Thanks! You're all signed up.

X

The Beginning of the End for JetBlue as We Know It

SmarterTravel

As of earlier this week, JetBlue’s share price had soared 49 percent for the year. According to TheStreet, that outsized spike was largely attributable to institutional investors’ and analysts’ faith that Dave Barger, the airline’s CEO, will soon be replaced by a new top manager.

(Barger’s contract is up in February 2015, but there’s speculation that he might depart sooner, allowing current JetBlue president Robin Hayes to assume Barger’s role.)

What’s so good about Barger leaving? Barger is known as a champion of the customers-first school of business that underpins JetBlue’s strategy of delivering upgraded service at affordable prices. In the view of analysts, some of whom have called for Barger’s dismissal, that approach has kept JetBlue from fully realizing its profit potential.

What might JetBlue look like under new management?

Industry analyst Helane Becker, commenting on MarketWatch, cited two opportunities to quickly and easily pad JetBlue’s bottom-line numbers. First would be to add 12 more seats to each of the airline’s A320 aircraft. Second would be to impose fees for the first checked bag and for inflight WiFi. “We believe a management change would lead to a change in philosophy and likely morph the model similar to one of Spirit Airlines, although not as extreme. The changes would improve the financial outlook for the company in our opinion.”

Such changes would be wrenching for JetBlue loyalists, for whom the roomier seating and relative absence of nuisance fees have been key reasons to book JetBlue over the competition. Even the number-crunchers acknowledge that a remodeled JetBlue would jeopardize the considerable brand equity the airline has built up over the years.

But in the end, that’s likely to be of little consequence: When it comes to a choice between passengers and profits, profits generally get the nod.

For investors, the airline’s future looks bright. But for travelers, JetBlue’s best days may be behind it.

Reader Reality Check

A JetBlue more like Spirit: Like or dislike?

This article originally appeared on FrequentFlier.com.

Top Fares From

Comments