JetBlue bucks the trend. We were profitable within our first year of operation, have achieved eight consecutive quarters of profitability, and reported an operating margin of 16.5% in 2002, the highest of any domestic U.S. airline. Our product – new planes, leather seats, up to 24 channels of DIRECTV programming for every Customer, low fares and friendly service – ups the ante at a time when other airlines are cashing in their chips. How have we done it?

Start With a Lot of Money. JetBlue is the best-capitalized airline start-up in history. This means we are able to invest in the best product available. You'll see it in our new planes, comfortable leather seats, free satellite TV and fast check-in technology.

Maintain Low Operating Costs. The key to our low unit costs is the high productivity of our assets and our Crewmembers. Some of the factors that contribute to our low unit costs are:

  • We utilize our aircraft efficiently. For the year ended December 31, 2002, each of our aircraft operated an average of 12.9 hours per day, which we believe was higher than any major U.S. airline. By using our aircraft efficiently, we are able to spread our fixed costs over a greater number of flights and available seat miles. We achieve high aircraft utilization in several ways. New aircraft can be safely scheduled to fly more hours each day because they are more reliable and require less maintenance than older aircraft. In addition, we operate a number of "red eye" flights, which enable a portion of our fleet to remain productive through the night. Our aircraft are scheduled with minimum ground time to avoid unnecessary time spent at airport gates, which increases the number of daily flights per aircraft.
  • We currently operate only one type of aircraft, the technologically-advanced, environmentally friendly Airbus A320, with a single class of service. Operating a fleet of identical aircraft leads to increased cost savings as maintenance issues are simplified, spare parts inventory requirements are reduced, scheduling is more efficient and training costs are lower. Flying a single type of aircraft also allows our Crewmembers to become highly knowledgeable about the A320, thereby increasing their efficiency and productivity. A single class of service simplifies our operations, enhances productivity, increases our capacity and offers an operating cost advantage.
  • Our workforce is productive. We take great care to hire and train Crewmembers who are enthusiastic and committed to serving our Customers and we incentivize them to be productive. Our Crewmember productivity is created by greater fleet commonality, fewer unproductive labor work rules, use of part-time Crewmembers and the effective use of advanced technology. For example, most of our reservation sales agents work from their homes, providing us better scheduling flexibility and allowing Crewmembers to customize their desired schedules.
  • We have low distribution costs. Our distribution costs are low for several reasons. Unlike the major U.S. airlines that use a combination of ticketless travel and paper tickets, we do not use any paper tickets. Ticketless travel saves paper costs, postage, Crewmember time and back-office processing expense. In addition, direct bookings by our Customers save computer reservation systems fees. For the year ended December 31, 2002, 63.0% of our sales were booked on www.jetblue.com, our least expensive form of distribution, and 33.3% were booked through our reservation agents.

Hire the Best People. JetBlue screens Crewmembers rigorously, trains them well and gives them the best tools. That means our people are motivated and service-oriented. We love changing the industry for the better! Learn more about our Crewmembers in the ‘Our People’ section of this report.

Build a Strong Brand. The JetBlue brand was built on giving Customers the things they want, and nothing they don't. We also added a little style and an honest and humorous voice to our marketing so our Customers know real people are running this shop. We believe that we have made significant progress in establishing a strong brand that helps to distinguish us from our competitors by identifying us as a safe and secure, reliable, low-fare airline that is focused on Customer service and that provides an enjoyable flying experience. We were voted the number one domestic airline in the Conde Nast Traveler 2002 Readers' Choice Awards and received the highest score of any airline in the Conde Nast Traveler 2002 Business Traveler Awards "coach-only" category. During 2002, we also received the Editor's Choice Award from Worth magazine, and we were named the number two domestic airline in the Travel and Leisure 2002 World's Best Awards and the "It" airline by Entertainment Weekly. In the 2001 Zagat Airline Survey, which covered 22 U.S. airlines, we were voted the number two airline in the United States in the "overall," "comfort" and "service" categories for coach travel, behind Midwest Express. To further enhance our brand loyalty, we implemented our Customer loyalty program, TrueBlue Flight Gratitude, in mid 2002. By the end of the year, more than 400,000 Customers had joined this program, and that number has been growing steadily in 2003.

These accolades are reflected in internal surveys of our Customers: in a recent poll, 94% of our Customers rank their JetBlue Experience as ‘Much Better’ or ‘Somewhat Better’ than other airlines; and 98.7% said the would recommend JetBlue to others.

Focus on Service. By offering our Customers the best experience we can deliver, we find most of them come back regularly and tell their friends and family about us. It's not rocket science...just a radical application of common sense.

We devote a great deal of time and attention to hiring Crewmembers who will treat Customers in a friendly and respectful manner. The importance of providing caring Customer service is also emphasized in training. In addition, our policies and procedures are designed to be Customer-friendly. For example:

  • pre-assigned seats;
  • all travel is ticketless;
  • our policy is not to overbook flights;
  • fares are low and based on one-way travel;
  • no Saturday night stay is required; and
  • change fees are only $25 per passenger, compared with amounts of $75 to $100 charged by most major U.S. airlines, except in certain markets where our competitors have matched our fee.

Our focus on Customers is also evidenced by our fleet of all new aircraft with roomy leather seats, each equipped with free DIRECTV® and comfortable leg room with 32 inches between rows of seats.

Our focus on service has led our Customers to give us incredible word-of-mouth recommendations. And for that, we will always be grateful.

Run a Solid Operation. Our Customer commitment is also demonstrated by our exceptional operational performance. Figures below are for the year ended December 31, 2002, based on our calculations for our data compared to the major U.S. airlines which are required to report such data to the DOT:

  • our completion factor of 99.8% was higher than any of the major U.S. airlines, which had an average completion factor of 98.7%;
  • our on-time performance of 85.7% was higher than all of the major U.S. airlines, which had an average on-time performance of 82.1%;
  • our incidence of delayed, mishandled or lost bags of 2.33 per 1,000 Customers was lower than any of the major U.S. airlines, which had an average of 3.84 delayed, mishandled or lost bags per 1,000 Customers; and
  • our rate of Customer complaints to the DOT per 100,000 passengers was 0.43, compared to an average of 1.22 for the major U.S. airlines and second only to Southwest Airlines.

Make Use of Advanced Technology. As a new airline, we have made use of advanced technology in many ways. For instance, all of our pilots use laptop computers in the cockpit to calculate the weight and balance and takeoff performance of the aircraft prior to departure. These laptops also allow our pilots to access manuals in an electronic format during the flight. We believe that only a limited number of airlines in the world have this pilot laptop capability. In addition, all of our travel is ticketless and we strongly emphasize bookings through our website. In response to the September 11, 2001 terrorist attacks, we commenced installation of four cabin security cameras on each of our aircraft. In 2002, we introduced Customer self-service kiosks at JFK, Long Beach, Oakland and Fort Lauderdale with the plan to make this improvement available at other locations in 2003.

Have a Proven Management Team. We are led by a management team with significant airline industry experience, including experience at successful low-cost, Customer-focused airlines, such as Southwest Airlines. Our top four executive officers average 20 years of experience in the airline industry. Our Chief Executive Officer, David Neeleman, was the president and one of the founders of Morris Air, a successful low-fare start-up airline that was acquired by Southwest Airlines in 1993. Mr. Neeleman was also instrumental in developing the Open Skies reservation system and in founding WestJet, a leading low-fare airline in Canada. David Barger, our President and Chief Operating Officer, was vice president in charge of Continental Airlines' Newark hub from 1994 to 1998, and has extensive experience managing airline operations in the New York area. He also has substantial experience working closely with the Port Authority of New York and New Jersey, which operates all three major New York airports. Our Chief Financial Officer, John Owen, was treasurer of Southwest Airlines from 1984 to 1998, where he gained extensive experience in aircraft purchase, lease and financing transactions. Thomas Kelly, our Executive Vice President and Secretary, has worked with David Neeleman for over 18 years and served as Executive Vice President and General Counsel of both Morris Air and Open Skies. Learn more about our Officers in the ‘Officers and Directors’ section of this report.