Six years ago, JetBlue Airways offered only 11 daily flights
from two gates at Boston Logan International Airport, a modest presence that
turned the heads of few corporate travel buyers. Now, the carrier is offering
more service from the city than any of its competitors, growing at a clip of 30
percent this year alone and making the city a focal point of its burgeoning
corporate contracting initiatives.
The carrier considers its presence in New York, the West
Coast and South Florida as compelling to corporate buyers only on a secondary
or tertiary carrier basis, but in Boston, JetBlue sees the potential to serve
as the primary domestic carrier for some companies.
"It seems like every day they're adding a new city, and
they're going to cities that are meaningful for us," said Michelle De
Costa, global travel manager for Boston-based Sapient. "Any increased
capacity is definitely a good thing, especially now."
While JetBlue said it plans to reduce capacity throughout
much of its network this year, the carrier said Boston, along with the
Caribbean, is driving its full-year 6 percent to 8 percent capacity growth
rate, compared with 2009.
JetBlue this summer will operate about 75 daily departures
from Logan to about 35 nonstop destinations, while adding frequencies to a
dozen markets, including Chicago O'Hare, Charlotte, Pittsburgh, San Diego,
Washington Dulles and others. In September, the carrier will launch Phoenix
service, while November will bring new nonstop service to Washington National
and Sarasota. The carrier's growth in Boston comes in tandem with its recent
move to bulk up its presence in the corporate market, as it began forging
corporate agreements there, and elsewhere, in the past year.
"They're starting to act like a traditional legacy
carrier in the corporate arena," said Joe Ondrus, senior vice president of
Boston-based Garber Travel. "If they can get to critical mass in Boston,
then I'd expect them to be even more aggressive in the corporate space. I'm
seeing our customers are intrigued by it, but the real big shoe to drop is to
see how they work with American. That, to me, could be a game changer,"
Ondrus said, referring the recent JetBlue-American interline agreement, which
he said could portend a deeper relationship and a potentially more meaningful
value proposition to corporate clients.
Speaking with BTN earlier this year, executive vice
president and chief commercial officer Robin Hayes said JetBlue is maintaining
a "light touch" in the corporate market. JetBlue has only a
smattering of sales managers scattered across the country; doesn't bother with
a system as advanced as Prism, rather using an internal tool to calculate
discounts and marketshare commitment; has little service to international
business destinations, lacks business class cabins and does not boast exclusive
club lounges.
Acknowledging such shortcomings, Hayes said, "We don't
really position ourselves as a business travelers' airline, but I think the
economy that went belly-up at the end of 2008 spurred new interest in many
corporates—both large and small—to consider traditional low-cost carriers. The
challenge for us is we didn't offer a compelling schedule. What you've seen us
do in Boston, for example, is build up a schedule that is competitive for
business travelers, and Boston is the market where we expect to see the most
traction in terms of getting additional business travel."
JetBlue sales reps across the country are courting what vice
president of sales and distribution Noreen Courtney-Wilds called a "targeted
account list," particularly companies that would spend more than $100,000
annually on JetBlue. While the carrier has sales managers in "focus
markets" including New York—the carrier's hometown—South Florida, the West
Coast and the Washington, D.C., area, Courtney-Wilds said Boston offers the
carrier a different opportunity.
Courtney-Wilds said its corporate contract penetration
remains limited, especially compared with legacy airlines. "We're not in
the couple-hundred mark yet," she said.
"The sales managers' approach is very consultative,"
Courtney-Wilds said. "We go in and talk about the role we can play in
their program. Companies are usually willing to share how much program volume
they have, and we have this tool we use so we can go to them with an offer and
show them where they can move share and save money by flying JetBlue."
Hayes said contract structure depends on the account, but he
said, "We keep it very simple, so we'll offer either discounts or a fixed
rate and expect a certain volume commitment."
Sapient is among the companies that has submitted data to
JetBlue, which is running the numbers "to see what kind of potential there
is," De Costa said. While she said JetBlue is appealing to quite a few of
the company's corporate travelers, she pointed to some of JetBlue's
shortcomings, noting that its frequent flyer program is lacking compared with
the legacies, as is its international network. "We're probably about 60
percent international to 40 percent domestic," she said. "JetBlue
would be a nice fit for our domestic travel, but they don't do much for us on
international."
Courtney-Wilds understands those limitations. "Given
our network footprint, we could never be the number-one preferred anyhow,
because we don't fly to a lot of those international destinations that
companies need. We always have seen ourselves as a niche player in this market
to begin with."
The carrier, meanwhile, has been working to make other
aspects of its product more palatable to corporations, rejoining the global
distribution systems a few years ago, forging interline agreements, partnering
with other carriers and adding perks to its frequent flyer program.
Prior to rejoining the GDSs, the company distributed its
product to corporate buyers exclusively through its CompanyBlue system. "Now
that we have full availability in the GDS and we participate with ARC in
various locations, a lot of companies have shifted to that method."
Courtney-Wilds said. Some larger corporate buyers still use CompanyBlue, but "it's
probably become a little more of a tool for the small and medium size market,
and we are planning in the future to add more benefits to that channel that
probably speak more to the SME market."
"No one has ever really dominated Boston," Ondrus
said. "Because of where it's geographically located, someone's always just
had 25 percent seat share, 18 percent seat share, so it really has always been
a battleground to get a real foothold. US Airways tried it, Delta tried it and
now JetBlue is giving it a shot."
This story was originally published in the July 12, 2010,
edition of Business Travel News.