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STANFORD GRADUATE SCHOOL OF BUSINESS

JETBLUE AIRWAYS: A NEW BEGINNING

CASE: L-17 DATE: 9/13/10

If we were going to change on this magnitude as quickly as we were trying to, we had to involve everybody that did the work in the work.

-Rob Maruster, JetBlue Airways Chief Operating Officer 1

An ice storm bit JFK Airport in New York on February 10, 2010, severely reducing airport capacity for more than 24 hours. The day before the storm hit, JetBlue Airways, based at JFK, had cancelled 386 flights scheduled for the following day, including all 261 flights scheduled to take off from JFK. The cancellation decision was made well in advance, based on weather forecasts-passengers and aircrews were notified up to 36 hours before their flights. Since

passengers on cancelled flights did not come to the airport, the level of stress generally experienced when boarding areas were full of people impacted by cancelled or delayed flights was greatly reduced. The airline adjusted plans for airplanes and aircrews so that it could quickly recover once the storm passed. The next day, operations resumed in an orderly way, although another 138 flights were cancelled. 2 The schedule was completely back to normal two days after the storm.

This was a far cry from the impact of a six-hour ice storm three years earlier. That event, called by some the "Valentine's Day Massacre," had stranded nine JetBlue planes, full of passengers, on the tarmac for more than six hours. The company had delayed making cancellations, hoping the weather would clear, but eventually had to cancel 1,195 flights over a period of six days, costing about $41 million. 3 JetBlue was pilloried in the press and called before Congress-a shocking turn of events for a company predicated on the idea of "bringing humanity back to air travel," and consistently rated as one of the best (if not the best) airline for passenger service.

1 Quotations are from interviews with the author (Hoyt) unless otherwise specified.

2 Cancellation statistics from JetBlue Airways.

3 John Harvey, JetBlue CFO, in "QI 2007 JetBlue Airways Earnings Conference Call-Final," Voxant FD Wire,

A ril 24, 2007.

David Hoyt and Professors Charles O'Reilly, Hayagreeva Rao, and Robert Sutton prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

Copyright © 2010 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: cwo@gsb.stanford.edu or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this 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 the Stanford Graduate School of Business. Every effort has been made to respect copyright and to contact copyright holders as appropriate. If you are a copyright holder and have concerns about any material appearing in this case study, please contact the Case Writing Office at cwo@gsb.stanford.edu.

This document is authorized for use only by Ian Lansberry in MGT-600 Resource Planning and Decision Making 18TW3 taught by Lindsay Conole, Southern New Hampshire University from

January 2018 to April 2018.

JetBlue Airways: A New Beginning: L-17 p.2

The dramatic turnaround was the result of a company-wide effort, involving more than 200 people from all levels and departments, working on 100 cross-functional projects. The initiative,

called "IROP Integrity," not only transformed the way JetBlue addressed disruptive events, or

irregular operations (IROPs), but established a model for large-scale change in the company, and instilled confidence among employees that they could work together to solve even the most challenging problem.

JETBLUE AIRWAYS

JetBlue Airways was founded in 1999 to provide low-cost flights to previously underserved markets. It would use technology both to improve the customer experience and to increase employee and aircraft productivity. The company was founded by David Neeleman, who had

previously cofounded Morris Air, a low-cost airline based in Salt Lake City, Utah, which he sold to Southwest Airlines.4 To balance his visionary leadership as JetBlue's founding chairman and CEO, Neeleman brought in an experienced airline executive with strong operational expertise, David Barger, as the company's chief operating officer.

JetBlue was quickly successful, beating the long odds faced by airlines, particularly airline start­ ups. Of the 51 U.S. airlines that were founded in the 1980s,just two were still operating by the