JetBlue Airways Corporation, a low cost airline, has been serving the air traveling public with enhanced customer service and better than average on-time rankings for the past several years. The market as a whole, however, has been struggling with fuel costs and the realities that they bring. Current oil prices have been hovering near $100 per barrel and are likely to go significantly higher in the longer term. Currently, JetBlue is pegging their 2008 jet fuel costs at $2.55 per/gal., a 21.8% increase from 2007.
The company has recently announced it does not believe that the business model, currently in place, for low cost airlines works in an environment of higher fuel prices. With this in mind, the company has instigated talks with Lufthansa Airlines to coordinate routes and take advantage of purchasing power. The company has also indicated that it will service fewer new routes in a manner consistent with given conditions.
JetBlue has also begun to address other cost issues. Pilot replacement, as the current pilot demographic ages, is a looming issue. The need to fill the plane’s pilot seats is a real concern but also one that will reduce costs as newer pilots offer lower cost. To accomplish this task the company is introducing a pilot professional track of sorts. The program is designed to work with aspiring pilots, in their college aged years, to help them see a definitive professional track for their piloting skills.
Interestingly enough, the ability to offer a lower than expected loss for the quarter and year has yielded activity in the company’s stock price. This activity is small by any measure, but activity nonetheless considering that none of the lower cost airlines has posted a profit. Currently, future prospects for a profit are the driving force for this and other lower cost airlines. JetBlue may have a little bit of a monkey on its back with recent public relations gaffs but in general appears to be holding its own in very difficult economic conditions. Thankfully for all concerned, seat miles continue to stay up and fuel surcharges accepted.
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