance on alliance deals. Some of our travel mangers have told Network Carrier X, "Take my deal, because I'm saving more on a carrier like JetBlue on domestic. Even if I have to pay rack to do international, I'm still ahead." We think we offer a competitive price even before we offer discounts. Our basic proposition is that we're saving you a lot of money, and by the way, we've got the best domestic product flying with more improvements to come. Plus, we think we've got a good schedule. We think we can hit the three things they want. If you're sitting in New England, I can get a nonstop to most places you want to go. I can save you time on the connection, and I'm more than price-competitive. They've got to decide how their international plays into that.
What else is on tap for corporate customers?
One of the things I'm most excited about is the Mosaic program. It's helpful for a couple of things. We still see travel going on the other guy because some flyers are so wed to their frequent flyer program, but now we've got something to address that. We wanted to give the program a few months to get on its feet and stable, and now we're in the process of going out to our account base and granting each corporation based on spend and performance a certain number of Mosaics. We'll tell you how many of your travelers already qualify, then say, "These are yours to give to your travelers."
I don't know if it fits into the JetBlue identity, but would you consider something like an airport lounge in Boston?
It's one of the things we've been very cautious about. Internally, even with Mosaic or something like early boarding, we've historically been about, "Everybody deserves the same high level of service." So it has been a bit of an internal shift: We still want to treat everybody in that same great way, but there are some we want to recognize a little more. When we think of things like lounges, it's not clear how we do that. Even when you think about [additional legroom seating option] Even More—it is available to everyone.
Even on the aircraft, JetBlue has been reluctant to put up a wall.
We have had in our surveys people say, "Don't ever think about putting a curtain up in your airplanes." On the service and amenity side, we should have our first ViaSat Wi-Fi-equipped aircraft in the sky this quarter. That will be huge for us. For the first year, all basic email and basic web browsing will be free, and we'll see where we go from there. If you look at our gap, as it were, I'm much less concerned about not having a first-class cabin than having Wi-Fi.
What are your plans to bring ancillaries to the global distribution system channel?
We want to bring our ancillaries into the GDS channel. We hear that loud and clear from our customers. What we have told our GDS partners is that we want to do it, but I have one person, so it's not scalable for us to build the Sabre solution, the Travelport solution and the Amadeus solution. We are highly proponent of an industry solution, such that we can file it through ATPCo, settle it through Electronic Miscellaneous Documents, etc. We want an industry-standard solution. As soon as we get that, we're happy to do it. This is not a philosophical issue where we want to use ancillaries to drive business to our website. We 100 percent want to, but I can't support multiple solutions.
We talked about your small-business product, CompanyBlue, as having a smaller audience. How do you approach that product and the small-business sector now?
We are building that from scratch. Everybody has a small-business product. How do we get into that game and do it possibly better, and how attractive can we make that? Also, without obviously violating our GDS agreements, how do we allow for those folks that would say they want to use this tool instead of their current booking tool?
As for small business, you have to believe that we're getting a lot through our website already, but can we do this better. How can we help you manage your travel spend, help you manage your travelers and make sure there are rewards for them? That's something we'll be focusing on.