Jamake1
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Jet Blue Is Getting Old Fast...

Fri Jan 06, 2006 10:37 pm

United's B747-400. "She's a a cruel lover."
 
Slovacek747
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RE: Jet Blue Is Getting Old Fast...

Fri Jan 06, 2006 10:47 pm

It's hard to believe its already been that long since it began service... but yes like all airlines it has rising costs...I am sure they will continute to make a profit for a while longer but will eventually have to take measures to cut costs. Jetblue is a heck of an airline but it cant escape the natural business process.

Slovacek747
 
Grbld
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 2:56 am

Quoting Slovacek747 (Reply 1):
...but will eventually have to take measures to cut costs

Not necessarily. It's pretty simple: They can increase revenue. Though that in itself is not simple it could happen, either through adding other services and amenities and/or increasing fares.

If it should occur that one (or more) of the legacy carriers actually goes belly up, that is a good opportunity for jetBlue to raise their fares on certain routes. The same goes for other carriers as well, of course.

Even though for many people, it would be a big problem to see a legacy carrier go bankrupt, not in the least the people working there, it automatically improves the market for the remaining carriers, which will end up hiring many of the "lost" personnel, getting capacity up there to where it was with all the bankrupt carrier still operating but now at higher (and more profitable) price levels. And even though this may be "bad" for the consumer, it will be healthier for the airlines, which in the end is good for the consumer.


Grbld
 
wingman
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 5:34 am

Well, I hope this is one airline that doesn't fail because they are a true pleasure to fly. Great planes, great service, and that comfortable interior with non-stop entertainment and treats. It really does put the majors to shame. They even put other LCC's to shame so I for one hope they continue to set the class standard and that others match them. I also hope someday for Jetblue International with 787's in all economy with nice wide seats, 32-33" of legroom and killer entertainment.
 
frequentflyer
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 6:09 am

Totally agree with Wingman, B6 is an airline of a new flavor, and an elevated quality/price ratio, expecially is compared to AA or UA domestic.

It's kind of Song without the Delta baggage.

Friendly, efficient service, ultra-clean recent aircraft, and pilots who try their best to be entertaining in their communication with pax.

Long Live B6! And all my wishes for an International B6  Wink
Take off and live
 
CactusA319
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 7:06 am

This is no surprise. Anybody who follows the airline industry could see the cost increases were going to catch up with them eventually. This doesn't mean they'll go under though. They'll just have to find ways to increase revenue to cover costs, be it by fare increase, increased service in high-profit markets, or other means (read: fees).
 
n844aa
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 7:25 am

Quoting Frequentflyer (Reply 4):
Totally agree with Wingman, B6 is an airline of a new flavor, and an elevated quality/price ratio, expecially is compared to AA or UA domestic.

In the context of this article, though, don't you think it's possible that an elevated quality/price ratio has been possible because of B6's relatively lower costs vis-a-vis the legacy/established carriers? With those costs now increasing -- indeed, with B6 running a loss in the most recent quarter (according to the article, anyway) -- it seems that something will eventually have to give.

Clearly B6 is a very well-run airline, and these increasing costs were undoubtedly contemplated long ago (though fuel prices may not have been -- I don't know how well hedged B6 is.) Still, as these costs continue to rise, it seems that at the very least the quality/price ratio must diminish.
New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
 
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lightsaber
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 9:54 am

Quoting CactusA319 (Reply 5):
This is no surprise. Anybody who follows the airline industry could see the cost increases were going to catch up with them eventually.

??? I believe we're talking about a 0.25 CASM delta (excluding fuel). This isn't up to legacy levels by any means. B6 is flying E190's (known higher CASM, by about 1.0 cents), shorter routes (on average, this has higher CASM). Per last year's annual report, they were predicting a 0.24 cent higher CASM with MX, etc. Does anyone have a link on CASM?

Yes B6 will have a loss for quarter/year. Cest la vie.

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
RAMPRAT980
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 10:59 am

Could very well happen. Lets wait and see
With gun control there can be no democracy.. With gun control there can be no Freedom
 
jumbojet
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 11:10 am

Quoting Wingman (Reply 3):
Well, I hope this is one airline that doesn't fail because they are a true pleasure to fly. Great planes, great service, and that comfortable interior with non-stop entertainment and treats. It really does put the majors to shame.

The day will soon come when jetblue's fleet of planes will be considered old and worn out. Maybe not tomorrow, next week or next year but it is only a matter of time. It's also a matter of eventually cycling out the older planes of the legacies and when they one day take delivery of newer planes then JetBlue just might be the ones on the outside looking in.

[Edited 2006-01-07 03:30:01]
 
CTHEWORLD
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 11:45 am

Quoting Frequentflyer (Reply 4):
pilots who try their best to be entertaining in their communication with pax.

Funny, I thought a pilot's job was to safely fly the plane from a-b. Also, their fleet will age, just like everyone else, their work groups will demand more money, some might even unionize. I am not saying that jetBlue is bad, they have done a great job establishing themselves and a brand, but the job of keeping their shine is going to get harder and harder, I hope they are up to it.
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 1:13 pm

I think the article, while making some good points, is not good at pointing out what has really been killing JetBlue (and all airlines) lately: jet fuel. If it weren't for the dramatic rise in fuel, B6 would have had profit growth on a year-over-year basis, which is a main way of determining analyst ratings, share prices, outlook (both near-term and long-term), etc.

I think that for an airline that is based out of the most competitive market in the U.S (NYC) and is growing at a time of extremely high fuel costs, B6 is doing just fine. They will be around for awhile.

JetBluefan1
 
rjpieces
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 1:32 pm

Quoting JetBluefan1 (Reply 11):
I think the article, while making some good points, is not good at pointing out what has really been killing JetBlue (and all airlines) lately: jet fuel.

Always an excuse....
"Millions long for immortality who do not know what to do with themselves on a rainy Sunday afternoon"
 
eyeonthesky17
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 2:04 pm

Quoting Grbld (Reply 2):
Even though for many people, it would be a big problem to see a legacy carrier go bankrupt, not in the least the people working there, it automatically improves the market for the remaining carriers, which will end up hiring many of the "lost" personnel, getting capacity up there to where it was with all the bankrupt carrier still operating but now at higher (and more profitable) price levels. And even though this may be "bad" for the consumer, it will be healthier for the airlines, which in the end is good for the consumer.

I couldn't agree more. While UA, DL, and NW have been offered huge protections in bankruptcy, we see a healthy airline like B6 fall on hard times due to fuel prices. It's criminal!!!!!

B6 will also have other problems as they reach maturation. While B6 costs and fares (most likely) continue to increase and become more in line with the legacy carriers, we'll see the corporate traveler move toward the old reliables. Mileage programs will always rule the day. B6 will need to reinvent their Blue Rewards program in order to successfully court and keep business travelers. These passengers should be viewed as a market of increasing importance to B6.

Last April I flew from JFK to AUA in J class on American. The family of six next to me did not pay a single penny for their tickets. The wife explained that her husband flew for business almost every 10 days, so his mileage paid for all tickets. It takes way too many trips to earn even one award ticket on B6.

Also, imo B6 will begin to run a disadvantage due to their lack of content in the GDS'. While GDS costs are definitely an issue, I think multiple distribution channels will become more and more important.

On a positive, if B6 can continue to portray themselves as the fresh and hip airline, they may be able to offset some of the upcoming hurdles. A liquidation of DL and/or NW woudln't be bad for them either.

Give it a few years and we'll be calling them a legacy carrier.
 
AeroTycoon
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 2:13 pm

Just to refer to the original title thread:

Jet Blue ages at the same speed as the rest of the airlines. Tommorow they will be one day older than today, as will American, Southwest, and Cathay Pacific.
 
ikramerica
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 2:15 pm

Quoting Jumbojet (Reply 9):
The day will soon come when jetblue's fleet of planes will be considered old and worn out. Maybe not tomorrow, next week or next year but it is only a matter of time.

I was going to mention that. It's great when an airline starts up with an all new fleet. But keeping that fleet "all new" gets harder and harder.

Worse, when you are the airline known for "innovative product" because you can introduce it from the getgo on a new fleet, all of a sudden, if you need to compete with the NEW "innovative" airline with an even better product coming online in all new planes, you all of a sudden must retrofit 100+ aircraft at great expense!

It's the same problem the legacies face by not being brand new. While B6 could just bring new jets online with PTV, a legacy would have to retrofit hundreds of planes. Now B6 will face the same challenge when the next "must have" amenity comes along.

WN avoids this by not bothering. They aren't the 'innovative' airline, just the low cost, low restriction airline with friendly staff. They avoid retrofit costs just by not bothering. The most they incurred was to put leather covers on their seats as they needed replacing. Not the same thing as putting DirecTV at every seat, or satellite radio, or power ports, or what have you.

B6's real test may come from Virgin America, should it get going as planned. That product will be even newer, likely with AVOD with movies and shows worth watching. Then we'll see what happens.

Quoting Frequentflyer (Reply 4):
and pilots who try their best to be entertaining in their communication with pax.

I've always found jokey pilots or F/As to be extremely unprofessional and disconcerting. I want professionals in charge of my safety, not would be comedians. I see enough semi-talented hacks here in L.A.
Of all the things to worry about... the Wookie has no pants.
 
Bels13
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 3:04 pm

First off, JetBlue from an employee stand point is not the best in the business. Actually, JetBlue is either the worst or very close to it. The reason, JetBlue wanted to cut costs on training employees so pretty much the training is a self study course and also after 5 years, you must re-interview for your job. This process has just begun. From a consumer standpoint, great, good service and other stuff, but ask yourself, if JetBlue provides good service, TV, nice seats and cheap fares, where do you think the cost cutting is? With its employees. LLC with service and great wages and work benefits and cheap fares don't mix.
 
schipholjfk
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 3:20 pm

Quoting Wingman (Reply 3):
I also hope someday for Jetblue International with 787's in all economy with nice wide seats, 32-33" of legroom and killer entertainment.

Oh man... that's the day I am waiting for! I'll hand my FF platinum card back to NWA, say so long and become a true blue international flying club member. Hope that day comes one day...
The fun of flying... love it !!!
 
bond007
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 3:26 pm

Quoting Bels13 (Reply 16):
LLC with service and great wages and work benefits and cheap fares don't mix.

Isn't WN paying some of the highest salaries of any airlines ???

Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
Grbld
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 9:06 pm

Quoting Bond007 (Reply 18):
Isn't WN paying some of the highest salaries of any airlines ???

Absolutely. I think jetBlue is a bit on shaky ground by some of their personnel handling (like Bels13 is saying) where WN does an excellent job and has managed to keep it up for decades. Sure, you get your complaints every now and then but all in all, they still have one of the best customer service records in the world, and it's mostly because of how they handle their own personnel (which is very good).

A legacy carrier's modus operandi cannot change into a new format to challenge the low cost carriers. It requires out of the box thinking and is even harder than when starting with a whole new airline. Being a LCC doesn't depend solely on how much costs you can cut, because if you need to cut costs, you weren't doing well in the first place.

Being a LCC means that you're first of all smart with your money and resources. Which means that there are hardly any excess costs that can be cut in the future, but the necessity to cut won't be there as much either because you're running a healthier airline.

Virgin Atlantic, one of the best and luxurious airlines in the world, is a LCC. The pilots get about the same as at BA but the staff motivation is much higher and the product they offer, offers greater value for money than BA. That's what being a LCC is all about.

I don't see jetBlue's ageing fleet being a problem at all. Bringing in new jets for the foreseeable future will keep the average age down and it's relatively easy to get rid of your older planes for newer ones as well. My airline also has a very young fleet and as such is getting rid of its oldest 737NG and replacing it with a new one in the near future.

Grbld
 
lowecur
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RE: Jet Blue Is Getting Old Fast...

Sat Jan 07, 2006 10:53 pm

GRBLD, you'd better bring yourself up to date. New pilot contract comes up in the fall. Section 6 has been put off, as SWAPA wanted the dust to settle a little on industry direction before negotiations. The airline has to make up $500M shortage from smaller fuel hedge income this year, and pilots are already grumbling about the first of two tests that reduce days off and increase productivity. It is my sense both of these tests will be voted down by SWAPA in contract negotiations, and I look for a protracted period of working without a contract as SWAPA and mgt go round n round trying to find common ground.

Adversarial relationships at SWA are not new. The FA's worked without a contract for 2 years and picketed on numerous occassions. This is not the SWAPA of 5 or 10 years ago. They have hired many disgruntled pilots from other airlines, and the last thing many of them want to hear is about is a reduction of pay or work rules.

[Edited 2006-01-07 15:04:52]
 
GSPSPOT
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 12:15 am

If Legacies are cutting costs to emulate LCC's, then where do LCC's cut costs? Where does it end??? You can't CUT your way to success! You have to stand out with features and service customers want, and in the end, may be willing to pay a bit more for.
Finally made it to an airline mecca!
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 12:23 am

Quoting Rjpieces (Reply 12):
Always an excuse....

If you look at JetBlue's quarterly reports, you will see that their fuel neutral operating margin improved consistently. In other words, if fuel prices were the same in 2005 as in 2004, their operating margins would have been higher.

1Q04 - 11.3%, 1Q05 FUEL NEUTRAL - 12.7%
2Q04 - 14.1%, 2Q05 FUEL NEUTRAL - 16.9%
3Q04 - 7.0%, 3Q05 FUEL NEUTRAL - 12.6%

Just for reference purposes, 'fuel neutral' refers to the same fuel prices as the same quarter one year before.

So, my point is that had fuel cost the same amount as a year before, B6 would have seen growth in margins (and profits). Fuel is obviously what's killing B6.

JetBluefan1
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 12:31 am

Quoting Bels13 (Reply 16):
From a consumer standpoint, great, good service and other stuff, but ask yourself, if JetBlue provides good service, TV, nice seats and cheap fares, where do you think the cost cutting is? With its employees.

While B6 is cutting costs for training, B6 Crew is still in good hands as they have not been asked for pay cuts. All legacies in the U.S have been cutting pay, most even multiple times. B6 has not seen a single paycut since inception. B6 and WN (and FL?) are the airlines that have realized that Crew Members are the absolute most important asset to the company and cutting paychecks isn't going to help the cause for better customer service.

I think that a change in training rules isn't much to complain about in today's industry. In fact, I definitely think it's a good idea to "reinterview" for your job. B6 management is very big on customer service and they want to make sure that those that they are signing paychecks to are doing the very best that they can. I think that's perfectly fair.

Also, keep in mind that pilots and flight attendants are both trained at the new facilities in MCO. Do they also have to reinterview too?

BTW, I know B6 offers paid training (unlike most other airlines). With the new rules, will they still be doing this?

JetBluefan1
 
bond007
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 12:36 am

Quoting JetBluefan1 (Reply 22):
So, my point is that had fuel cost the same amount as a year before, B6 would have seen growth in margins (and profits). Fuel is obviously what's killing B6.

Flawed logic. You could say the same for ANY line of the P&L. If the operating costs were the same...if ...Landing Fees, Depreciation,A/C rent, Sales & Marketing, Maintenance, other ...you bet they all increased ... some by a bigger percentage than the fuel costs did.


Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
kellmark
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 12:49 am

Quoting JetBluefan1 (Reply 23):
I definitely think it's a good idea to "reinterview" for your job. B6 management is very big on customer service and they want to make sure that those that they are signing paychecks to are doing the very best that they can. I think that's perfectly fair.

This is about as low as they come. There are in place already at every company employee performance evaluations. If an employee is not performing to their standards they can take action to solve the problem. But to make every employee "reinterview' for their job at a 5 year point I think is a very poor policy that shows little or no loyalty to those who have been there for 5 years, working hard. It looks like a way to eliminate the rise in costs associated with seniority and higher pay without really saying it. Tell a large percentage of longer term folks that they didn't pass the interview and then hire new ones at much less pay. How convenient.
 
GSPSPOT
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:16 am

I totally agree with Kellmark... What a slap in the face! Employers expect commitment from employees, but where, oh where is the commitment from employers to employees?
Finally made it to an airline mecca!
 
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fanoftristars
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:22 am

Quoting JetBluefan1 (Reply 23):
While B6 is cutting costs for training, B6 Crew is still in good hands as they have not been asked for pay cuts.

That may be, but when you start them out paying peanuts, you can't really reduce that much. I believe that DL's latest cuts to their pilots still keep them at near the top of the payscale. Case in point, the DL pilots flying the 737-800 make almost $200 per hour while B6 pilots flying the same size of plane, A320, make less than $150 per hour. (www.airlinepilotcentral.com) B6 Pilots had better hope they don't have to have pay cuts!

Having said that, B6 will always be a minor player until they have route structure that rivals the majors. I do have to give them credit though. They've established themselves firmly in the minds of flyers who think they are god. Sadly, these are the flyers that fly maybe once per year.

For the business traveler, can they get me anywhere without flying me to JFK? No. Can they bump me to F class because I fly over 100,000 miles a year? No. Will I earn a free ticket every three trips to NYC? No. Can I cash in my miles to fly to Italy in Business Class? No. Can they route me through other cities in an irrop situation? No. Can they offer a route strucure to secondary cities with multiple departure times? No. How about a nice quiet lounge to sit and relax in before my flight with free drinks and snacks? No. Can they get me to Europe or Hawaii? No.

Until B6 can say yes to every one of the above, a leather seat and video screen for most business travelers just won't cut it. The fact that they've been profitable for so long isn't really that amazing. If the majors could start over, cherry picking routes with high yields, they'd have no probelm making money.
"FLY DELTA JETS"
 
rjpieces
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:23 am

Quoting JetBluefan1 (Reply 22):
In other words, if fuel prices were the same in 2005 as in 2004, their operating margins would have been higher.

If if if. Like I said, you are looking to find excuses.

Quoting JetBluefan1 (Reply 22):
So, my point is that had fuel cost the same amount as a year before, B6 would have seen growth in margins (and profits). Fuel is obviously what's killing B6.

Read above.

Quoting Bond007 (Reply 24):
Flawed logic. You could say the same for ANY line of the P&L.

BINGO!!  Smile
"Millions long for immortality who do not know what to do with themselves on a rainy Sunday afternoon"
 
kellmark
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:33 am

Quoting RJpieces (Reply 28):
Quoting JetBluefan1 (Reply 22):So, my point is that had fuel cost the same amount as a year before, B6 would have seen growth in margins (and profits). Fuel is obviously what's killing B6.

Every single US major carrier would have made profits if fuel prices had been the same as the year before. The problem was that they could not get the yields/revenue to make up for it.
 
ikramerica
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:33 am

Quoting Fanoftristars (Reply 27):
If the majors could start over, cherry picking routes with high yields, they'd have no probelm making money.

Well, that is a valid point, but there have also been airlines that start up with new aircraft and hand picking routes that go under, too. B6 has done something right: choosing JFK as a home base. But that's limiting their business as well.
Of all the things to worry about... the Wookie has no pants.
 
tozairport
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:45 am

Quoting JetBluefan1 (Reply 22):

So, my point is that had fuel cost the same amount as a year before, B6 would have seen growth in margins (and profits). Fuel is obviously what's killing B6.

So then jet blue can join the club with, lets see, EVERY OTHER AIRLINE! If it weren't for the rise in fuel costs, UA would have been hugely profitable, NW and DL would probably not go BK, and even Fly I may have been able to struggle on until Summer. Once then airlines start pricing their tickets to make a profit and account for increased costs (like just about every other industry), then the airline industry will prosper. Making the employees subsidize the cheap tickets with pay cuts is not the answer, pricing the product properly is.
Meet the new boss, same as the old boss.
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 1:50 am

Quoting Ikramerica (Reply 15):
I've always found jokey pilots or F/As to be extremely unprofessional and disconcerting. I want professionals in charge of my safety,

One of the very reason I will not fly WN, I would rather listen to a rhino give birth than listen to an F/A sing some song about Luv in the air over the PA
 
werdywerd
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 2:13 am

Where did this rumor of "B6 employees need to re-interview after 5 years" come from?
I work for B6 and have never heard of this. You guys are silly if you actually believe this.
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 2:57 am

Quoting Werdywerd (Reply 33):
Where did this rumor of "B6 employees need to re-interview after 5 years" come from?
I work for B6 and have never heard of this. You guys are silly if you actually believe this.

That's what I'd like to know too.

Quoting Tozairport (Reply 31):
So then jet blue can join the club with, lets see, EVERY OTHER AIRLINE!

I was simply referring to the flaws in the article. Never did I say that other airlines wouldn't have made money. However, the article is attacking B6's rising costs in maintenance and labor and NOT FUEL. Once again, as I proved before, B6's profits would have increased had fuel stayed the same price. The article completely ignores that point and points out that B6's profits are going down the drain because of "growing pains (that include) rising costs related to the maturation of the company." Once again, this is not the main reason for their losses...as I proved before (btw all info regarding operating margins was taken from jetblue.com's press releases).

JetBluefan1
 
tozairport
Posts: 463
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 3:14 am

JetBluefan1

I understand what you are saying w/regard to jet blue, but you said:

Quoting JetBluefan1 (Reply 22):
Fuel is obviously what's killing B6.

This is where I disagree. The lack of the ability to price their product is what is killing all airlines. We now pay more for just about anything that takes energy to produce, yet you don't hear too many complaints about that. But if you raise the price of a round trip ticket $10, all hell breaks loose on CNN and Fox. Unfortunately, I don't think that this will change until WN has to start paying market rates for fuel. Even then, they will probably try to extract concessions from their employees rather than price their product.  Sad

All the best.

tozairport
Meet the new boss, same as the old boss.
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 3:23 am

Quoting Tozairport (Reply 35):
This is where I disagree. The lack of the ability to price their product is what is killing all airlines. We now pay more for just about anything that takes energy to produce, yet you don't hear too many complaints about that. But if you raise the price of a round trip ticket $10, all hell breaks loose on CNN and Fox. Unfortunately, I don't think that this will change until WN has to start paying market rates for fuel. Even then, they will probably try to extract concessions from their employees rather than price their product.

Tozairport,

You certainly bring up an excellent point and I completely agree. So perhaps what's killing JetBlue (and all airlines) is its inability to raise fares in order to make up for the high price of fuel.

Just so you know (and/or everyone else who cares), my argument was against the article and its inability to pinpoint why JetBlue's profits have gone down.

All the best to you too,

JetBluefan1
 
bond007
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 3:25 am

All you 'proved' is that if a cost doesn't increase from year to year, and your revenue stays the same...you'll make the same profit.

You can 'prove' by looking at the JetBlue financial statements that if maintenance didn't increase by 100%, depreciation didn't increase by 50%, other expenses didn't increase by 34% ... they might have ALSO made money.

Fuel costs account for around 20% of total operating costs .... so what about the other 80% ??

The airlines always take the small percentage cost that they have no control over (except for hedging) and make that the reason they lose money.


Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
lowecur
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 3:29 am

Everyone is so worried about expenses. Jetblue's expenses are just fine and will be for sometime to come. The 190 is the key to future Jetblue profits if the a/c are used properly. I'm not a fan of most of the Shuttle routes unless you are the dominant player and can get the proper yield. Jetblue wants to be the dominant player on these routes in the next few years, but in order to do that it's going to cost them money to gain marketshare. The 190 can and will be used on routes that have much higher yields, but Jetblue has shown a penchant to go after the glamour routes at the beginning. Once they start plugging in more Richmonds and Austins into their future scheduling, the RASM curve will begin to rise sharply and with it profits!
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 3:31 am

Quoting Bond007 (Reply 37):
All you 'proved' is that if a cost doesn't increase from year to year, and your revenue stays the same...you'll make the same profit.

That's wrong. Look at the reports yourself. A fuel-neutral margin simply means that if B6 was paying the same price for fuel that quarter as the same quarter the year before, then that's what their margin would be. The difference in revenue is accounted for in this figure.

Once again, if fuel had stayed the same price in 2005 as it were in 2004, B6 would have been more profitable. Or, if B6 found a way to compensate for the higher fuel prices via higher fares, then their profits could have also gone up. However, it is a fact that on a fuel-neutral basis, B6 was more profitable.

JetBluefan1
 
bond007
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 3:42 am

Quoting JetBluefan1 (Reply 39):
Quoting Bond007 (Reply 37):
All you 'proved' is that if a cost doesn't increase from year to year, and your revenue stays the same...you'll make the same profit.

That's wrong.

No, I assure you that's right ... where did you go to school?  Smile

It's also a fact that on a 'maintenance-costs-neutral' basis, and a 'depreciation-neutral' basis, and a 'all other costs-neutral' basis ... they'd be more profitable!


Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
jetbluefan1
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 7:12 am

Quoting Bond007 (Reply 40):
No, I assure you that's right ... where did you go to school?

NYU...so don't try attacking my education  spin  lol

In any case, if you listen to the reports themselves you will hear David Barger (or Neeleman) pointing out that a fuel-neutral margin is if they paid the same for fuel (per gallon) as they paid the same quarter the year before.

In any case, I think this is getting out of hand. The fact is that if fuel costs were lower, B6 would have been more profitable as would have all other airlines.

The article failed to point out that fuel was the major factor for B6's lower profits and went ahead and blamed the issues on maintenance and labor. Those were not huge factors in B6's lower profits. Yes, they were factors, but not nearly as large as fuel. According to their 3Q05 report:

Revenue increased 38.5%
Labor increased 24.9%
Maintenance increased 72%
Aircraft fuel increased 101%

The fact is that JetBlue's revenue increase 14% ahead of B6's labor costs. While maintenance costs were obviously up quite a bit (and no one is debating that), B6 paid DOUBLE for fuel over last year while only gaining additional revenue of 38.5%.

JetBluefan1
 
rdwelch
Posts: 449
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 7:37 am

Quoting CTHEWORLD (Reply 32):
One of the very reason I will not fly WN, I would rather listen to a rhino give birth than listen to an F/A sing some song about Luv in the air over the PA

LMAO!!!!
They say I have ADD, but they don't understand..Oh look! A chicken!
 
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lightsaber
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 8:41 am

Quoting JetBluefan1 (Reply 41):
Revenue increased 38.5%
Labor increased 24.9%
Maintenance increased 72%
Aircraft fuel increased 101%

The fact is that JetBlue's revenue increase 14% ahead of B6's labor costs. While maintenance costs were obviously up quite a bit (and no one is debating that), B6 paid DOUBLE for fuel over last year while only gaining additional revenue of 38.5%.

Nice numbers. Thanks! I'm floored by the year to year increase in MX. However, I do not think anyone is surprised as JBLU as managed expectations there well and in prior years B6 had low MX bills. (e.g., warranties are expiring.)

Lightsaber
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ikramerica
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 8:57 am

Quoting JetBluefan1 (Reply 41):
The fact is that JetBlue's revenue increase 14% ahead of B6's labor costs. While maintenance costs were obviously up quite a bit (and no one is debating that), B6 paid DOUBLE for fuel over last year while only gaining additional revenue of 38.5%.

So? You are picking 1 number, as everyone has been pointing out, and saying it's the reason.

M/X increased at twice the rate of revenue. Fuel went up and is NOT EXPECTED TO RETURN TO PREVIOUS LEVELS.

It's great that this year, revenue increased more than labor costs. Of course, that is expected when you build route networks. They added planes and routes over the year. Thus revenue increased because of it. They also added "rookie" personnel over the year. That means labor at it's LOWEST cost.

If labor costs increased faster than revenue under that situation, it would be even worse than it is now.

But you seem to be working under the assumption that B6 will grow it's route at the same PERCENTAGE rate in the coming year (it won't) and that fuel is a one time problem, and it's not.

Since you are so into "fuel-neutral" analysis, I'd like to see the cost of labor, fuel, M/X in an "expansion-neutral" presentation, then see if B6 really is "profitable." Because, once you mature, you just can't grow as quickly as when you were new, and the new routes are by default going to be less lucrative.
Of all the things to worry about... the Wookie has no pants.
 
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lightsaber
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 9:15 am

Quoting Ikramerica (Reply 44):
But you seem to be working under the assumption that B6 will grow it's route at the same PERCENTAGE rate in the coming year (it won't) and that fuel is a one time problem, and it's not.

??? Jetblue is getting more aircraft percentage wise in 2006 than previous years (exluding start up year 1 and 2).

Quoting Ikramerica (Reply 44):
Since you are so into "fuel-neutral" analysis, I'd like to see the cost of labor, fuel, M/X in an "expansion-neutral" presentation, then see if B6 really is "profitable." Because, once you mature, you just can't grow as quickly as when you were new, and the new routes are by default going to be less lucrative.

This is a valid point and one reason that its speculated that WN must keep growing.  Smile Ok.. they both grow.  Smile

My biggest problem with B6 is that they're not going to have E190's on the west coast for years!  hissyfit  But I know from a business sense that is the smart plan (for now).

Man, imagine the forums when Virgin America starts. While I'm not seeing the market "need" for VirgA, I'll concede its going to happen. Is it just me or are UA's hubs getting hammered? I'm curious what happens to DH's IAD gates and ORD will one day have a lot more LCC flights...

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
jacobin777
Posts: 12262
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RE: Jet Blue Is Getting Old Fast...

Sun Jan 08, 2006 9:26 am

Quoting JetBluefan1 (Reply 36):
Just so you know (and/or everyone else who cares), my argument was against the article and its inability to pinpoint why JetBlue's profits have gone down.

 confused  profits have gone down because operating expenses and fuel have gone up big time......

Quoting Lowecur (Reply 38):
Jetblue's expenses are just fine and will be for sometime to come.

not from the article its not...

"In fact, in the third quarter JetBlue's maintenance costs rose to $19.8 million, up 72% from the same period a year earlier. That followed a full-year 2004 increase of 94% to $44.9 million."

their expenses are picking up steam....lets see how they do in the next 1-3 years...when most of their A320's need heavy maintenance....
"Up the Irons!"
 
lowecur
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RE: Jet Blue Is Getting Old Fast...

Mon Jan 09, 2006 12:50 am

Quoting Jacobin777 (Reply 46):
not from the article its not...

"In fact, in the third quarter JetBlue's maintenance costs rose to $19.8 million, up 72% from the same period a year earlier. That followed a full-year 2004 increase of 94% to $44.9 million."

their expenses are picking up steam....lets see how they do in the next 1-3 years...when most of their A320's need heavy maintenance....

Another expense-side mavin. Why did ATA have financial problems with an extremely low CASM? Simple, they had no routes or a/c that were RASM/CASM friendly. Short to medium size routes between focus cities and medium/small cities generates the highest RASM, but you need a/c and a business model that is CASM friendly.....hence the 190......watch and learn in the next few years as the 190 shows the airline world a new paradigm.

[Edited 2006-01-08 16:53:00]

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