JetBlue's CEO battles to appease passengers and Wall Street
NEW YORK (AP) — Robin Hayes, the new CEO of JetBlue Airways, is balancing between passengers and Wall Street.
As he takes control of the New York-based airline Monday, Hayes faces a difficult task: increase profits without destroying the culture that has made JetBlue stand out from other U.S. airlines.
JetBlue, after all, was the first carrier to give passengers free live TV at each seat and is still known for its friendly employees. For years, the airline has resisted charging for a first checked bag and boasted the most generous legroom in the industry. But, while the airline remained profitable, it lagged behind competitors. Wall Street demanded change.
To appease investors, Hayes recently announced that JetBlue will add a fee this spring for the first checked suitcase — a move estimated to bring in an extra $200 million annually by 2017. It will also add 15 more seats on most of its jets. That should increase the profit per flight, but passengers will lose some personal space.
To the airline's fans, those were jarring decisions. Hayes stayed up until 3 a.m. personally answering the flood of emails.
"People are so passionate about the JetBlue brand and the JetBlue story. They are very protective of it," Hayes says. "I see that as a good thing."
Hayes, 48, was chosen in September to replace outgoing CEO Dave Barger. He is more receptive to investors than Barger, but JetBlue prides itself on doing right by workers and passengers. So, following the lead of his predecessors, Hayes flies to Orlando, Florida every two weeks to welcome new hires at the airline's orientation and training program. And while he's cramming more seats into planes, the passengers sitting in them will be getting larger TV screens and almost three times as many channels.
Perhaps it helps that Hayes has always had a love of travel.
Growing up in London, the oldest of three kids, Hayes would create make-believe train timetables.
"As a kid, you know about all these places but have never been. It's just a way of pretending that you are there," he says.
Fascinated with the London Underground, Hayes could tell people the quickest way from one station to another — and suggest where to stand on the platform to line up perfectly with each station's unique exit.
But flying ended up his true love. Hayes wouldn't take to the sky until he was 18 — a trip with his then girlfriend to Greece. He was hooked.
In his first job out of school, Hayes spent a summer working at Boston's Logan International Airport. From 2 p.m. to 10 p.m., he would deliver liquor, cigarettes and other duty free items to passengers boarding flights. As one jet after another departed across the ocean, Hayes remained at the airport. That solidified his thirst for travel.
With a degree in electrical engineering, Hayes spent a year designing military cockpit avionic systems. He missed interacting with people and quickly found himself working the ticket counter and gates in Glasgow, Scotland, for British Airways.
There were some hiccups along the way. Still new to the company, Hayes was boarding flights at two adjacent gates when he accidentally sent a man who was supposed to fly domestically within Scotland to Germany without a passport.
"I got into a bit of trouble for that, but they didn't fire me," he says. "Mistakes are the best way to learn. My frustration is when people make a mistake and don't want to share it with other people."
Hayes would spend 19 years at British Airways. He met his wife Sue, another British Airways executive, while they were both working at the company's London headquarters. Today they are married and live in Connecticut with their three children.
In 2008, while Hayes was British Airways' executive in charge of operations in North and South America, JetBlue offered him the job of chief commercial officer.
While weighing the offer, Hayes and his family took a vacation, flying home on JetBlue. Waiting for pizza at the Phoenix airport, his wife mentioned to a JetBlue pilot in the same line that she was a fan of the English soccer team Manchester City.
During the boarding process, the pilot made an announcement welcoming everybody, including Manchester City fans, to the airplane. Hayes recalls his wife saying: "That's an amazing culture for someone to do that. I think you should go work for them."
Hayes eventually became president in 2014. Two years earlier, he became an American citizen, a prerequisite to becoming a U.S. airline CEO, although he says that had nothing to do with the decision.
British Airways focuses on long-distance flights and caters to business travelers who buy expensive, last-minute tickets. JetBlue is the opposite; its average flight is 1,088 miles — the distance between New York and Miami. Most passengers are on vacation, escaping chilly Northeast cities to the warmth of Florida, the Caribbean and increasingly Latin America.
Those routes, however, don't command high airfares.
For every 1,000 miles JetBlue flew last year, it collected an average of $119 for each available seat. By that same measure, Southwest Airlines took in $135, United Airlines saw $137, American Airlines had $140 and Delta Air Lines led the industry with $146.
JetBlue's passengers flew a combined 37.8 billion miles last year. Getting the same revenue out of each seat as Southwest does would have brought in an extra $615 million, at an airline whose profit last year was $401 million.
Hayes doesn't expect to match the other airlines, but he wants to come much closer. While JetBlue will start charging for bags this spring, Hayes is quick to point out other amenities. There will be the new TV screens with up to 100 channels of live TV, free Wi-Fi and power outlets. Passengers will hopefully pay more — JetBlue does command a $10-to-$15 premium on leisure routes — for a better experience and to enjoy those freebies.
Hayes is also working on his own makeover. He's a very detail- oriented person and wants to take a step back. Right now, every time a flight is delayed more than two hours, he gets an email about the delay and what type of compensation was given to passengers.
Then there is his wardrobe. Hayes isn't a slob but he's also far from the typical buttoned-up CEO. He only recently got a new pair of dress shoes because one of his executive vice presidents noted the ones on his feet were falling apart.
"I'm trying to look more the part but that's quite hard," Hayes says. "My shirt comes out a lot, so people remind me to tuck it in."
Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.