Speaker 1: I am so pleased. So today I am sitting down
Speaker 1: with someone who really has seen quite a transformation. Joanna Garrity,
Speaker 1: who is the CEO of Jet Blue joining us here,
Speaker 1: and you've been at this company for almost two decades.
Speaker 1: You became CEO in February. You previously were chief operating officer.
Speaker 1: This has been a company that's gone an incredible transformation.
Speaker 1: Can you just describe what that transformation of identity has
Speaker 1: been like?
Speaker 2: You know, thanks for the question. You know, Jeff Blue,
Speaker 2: our mission has always been about bringing humanity back to
Speaker 2: air travel, and I think we continue to do that
Speaker 2: to this day. We've definitely had a number of challenging
Speaker 2: items over the last few years of field transaction, actually
Speaker 2: filed two transactions, but we're focused on getting back to
Speaker 2: the core, our roots. What makes jef Blue unique special
Speaker 2: being that carrier for so many different customers who want
Speaker 2: to fly to leisure out of the Northeast, into the Caribbean, Florida,
Speaker 2: you name it. But really remembering that at the heart
Speaker 2: of what we do is delivering great service. We've got
Speaker 2: great people and that's what sets jeff Blue apart.
Speaker 1: The reason why I ask is because you made some
Speaker 1: news to you talked about opening lounges at JFK in
Speaker 1: New York City as well as in Boston's Logan Airport,
Speaker 1: some plans to potentially open up others in Orlando, in
Speaker 1: Fort Lauderdale, and it made me think the idea of
Speaker 1: lounges caters to a premium, well healed customer, how does
Speaker 1: that fit into the transformation?
Speaker 2: Yeah, I think most probably don't realize that, Jeff Blue.
Speaker 2: Actually it's about twenty five percent of our seats are premium,
Speaker 2: between our even more space seats and our Mint product,
Speaker 2: and this has been something that customer has been asking
Speaker 2: for for quite some time, and so we're dipping our
Speaker 2: toe into the water Boston JFK. The lounges are going
Speaker 2: to be designed around a more bespoke personal experience, play,
Speaker 2: live work, and really focusing on how do we address
Speaker 2: what our customers have asked for. Transatlantic customers will be
Speaker 2: able to go into the lounges as part of their
Speaker 2: ticket our mosaic for customers, so some of our most
Speaker 2: loyal will also have access along with our customers who
Speaker 2: are going to sign up for our new Premier card
Speaker 2: that we're launching later this year. But We're focused on
Speaker 2: making sure there's no long lines and it's something that
Speaker 2: customers actually want to joy before they fly.
Speaker 1: Okay, let's just talk about how many lounges you're talking
Speaker 1: about building out. I mean, is it's the beginning of
Speaker 1: fifteen lounges all around the world. You're talking about London,
Speaker 1: You're talking about New York. Are you talking about Let's
Speaker 1: see how it goes?
Speaker 2: Ye, how it goes. I think if you look at
Speaker 2: what we did with Mint when we introduced it across
Speaker 2: the United States, you know, about years ago, we were
Speaker 2: very thoughtful about how we stepped into it. We want
Speaker 2: to make sure that it's what customers want, but we
Speaker 2: also want to make sure it's affordable. And lounges are
Speaker 2: expensive to build them out, to operate them. So we've
Speaker 2: got to be very thoughtful because low fares are an
Speaker 2: incredibly important part of what JetBlue delivers to customers, and
Speaker 2: we need to keep it that way.
Speaker 1: Well, that's what I was going to ask. I think
Speaker 1: about lounges and premium seats as often catering to a
Speaker 1: corporate customer. How do you cater to the leisure customer
Speaker 1: with these types of perks that cost money at a
Speaker 1: time when you're really known for care catering to value
Speaker 1: for people like myself who have gone to the islands
Speaker 1: with the kids and pack it all up and it's exhausting,
Speaker 1: but they can get sunships, so everybody's happy.
Speaker 2: Sure. I think what most don't realize is our loyalty
Speaker 2: program and becoming a Mosaic four is actually quite accessible.
Speaker 2: So unlike some of the larger carriers where you have
Speaker 2: to be a true road warrior to take advantage of
Speaker 2: some of the perks, that's not the case at JetBlue.
Speaker 2: You book a couple of vacations a year on Jet
Speaker 2: Blue and depending on the flight spend, you might actually
Speaker 2: qualify as a Mosaic four and that gives you a
Speaker 2: rite into a lounge, which I think is unique and
Speaker 2: sets us apart. There's this huge population of people who
Speaker 2: fly a lot, but not enough to probably qualify to be,
Speaker 2: you know, the top, top top tier at some of
Speaker 2: the other airlines, and we want to be there for them.
Speaker 2: We know we can do it. In terms of the
Speaker 2: on board service, we do it today, free Wi Fi.
Speaker 2: We've been doing it for ten years. You can stream,
Speaker 2: you can play games, snacks, you know, great leg room,
Speaker 2: and I think we're uniquely situated to do this.
Speaker 1: You know, since the pandemic, people have talked about how
Speaker 1: a lot of airlines that have catered to a wealthier
Speaker 1: individual have been more resilient. They've been actually been able
Speaker 1: to withstand some of the turmoil post pandemic. During the
Speaker 1: pandemic has been a surprising trend that has stuck that
Speaker 1: people are willing to spend money to go have extra
Speaker 1: leg room, for a premium seat, even slightly better food.
Speaker 1: How resilient is that trend? Is that here to stay and.
Speaker 2: Why we've been seeing the premium trend for the last
Speaker 2: ten years. It's why we introduced Mint several years ago.
Speaker 2: But we want to be careful about it because we
Speaker 2: don't have the road warrior customer, but we know we
Speaker 2: have a high value leisure customer. And so when I
Speaker 2: think about the girls trip to Caribbean, you know you
Speaker 2: want a special experience. You want you know, a fun drink,
Speaker 2: you want a little extra leg room, you want to
Speaker 2: be able to stream on your phone. Those are things
Speaker 2: that we can offer and there's a great customer demographic
Speaker 2: to do that. But we also have to remember some
Speaker 2: customers don't want those perks and low fares are a
Speaker 2: real priority, so we want to balance it all. You know,
Speaker 2: an aircraft is a tube, and we think that there's
Speaker 2: a whole bunch of different things we can offer within that.
Speaker 2: But you know, you have to be mindful of how
Speaker 2: many customers, how many customers you're going to cater to
Speaker 2: in each section of the aircraft.
Speaker 1: How expensive are these lounges.
Speaker 2: So we haven't gotten into costs. You know, we're not
Speaker 2: talking about that publicly, but we're going to do it
Speaker 2: in a very affordable way and it's very much tied
Speaker 2: to our train Atlantic service, our co brand partner, as
Speaker 2: well as customers who want to pipe by day passes
Speaker 2: that are part of our mosaics.
Speaker 1: You mentioned the credit card that you're going to be unrolling,
Speaker 1: and I've seen this with Delta and United and how
Speaker 1: the credit card has been the key component of a
Speaker 1: lot of resilience and profitability. Do airlines now have to
Speaker 1: be credit card companies to survive?
Speaker 2: I don't think they need to be credit card companies
Speaker 2: to survive, but it definitely helps. Listen to credit card
Speaker 2: that is associated with an airline keeps the brand top
Speaker 2: of mind when you take it out to buy a
Speaker 2: meal and you get points on Jet Blue. That's something
Speaker 2: that reminds you that those points are there to earn
Speaker 2: travel for your next experience. And so from our perspective,
Speaker 2: we have a great credit card program, a great partner
Speaker 2: in the form of Barclays and MasterCard, and it's something
Speaker 2: that we know we have opportunity to continue to grow.
Speaker 2: Tied to our loyalty program, we also get points on
Speaker 2: vacations with Jet Blue and that's something unique avis as
Speaker 2: well rental cars. So we like how we've designed the
Speaker 2: program really around the leisure customer and the perks that
Speaker 2: they want as part of that program.
Speaker 1: So you haven't transformed any of the locations that Jet
Speaker 1: Blue flies to in terms of spreading out beyond just leisure.
Speaker 1: Is that really still the focus?
Speaker 2: So right now we're focused on really trying to make
Speaker 2: sure that we're growing our points of strength. So our
Speaker 2: focus is being the best East Coast leisure network Boston,
Speaker 2: New York, the surrounding cities down to Florida, the Caribbean.
Speaker 2: We've got some great transatlantic flights. We definitely have to
Speaker 2: make sure in this world where we're not growing as
Speaker 2: much that the places that we fly earn their way
Speaker 2: into the network, so we've moved some unprofitable flying out.
Speaker 2: We've actually pivoted pretty significantly back into the Northeast and
Speaker 2: really doubling down and offering a great schedule and great
Speaker 2: network for customers here.
Speaker 1: There have been a number of changes. In February, carl
Speaker 1: Icon took a ten percent stake or just under that
Speaker 1: in jet Blue and it has two board seats that
Speaker 1: he has filled. How many of these changes are coming
Speaker 1: with his urging, So.
Speaker 2: This is very much a plan that Jet Blue has
Speaker 2: had in place. We've been working it for the last
Speaker 2: year as we were kind of cycling through the Spirit transaction.
Speaker 2: The carl Icon board members have been very construc and
Speaker 2: we all feel very strongly that we need to become
Speaker 2: profitable again, and we need to remember that we have
Speaker 2: these tremendous strengths that we need to drive more value
Speaker 2: out of.
Speaker 1: You mentioned that Spirit deal. You mentioned a couple of
Speaker 1: deals that have fallen through. We did see Alaska and
Speaker 1: Hawaiian tie up. Are you still out there looking to
Speaker 1: consolidate or are you just basically saying that's enough, We're done.
Speaker 2: We've got a great brand we've got a great organic plan.
Speaker 2: We're focused on delivering the organic plan. Going through a
Speaker 2: transaction can take its toll on an organization. It also
Speaker 2: creates a level of distraction, and so we're very much
Speaker 2: focused on executing our Jet Forward plan and bringing Jet
Speaker 2: Blue back to what it was when we were founded
Speaker 2: around bringing humanity back to air travel.
Speaker 1: Is there a certain critical mass, so a certain economy
Speaker 1: of scale that's required in a world where the overhead
Speaker 1: is getting more fickle and more volatile, and frankly, a
Speaker 1: lot of people, the staff actually are a lot more expensive.
Speaker 2: I think scale matters. We're trying to build that scale
Speaker 2: with art within our core geography. So again, if you
Speaker 2: look at what we're doing in the Northeast, it's building
Speaker 2: scale and schedule in depth in the Northeast, in the Caribbean,
Speaker 2: in Florida, And that's our focus is if we can't
Speaker 2: build scale on a national level, let's build scale and
Speaker 2: the geographies where there are high populations of people, where
Speaker 2: our brand is well known, where customers love the experience,
Speaker 2: and where we can deliver a great leisure offering to customers.
Speaker 1: There's a question right now about how long we can
Speaker 1: remain in this cycle where people can really lean into
Speaker 1: the Instagram moment, and I'm wondering how much you see
Speaker 1: ongoing spending or whether some of the new offerings really
Speaker 1: reflect the fact that spending has been strong in the
Speaker 1: upper income tier and has been tapering off in people
Speaker 1: who are looking more for just value.
Speaker 2: You know, customers definitely look for value, and we need
Speaker 2: to be there for them, which is why low fares matter.
Speaker 2: But we also know customers value experiences too, and we're
Speaker 2: continuing to see strength in interests in those experiences and
Speaker 2: we want to be the airline to do it for
Speaker 2: the leisure customer.
Speaker 1: Do you need to increase prices significantly to keep up
Speaker 1: with the pace of how much things are increasing, especially
Speaker 1: given you know some of the renewed contracts and how
Speaker 1: you know the overhead costs have reportedly gotten significantly more expensive.
Speaker 2: We're definitely seeing labor costs increase, and it's important we
Speaker 2: want to pay our people for the service they deliver.
Speaker 2: They're an important part of the Jet Blue product. They're
Speaker 2: what differentiates us. But we also have to be mindful
Speaker 2: that we have to keep our costs in check, and
Speaker 2: that's always been a key priority for Jet Blue. Because
Speaker 2: low costs drive lower fares. We're focused on how do
Speaker 2: we do that through data science running a more efficient operation.
Speaker 2: We've seen great progress this summer in terms of better
Speaker 2: operational performance and that drives costs out of the business.
Speaker 1: Do you see demand sort of level picking up? How
Speaker 1: would you characterize it?
Speaker 2: I'd say demand, as we communicated in our last update,
Speaker 2: is solid. You know, the fall troughs are definitely more challenging.
Speaker 2: The troughs are a bit deeper for the leisure customer
Speaker 2: now than they were pre COVID, So we're focused on
Speaker 2: rationalizing capacity during those troughs to drive the best results
Speaker 2: for jet Blue.
Speaker 1: What's your favorite route of That's a tough one.
Speaker 2: They're all my favorite, Oh for.
Speaker 1: All, My children are my favorite children. Joanna Garritty, thank
Speaker 1: you so much for being with us. Joeta Garrity, the
Speaker 1: CEO of jet Blue,