WEBVTT - Jetblue CEO Joanna Geraghty Talks Premium Push

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Jet Blue planning to expend its first class offerings in

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<v Speaker 2>twenty twenty six as passengers continue to pay up for

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<v Speaker 2>premium options. The carrier also cutting capacity to increase fares

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<v Speaker 2>and focus on East Coast leisure destinations. Joining us now

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<v Speaker 2>to discuss is the Jet Blue CEO Joanna Garretyanna, good

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<v Speaker 2>to see you.

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<v Speaker 3>Thanks thanks for having me.

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<v Speaker 2>The demand for premium is through the roof and a

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<v Speaker 2>lot of people are trying to provide the capacity for it.

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<v Speaker 2>What gives you the impression the confidence that that demand's

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<v Speaker 2>going to stick around?

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<v Speaker 4>I mean, Jet Blue has been doing premium for ten years.

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<v Speaker 4>We introduced our Mint product ten years ago. This is

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<v Speaker 4>just continuing to round out the suite of products that

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<v Speaker 4>we have. We have a great coach experience, we have

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<v Speaker 4>even more space Mintlifelat and now more of a domestic

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<v Speaker 4>Mint and domestic business class seat that we're going to

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<v Speaker 4>be introducing in twenty twenty six. Very excited to bring

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<v Speaker 4>it to customers and leisure markets.

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<v Speaker 2>Food is best in class. Say on your behalf, I've

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<v Speaker 2>done the flight in Mint to California and to London

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<v Speaker 2>as well. Where does that come from. How expensive is

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<v Speaker 2>it to provide that kind of product?

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<v Speaker 4>Yeah, I mean, we really look to provide a differentiated

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<v Speaker 4>experience and we lean in on certain areas. So food

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<v Speaker 4>has been an area that we focus on. Comfort is

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<v Speaker 4>another area that we spend a lot of time with.

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<v Speaker 4>We have a great, a great partnership with Tought and Needle,

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<v Speaker 4>and as we think about our new domestic first class,

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<v Speaker 4>comfort is going to be the area that we lean

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<v Speaker 4>in on there as well, with some interesting features of

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<v Speaker 4>our seat product that provide a bit more comfort to customers.

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<v Speaker 1>How difficult is it to thread a needle with the

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<v Speaker 1>likes of business class Given the fact that Jet Blue

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<v Speaker 1>traditionally has been an airline that caters to pleasure travel,

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<v Speaker 1>sure to the idea of traveling with the family to

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<v Speaker 1>warm places in the winter time. How much does that

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<v Speaker 1>kind of create a conflict for you?

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<v Speaker 4>You know, we don't think it creates a conflict because

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<v Speaker 4>everybody's a leisure customer and when you think about what

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<v Speaker 4>you like to do on a vacation, sometimes you want

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<v Speaker 4>an elevated travel experience as well. So we want to

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<v Speaker 4>make sure that we have an offering for every type

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<v Speaker 4>of leisure customer. One of the things we have done

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<v Speaker 4>recently is kind of retrenched in the Northeast, really focusing

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<v Speaker 4>on serving the best leisure markets out of the Northeast Europe,

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<v Speaker 4>the West Coast down in the Caribbean, and there's a

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<v Speaker 4>real market for that premium seat.

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<v Speaker 1>I guess another way to say this is businesses are

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<v Speaker 1>willing to pay more on their expense accounts than individuals,

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<v Speaker 1>especially when they're going on vacation. How difficult is it

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<v Speaker 1>to charge the rates that make it worthwhile given the

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<v Speaker 1>fact that as people going on vacation and they typically

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<v Speaker 1>have bledgets.

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<v Speaker 4>We're not focused on charging rates at are akin to

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<v Speaker 4>what a business customer and a business would charge. We

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<v Speaker 4>really want to make the premium experience affordable to leisure customers.

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<v Speaker 4>When we introduced min ten years ago, we did just that.

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<v Speaker 4>We reduced fares to the West Coast, we introduced a

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<v Speaker 4>better product, a better service, and that's what we're looking

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<v Speaker 4>to do here. It's really important for jet Blue to

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<v Speaker 4>make sure that we have affordable fares and that all

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<v Speaker 4>of our products are accessible to the leisure customers. So

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<v Speaker 4>that's the customer that we're targeting. Somebody willing to pay

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<v Speaker 4>a bit more, but not at the size that you

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<v Speaker 4>would for a business.

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<v Speaker 1>You've been tasked with turning around the balance sheet of

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<v Speaker 1>jet Blue, and you've made progress in that front. You

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<v Speaker 1>just reported earnings that were positive and really pointed toward

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<v Speaker 1>progress in that How much.

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<v Speaker 3>Are you able to.

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<v Speaker 1>Raise prices at a time where you see increasing consumer pushback,

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<v Speaker 1>but at the same time there seems to still be

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<v Speaker 1>that ongoing demand for travel.

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<v Speaker 4>There's very healthy demand in the peak and that's where

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<v Speaker 4>leisure travel is great. So as we think about, you know,

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<v Speaker 4>the holidays, we think about the summer time frame. You know,

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<v Speaker 4>that's where I think Jet Blue does its best because

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<v Speaker 4>we fly to some of these great destinations. Troughs are

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<v Speaker 4>definitely more challenging. We've seen some pricing pressure in the troughs.

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<v Speaker 4>We've reduced a lot of flying in the trough So

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<v Speaker 4>it's really about balancing out that year and making sure

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<v Speaker 4>that you know, when demand is high, you're focused on

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<v Speaker 4>trying to capture your share of that demand and in

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<v Speaker 4>the troughs, really reducing the losses.

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<v Speaker 1>So do you expect to increase fares this year?

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<v Speaker 4>We're hopeful that we can keep fares affordable that reflect

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<v Speaker 4>the costs of service. It's more expensive to travel now

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<v Speaker 4>because there are costs. Airport costs have gone up, labor

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<v Speaker 4>costs have gone up, so there's meaningful inflationary pressure for

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<v Speaker 4>the airlines as well. Our great food comes at a cost.

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<v Speaker 4>When you start seeing the grocery costs go up, that

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<v Speaker 4>means the food in an aircraft is going to go

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<v Speaker 4>up too. So we're really trying to balance it and

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<v Speaker 4>make sure that relative to the other travel out there,

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<v Speaker 4>that Jet Blue is an affordable fare for customers, inaccessible

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<v Speaker 4>for a leisure customer.

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<v Speaker 5>Well, there's also been other constraints on the air industry

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<v Speaker 5>when it comes to getting the parts they need, comes

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<v Speaker 5>to actually getting the planes they need to fly. And

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<v Speaker 5>then next year a lot of people are talking about,

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<v Speaker 5>well we might get tariffs and potentially that might impact

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<v Speaker 5>the supply chain.

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<v Speaker 3>How are you preparing for all of that?

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<v Speaker 4>Yeah, I mean jeb Blue has a unique situation with

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<v Speaker 4>Pratt and Whitney. Right now, we have a number of

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<v Speaker 4>aircraft sitting on the ground that we're paying for, but

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<v Speaker 4>we're not able to fly because they're due for an

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<v Speaker 4>engine inspection and there's not enough capacity to do those inspections.

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<v Speaker 4>So that's definitely a headwind for Jet Blue as you

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<v Speaker 4>think about tariffs, it's a bit too soon to tell.

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<v Speaker 3>I think the good news for Jebl's.

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<v Speaker 4>We take a lot of our aircraft from Alabama, but

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<v Speaker 4>you know, depending on how tariffs get put in. We

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<v Speaker 4>do have exposure in Europe and in Canada because some

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<v Speaker 4>of our aircraft come from there.

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<v Speaker 5>Of course, the Jet Blue Spirit Airlines potential merger was blocked.

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<v Speaker 5>Are you potentially thinking about going at it again in

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<v Speaker 5>the next four years in this space more mergers and

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<v Speaker 5>acquisitions because there might be a lighter regulatory touch in.

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<v Speaker 3>Washington, d C.

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<v Speaker 4>We're really focused on delivering our new plan, Jet Forward.

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<v Speaker 4>We want to see Jet Blue thrive as a successful

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<v Speaker 4>standalone company. We have a brand that customers love, We've

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<v Speaker 4>got a great product, a great service. We're focus on

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<v Speaker 4>flying in the places that people know us. So we're

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<v Speaker 4>really focused on our standalone plan Jet Forward right now.

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<v Speaker 5>Okay, so you might not dip your toes back into

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<v Speaker 5>that space, but do you think that this is going

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<v Speaker 5>to be a more welcoming administration when it comes to

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<v Speaker 5>things like mergers and acquisitions.

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<v Speaker 4>It's hard to speculate because we don't know exactly what

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<v Speaker 4>the complain's going to be, but it's hard to see

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<v Speaker 4>an administration that's going to be worse than the administration

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<v Speaker 4>we had around antitrust.

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<v Speaker 1>In the meantime, you have announced a number of changes

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<v Speaker 1>in terms of the jet Forward, including closing down certain

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<v Speaker 1>operations in a number of cities.

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<v Speaker 3>I believe that they are.

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<v Speaker 1>Going to cut You're going to cut some fifty routes.

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<v Speaker 3>Correct. Is it done?

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<v Speaker 1>Are there more to come?

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<v Speaker 4>The network is always something that's evolving. So the majority

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<v Speaker 4>of the changes are done. But you know, we're not

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<v Speaker 4>going to rest on our laurels. If a particular market

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<v Speaker 4>is not producing results, then we're going to take a

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<v Speaker 4>good hard look at it see if we can improve it,

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<v Speaker 4>and if not, then we're going to point those planes

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<v Speaker 4>to a place where we can make money.

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<v Speaker 3>We've got to become.

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<v Speaker 4>Profitable, and part of that has made maybe need to

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<v Speaker 4>make some tough to say decisions.

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<v Speaker 2>I've got to follow up. Have you spoken too the

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<v Speaker 2>incoming administration.

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<v Speaker 3>We have not spoken to an incoming administration.

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<v Speaker 2>Planet to go down to marri Lanka anytime soon, like

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<v Speaker 2>the pilgrimage.

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<v Speaker 4>Right now, I'm focused on holiday travel. We have one

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<v Speaker 4>hundred and fifty thousand customers a day.

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<v Speaker 3>Flying is a great place over the holiday, the sun

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<v Speaker 3>for the holiday.

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<v Speaker 2>You can combine the two.

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<v Speaker 3>What do we call that?

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<v Speaker 4>Work?

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<v Speaker 2>Patience, leisure, pleasure? Leisure pleasure? Yeah, leisure, Okay, Leizia. You

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<v Speaker 2>seeing a lot of pleasure.

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<v Speaker 3>We see a lot of leisure. We see a lot

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<v Speaker 3>of leisure over the holidays too.

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<v Speaker 4>Though. We're just really happy to be a part of

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<v Speaker 4>connecting people with their families.

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<v Speaker 3>Over over the whole.

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<v Speaker 2>What does it only look like that one hundred.

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<v Speaker 4>And fifty thousand people a day over the Christmas holiday,

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<v Speaker 4>we've got about a thousand flights a day, and you know,

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<v Speaker 4>it's amazing when you think what airlines do and the

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<v Speaker 4>magic that we can deliver to customers, reuniting their families

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<v Speaker 4>and making that great experience. It'll be busy, it'll be tough,

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<v Speaker 4>and my hope is that everybody can be patient and

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<v Speaker 4>a little kinder.

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<v Speaker 2>If you're asking for patients, does that mean they're going

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<v Speaker 2>to be delays? How does this snack cut?

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<v Speaker 4>Oh, you've teed that one up perfectly delays. I wish

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<v Speaker 4>this administration would focus more on air traffic control and

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<v Speaker 4>that it's definitely been a meaningful pressure to Jet Blue

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<v Speaker 4>to all airlines. When we think about this next administration,

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<v Speaker 4>that is a real focus area for JetBlue.

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<v Speaker 2>What would you like to see change?

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<v Speaker 3>What would they do to.

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<v Speaker 4>See more hiring. I'd love to see better technology and

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<v Speaker 4>ultimately improving the amount of delays that come out of

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<v Speaker 4>the air traffic control system in New York in particular,

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<v Speaker 4>which is the hardest hit.

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<v Speaker 2>We don't like to say the same thing now one

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<v Speaker 2>what's delays? Did they pram up?

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<v Speaker 1>You're talking to the choir I've had? Well, okay, Honestly,

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<v Speaker 1>going to Florida is the hardest though. I have to

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<v Speaker 1>be honest, because there's always weather. There are winds that

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<v Speaker 1>come up. There's a random storm that comes up, and

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<v Speaker 1>some people get delayed for a long period of time

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<v Speaker 1>and they sit there and then their complane gets canceled

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<v Speaker 1>and they take go on vacation with the family.

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<v Speaker 3>CEOs can't control the weather, though.

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<v Speaker 5>But what is interesting is we have here an airline

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<v Speaker 5>CEO saying they want the FAA to hire more. The

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<v Speaker 5>incoming administration is talking about dog deifying the government.

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<v Speaker 2>It's true, Well, hopefully do not.

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<v Speaker 3>Talking about air traffic controllers. We are grossly.

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<v Speaker 4>Understaffed, and at the end of the day, those delays,

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<v Speaker 4>even with weather, we should be able to have a

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<v Speaker 4>more resilient aviation air traffic control system with weather.

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<v Speaker 3>That is just something that we have to deal with.

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<v Speaker 1>Just pause for a second. Are you saying that all

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<v Speaker 1>those delays it's not because of weather.

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<v Speaker 4>It's just some of the delays are definitely because of weather,

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<v Speaker 4>but they are exacerbated because we are significantly understaffed among

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<v Speaker 4>air traffic I.

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<v Speaker 2>Never trust the excuse. You've got a problem with trust

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<v Speaker 2>as well. I never trust it. I never trust it.

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<v Speaker 3>They know it's actually going on.

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<v Speaker 1>And actually, to Joanna's point, there is a problem.

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<v Speaker 3>With their traffic.

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<v Speaker 2>The stuff's missing.

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<v Speaker 5>I think you can actually see how bad the weather

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<v Speaker 5>is and you're thinking show and it's the weather.

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<v Speaker 2>But sometimes you look outside the sky is blue, the

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<v Speaker 2>sun is shining, and they're.

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<v Speaker 3>Like air traffic control blazing.

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<v Speaker 2>Yeah, that's a problem. The pilots missing went out the

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<v Speaker 2>night before.

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<v Speaker 3>Who knows, that's jan but that does not happen.

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<v Speaker 2>That doesn't have to checks. Just to be very clear, okay, Joanna,

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<v Speaker 2>it's going to say thank you, appreciate time. Thank you