Jetblue Airways Starting from Scratch

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HARVARD

BUSINESS

SCHOOL

9-801-354 REV: OCTOBER 29. 2001

JODY HOPPER GITTELL CHARLES O'REILL Y

Where have you heard this before? We're starting tickets and go to the big cities.'

a new low-fare airline.

We're going to offer low-fare

-Financial
If you want to be a millionaire, start with a billion dollars and launch a new airline: -Richard Branson, Founder, Virgin

Analyst

Atlantic

Airways

Keep an eye on ]etBlue.

That could prove to be a successful operation.3 -Herb Kelleher, Co-founder,

CEO, Southwest

Airlines

Ann Rhoades looked up from the stack of papers in front of her and gazed out the window. She watched with pride as a JetBlue plane lifted off from Kennedy Airport. She knew from the departure time that this one was bound for Buffalo. She paused for a moment to reflect on what had been a very exciting year for the start-up. JetBlue's service had grown from 9 departures per day at launch in February 2000 to more than 50 per day in the past 11 months. The fleet had grown from 2 planes to 10 with the arrival of one new Airbus A320 every five weeks (se4~ Exhibit 1 for first year growth). The business plan called for adding 10 new planes every year thrOllgh the end of 2003, bringing the fleet to 40.

Rhoades,Executive Vice President for People, had been extremely busy -growing the JetBlue team from the original 10 people to almost 1000. She knew that she would continue to add approximately 100new "crew members" with the arrival of every Ilew airplane and that, if they hit their plan, JetBluewould employ nearly 5000people within the next 4 years. Shewas charged with achieving this rapid growth while building a values-based, high conunitment organizational culture. Her experienceas head of human resourcesfor Southwest Airlines from 1988to 1994provided Rhoadeswith both appreciation for the challenge and expertise to meet it. She was committed to attracting, developing and retaining outstanding people who could make the JetBlue concept a reality. Still, she recognized that JetBlue'sexpansion goals were more aggressivethan any she had met before.

ProfessorJody Hoffer Gittell and ProfessorCharles O'Reilly of Stanford University Graduate BusinessSchool prepared this casein cooperation with the Global Airline Industry Program at the MassachusettsInstitute of Technology. HBS casesare developed solely as the basis for class discussion.Casesare not intended to serveas endorsements, sourcesof primary data, or illustrations of effective or ineffective management. Copyright @2001President and Fellows of Harvard College. To order copiesor requestpermission to reproduce materials, call 1-800-545-7685, write Harvard BusinessSchool Publishing, Boston, MA 02163,or go to http:/ /www.hbsp.harvard.edu. No part ofthis publication may be reproduced, stored in a retrieval system, used in a spreadsheet,or transmitted in any form or by any means-electronic, mechanical, photocopying, recording, or otherwise-without the permission of Harvard BusinessSchool.

801-354

JetBlue Airways: Starting from Scratch

Birth of an Airline
JetBlue was the best-funded start-up in U.S. aviation history, founded in early 1999 with an initial capitalization of $130 million. JetBlue's strategy was to combine common sense with innovation and technology to "bring humanity back to air travel." To accomplish this, JetBlue aimed to be the first "paperless" airline, substituting computers and information technology for everything from flight planning to aircraft maintenance to the sole use of e-tickets. But the company wasn't only about efficiency, it was also focused on service. In the words of founder David Neeleman, "We like to think of ourselves as customer advocates. We believe that all travelers should have access to high quality airline service at affordable fares."4

Brave words in the face of the depressingreality that of the 51 U.S. airlines founded during the 1980s, only two, America West and Midwest...
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