A discussion about the airline industry, airline employees, and all things related

To: US Employees (especially to our Charlotte-based team):

In announcing JetBlue's intention to add a handful of regional jet flights from JFK to Charlotte and Raleigh-Durham yesterday, JetBlue CEO David Neeleman made the following comment:

"Charlotte and Raleigh-Durham have natural ties to New York, but until now, the people of North Carolina have overpaid for sub-standard service." As US Airways is the largest provider of service from Charlotte to New York, we can assume that at least some of Mr. Neeleman's remarks were targeted at us. A number of you were upset by these remarks so I thought I should share my views with you.

First, I know David pretty well and I can assure you he is a genuinely good person. That he chose to make such a remark is probably indicative of the stress that JetBlue is under and we should not take his remarks personally. JetBlue is experiencing a relative profitability decline that is unprecedented in our industry. It is probably very hard for them to hear that US Airways (who they'd counted on being gone by now) is expecting to be profitable in 2006 (excluding transition related expenses), while they have disclosed that they expect to be unprofitable.

Their problems are serious and structural: 1) they have a low cost structure that is driven primarily by a low average age (low seniority employees, low maintenance on new airplanes for three years, etc.); 2) to maintain a low average age, they must grow; and 3) there are no more growth markets in our industry (which is where our survival really hurt them). And, their problems are well appreciated by the financial markets. Since our merger, US Airways stock has appreciated over 100%, while JetBlue is down about 20%. It doesn't appear that our customers are overpaying; rather it appears that passengers aren't willing to pay JetBlue enough for them to be profitable.

Some of this is likely due to their own service. While US Airways has been the leading on-time major airline since our merger, JetBlue has been among the worst! To characterize arriving late in JFK with a TV in front of you as better service than being on-time in LGA with a first class cabin, an award-winning frequent flyer program, business clubs and a global alliance, suggests that JetBlue may be looking at the wrong service standards.

The fact of the matter is JetBlue is struggling mightily and the hard working employees of US Airways are a big reason why. Rather than get upset by their comments we should keep them in context.

US Airways is going to be here long after JetBlue -- that was not their plan and they are trying to figure out what to do about it.

We, on the other hand, know what to do -- we will compete aggressively, we will focus on running our own race and we will win. Thanks so much for taking care of our customers and please keep it up.

Charlotte Observer