How JetBlue Is Challenging American, United and Delta - YouTube

In less than two decades, the New York City-based airline has gone from a quirky start-up to a major mainstream player

It is now the fifth-largest U.S. airline by passengers carried

And its network stretches from Maine to Peru

But 2018 was a rough year for JetBlue

Its stock tanked nearly 30 percent

The airline laid off workers at its corporate headquarters to cut down on costs

And it struggled to reconcile the impact of huge fuel bills and investments like expensive cabin upgrades

which aimed to fit more travelers on board and update amenities

We're exiting that awkward, teenage phase and becoming adults

I think you'll see a big emphasis on doubling down on those points of strength

And then I also think, you know, at 20 years old we need to refresh some things so our fleet

The airline now has to prove it can grow in the big leagues and keep a lid on costs while it does it

JetBlue is a unique operation whose quirky roots won it a loyal customer base

It's trying to hold on to that reputation as it goes even more mainstream in order to compete with the biggest players

To understand why, let's go back to JetBlue's start

JetBlue burst into the air travel market in 1999, promising to shake things up

The New York-based airline was the brainchild of Brazilian-born airline entrepreneur David Neeleman

He founded JetBlue with lofty promises: low fares and a flying experience that would "bring humanity back to air travel"

And JetBlue did stand out

JetBlue had a fleet of brand new Airbus A320 jets

outfitted with leather seats and seat back screens that offered satellite television on all of its planes

That was revolutionary for a U.S. airline at the time

And there was only one class of service: coach

It set up a hub at John F. Kennedy International Airport in New York

And launched its very first flight to Fort Lauderdale, Florida, on February 11th, 2000

Its spunky energy and aggressive marketing helped it stand out

JetBlue executives also had a keen awareness of a major passenger demographic

Travelers who were visiting friends and family outside of the continental U.S.

Those travelers counter the ebbs and flows of leisure and business travel

JetBlue sponsored events and ran brand-awareness campaigns to drum up interest in flying the new carrier to places like

Puerto Plata in the Dominican Republic and San Juan, Puerto Rico

JetBlue had not only pitted itself against the biggest carriers in the U.S. but against entrenched low-cost king Southwest

Despite the competition, customers loved JetBlue

Despite the competition, customers loved JetBlue Not long after it started flying, JetBlue wanted to go public

Not long after it started flying, JetBlue wanted to go public

Its executives aimed to IPO in the fall of 2001 but the September 11 terrorist attacks delayed that plan

Its plan also came amid a recession when a lot of U.S. airlines faced slumping sales

as passengers avoided air travel in the aftermath of the attacks

It ended up listing on NASDAQ in April 2002, just over two years after it started flying

It was initially a success

Its stock rose 47% in 2003 alone, but it later struggled

Shares hit their stride in the mid 2010s, as the U.S. was recovering from the Great Recession

In 2004, JetBlue entered international markets when it launched service to the Dominican Republic

As low-cost airlines grew, larger and more traditional rivals took note

and they debuted their own offshoots to compete with JetBlue and other budget airlines like Southwest

Delta and United both attempted this, and both failed

By the end of 2012, JetBlue was serving 75 destinations with a fleet of 180 jets

The airline that started out as a fun, no-fuss, alternative to big carriers, then started going after business travelers

In 2014, JetBlue launched Mint: its first business class and the first time it had more than one class of service on a plane

The seats could recline into a small flat bed and passengers were given more options for dining

The price started at around $600 one way, a fraction of the going rate on other airlines

And keep in mind, business class seats are a huge moneymaker for airlines

Premium seats, like business class, count for 30% of international passenger revenue

even though they just make up 5% of all flyers

So Mint gives JetBlue a real edge against its biggest competitors

But JetBlue's rapid growth has also met with several challenges from impatient investors, two recessions

and operational problems that resulted from its fast expansion

One of its biggest operational flops came in February 2007

JetBlue's bungled response to an ice storm that hit the Northeast stranded passengers for days

Travelers sat on aircraft for more than seven hours

The airline was late and canceling flights, adding to the chaos because pilots and flight attendants were not ready to restart operations

Neeleman, JetBlue's founder and then-CEO, told The New York Times he was humiliated and mortified

He issued a long apology to customers and introduced a passenger's bill of rights

that set compensation for when flights are delayed or canceled

The board ousted Neeleman from the CEO role three months later

The incident sparked new federal rules that fine airlines for passengers that are left on planes on the tarmac

Airlines now face fines of nearly $28,000 per passenger if they're left on planes on the tarmac for more than three hours

I think the customer has a much bigger voice now

So when JetBlue was founded back in '98, there wasn't the Internet, or it was very early stages

and customers didn't have a way to really communicate what they expected publicly about their air travel

We think feedback is a gift and we value it from our customers

We were one of the first carriers to take to Twitter and embrace it as a communication tool and a customer recovery tool

Eager for a bigger piece of the West Coast, JetBlue in 2016 made a bid for rival Virgin America

But its Seattle-based competitor Alaska Air Group won out

Also in 2016, JetBlue set out on an aggressive cost-cutting program

to slash expenses by up to three hundred million dollars a year by 2020

As part of that plan, the airline let go dozens of office employees in layoffs and buyouts

In 2018, the airline continued to struggle with on-time arrivals, a trend it chalks up to flying into congested airports in big cities

Late-arriving planes and other disruptions could mean higher costs for the airline and a bruised reputation

Despite these setbacks, JetBlue's business model has proven resilient

It's continued to expand, adding new destinations like Bogota, Colombia

as well as more business routes from big hubs like Boston

A nod to its tech-focused routes, JetBlue has a venture capital arm that has invested in electric aircraft startups

and travel booking platforms among others

In 2018, JetBlue said that it's adding a stripped down version of coach which does not come with a seat assignment

and other perks known as basic economy

Delta, United and American already offer that class

JetBlue is also expanding Mint as fast as it can and is considering starting service to Europe

But even with these changes, JetBlue's shares lost 28% in 2018, which was more than the industry average

That same year, an index of 15 airline stocks, including JetBlue's competitors, dropped 22%

Investors are worried about how the carrier and its competitors can raise revenue and keep a lid on costs

The newly designed cabins started to enter JetBlue's fleet in May 2018, after delays with suppliers

Its pilots unionized in 2014 and its flight attendants followed suit in 2018, promising to drive up labor costs

Sure, every company evolves and we aren't who we were back in 1998, 1999

And so as you evolve, you have to be willing to make tough decisions

but you have to make them in a smart way that protects your customers, protects your crew members

And I think we've been willing to make those decisions

with the crew member being kind of center and recognizing that it really is the core of delivering that experience

Higher fuel prices took a toll on JetBlue, as they did the rest of the industry

As of January 2019, its international destinations were limited to Mexico, Central America, the Caribbean

and a handful of countries in South America

JetBlue has said it's considering adding trans-Atlantic service

And the airline has planes on order that can make the trip from New York to London

Some analysts have said JetBlue could open itself up to a bid from one of the big three airlines

But for now, JetBlue is still clinging to its plans to aggressively cut costs and expand its list of destinations

Investors and customers alike will be waiting to see whether the startup-turned-mainstream airline is able to make it happen