JetBlue Targets Boston For Corporate Expansion

Six years ago, JetBlue Airways offered only 11 daily flights from two gates at Boston Logan International Airport, a modest presence that turned the heads of few corporate travel buyers. Now, the carrier is offering more service from the city than any of its competitors, growing at a clip of 30 percent this year alone and making the city a focal point of its burgeoning corporate contracting initiatives.

The carrier considers its presence in New York, the West Coast and South Florida as compelling to corporate buyers only on a secondary or tertiary carrier basis, but in Boston, JetBlue sees the potential to serve as the primary domestic carrier for some companies.

"It seems like every day they're adding a new city, and they're going to cities that are meaningful for us," said Michelle De Costa, global travel manager for Boston-based Sapient. "Any increased capacity is definitely a good thing, especially now."

While JetBlue said it plans to reduce capacity throughout much of its network this year, the carrier said Boston, along with the Caribbean, is driving its full-year 6 percent to 8 percent capacity growth rate, compared with 2009.

JetBlue this summer will operate about 75 daily departures from Logan to about 35 nonstop destinations, while adding frequencies to a dozen markets, including Chicago O'Hare, Charlotte, Pittsburgh, San Diego, Washington Dulles and others. In September, the carrier will launch Phoenix service, while November will bring new nonstop service to Washington National and Sarasota. The carrier's growth in Boston comes in tandem with its recent move to bulk up its presence in the corporate market, as it began forging corporate agreements there, and elsewhere, in the past year.

"They're starting to act like a traditional legacy carrier in the corporate arena," said Joe Ondrus, senior vice president of Boston-based Garber Travel. "If they can get to critical mass in Boston, then I'd expect them to be even more aggressive in the corporate space. I'm seeing our customers are intrigued by it, but the real big shoe to drop is to see how they work with American. That, to me, could be a game changer," Ondrus said, referring the recent JetBlue-American interline agreement, which he said could portend a deeper relationship and a potentially more meaningful value proposition to corporate clients.

Speaking with Successful Meetings' sister publication BTN earlier this year, executive vice president and chief commercial officer Robin Hayes said JetBlue is maintaining a "light touch" in the corporate market. JetBlue has only a smattering of sales managers scattered across the country; doesn't bother with a system as advanced as Prism, rather using an internal tool to calculate discounts and marketshare commitment; has little service to international business destinations, lacks business class cabins and does not boast exclusive club lounges.

Acknowledging such shortcomings, Hayes said, "We don't really position ourselves as a business travelers' airline, but I think the economy that went belly-up at the end of 2008 spurred new interest in many corporates—both large and small—to consider traditional low-cost carriers. The challenge for us is we didn't offer a compelling schedule. What you've seen us do in Boston, for example, is build up a schedule that is competitive for business travelers, and Boston is the market where we expect to see the most traction in terms of getting additional business travel."

JetBlue sales reps across the country are courting what vice president of sales and distribution Noreen Courtney-Wilds called a "targeted account list," particularly companies that would spend more than $100,000 annually on JetBlue. While the carrier has sales managers in "focus markets" including New York—the carrier's hometown—South Florida, the West Coast and the Washington, D.C., area, Courtney-Wilds said Boston offers the carrier a different opportunity.

Courtney-Wilds said its corporate contract penetration remains limited, especially compared with legacy airlines. "We're not in the couple-hundred mark yet," she said.

"The sales managers' approach is very consultative," Courtney-Wilds said. "We go in and talk about the role we can play in their program. Companies are usually willing to share how much program volume they have, and we have this tool we use so we can go to them with an offer and show them where they can move share and save money by flying JetBlue."

Hayes said contract structure depends on the account, but he said, "We keep it very simple, so we'll offer either discounts or a fixed rate and expect a certain volume commitment."

Sapient is among the companies that has submitted data to JetBlue, which is running the numbers "to see what kind of potential there is," De Costa said. While she said JetBlue is appealing to quite a few of the company's corporate travelers, she pointed to some of JetBlue's shortcomings, noting that its frequent flyer program is lacking compared with the legacies, as is its international network. "We're probably about 60 percent international to 40 percent domestic," she said. "JetBlue would be a nice fit for our domestic travel, but they don't do much for us on international."

Courtney-Wilds understands those limitations. "Given our network footprint, we could never be the number-one preferred anyhow, because we don't fly to a lot of those international destinations that companies need. We always have seen ourselves as a niche player in this market to begin with."

The carrier, meanwhile, has been working to make other aspects of its product more palatable to corporations, rejoining the global distribution systems a few years ago, forging interline agreements, partnering with other carriers and adding perks to its frequent flyer program.

Prior to rejoining the GDSs, the company distributed its product to corporate buyers exclusively through its CompanyBlue system. "Now that we have full availability in the GDS and we participate with ARC in various locations, a lot of companies have shifted to that method." Courtney-Wilds said. Some larger corporate buyers still use CompanyBlue, but "it's probably become a little more of a tool for the small and medium size market, and we are planning in the future to add more benefits to that channel that probably speak more to the SME market."

"No one has ever really dominated Boston," Ondrus said. "Because of where it's geographically located, someone's always just had 25 percent seat share, 18 percent seat share, so it really has always been a battleground to get a real foothold. US Airways tried it, Delta tried it and now JetBlue is giving it a shot."

This story was originally published in the July 12, 2010, edition of Business Travel News.

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