I am so pleased. So today I am sitting down with someone who really has seen quite a transformation. Joanna Garrity, who is the CEO of Jet Blue joining us here, and you've been at this company for almost two decades. You became CEO in February. You previously were chief operating officer. This has been a company that's gone an incredible transformation. Can you just describe what that transformation of identity has been like?
You know, thanks for the question. You know, Jeff Blue, our mission has always been about bringing humanity back to air travel, and I think we continue to do that to this day. We've definitely had a number of challenging items over the last few years of field transaction, actually filed two transactions, but we're focused on getting back to
the core, our roots. What makes jef Blue unique special being that carrier for so many different customers who want to fly to leisure out of the Northeast, into the Caribbean, Florida, you name it. But really remembering that at the heart of what we do is delivering great service. We've got great people and that's what sets jeff Blue apart.
The reason why I ask is because you made some news to you talked about opening lounges at JFK in New York City as well as in Boston's Logan Airport, some plans to potentially open up others in Orlando, in Fort Lauderdale, and it made me think the idea of lounges caters to a premium, well healed customer, how does that fit into the transformation?
Yeah, I think most probably don't realize that, Jeff Blue. Actually it's about twenty five percent of our seats are premium, between our even more space seats and our Mint product, and this has been something that customer has been asking for for quite some time, and so we're dipping our toe into the water Boston JFK. The lounges are going to be designed around a more bespoke personal experience, play, live work, and really focusing on how do we address
what our customers have asked for. Transatlantic customers will be able to go into the lounges as part of their ticket our mosaic for customers, so some of our most loyal will also have access along with our customers who are going to sign up for our new Premier card that we're launching later this year. But We're focused on making sure there's no long lines and it's something that customers actually want to joy before they fly.
Okay, let's just talk about how many lounges you're talking about building out. I mean, is it's the beginning of fifteen lounges all around the world. You're talking about London, You're talking about New York. Are you talking about Let's see how it goes?
Ye, how it goes. I think if you look at what we did with Mint when we introduced it across the United States, you know, about years ago, we were very thoughtful about how we stepped into it. We want to make sure that it's what customers want, but we also want to make sure it's affordable. And lounges are
expensive to build them out, to operate them. So we've got to be very thoughtful because low fares are an incredibly important part of what JetBlue delivers to customers, and we need to keep it that way.
Well, that's what I was going to ask. I think about lounges and premium seats as often catering to a corporate customer. How do you cater to the leisure customer with these types of perks that cost money at a time when you're really known for care catering to value for people like myself who have gone to the islands with the kids and pack it all up and it's exhausting, but they can get sunships, so everybody's happy.
Sure. I think what most don't realize is our loyalty program and becoming a Mosaic four is actually quite accessible. So unlike some of the larger carriers where you have to be a true road warrior to take advantage of some of the perks, that's not the case at JetBlue. You book a couple of vacations a year on Jet Blue and depending on the flight spend, you might actually qualify as a Mosaic four and that gives you a rite into a lounge, which I think is unique and
sets us apart. There's this huge population of people who fly a lot, but not enough to probably qualify to be, you know, the top, top top tier at some of the other airlines, and we want to be there for them. We know we can do it. In terms of the on board service, we do it today, free Wi Fi. We've been doing it for ten years. You can stream, you can play games, snacks, you know, great leg room, and I think we're uniquely situated to do this.
You know, since the pandemic, people have talked about how a lot of airlines that have catered to a wealthier individual have been more resilient. They've been actually been able to withstand some of the turmoil post pandemic. During the pandemic has been a surprising trend that has stuck that people are willing to spend money to go have extra leg room, for a premium seat, even slightly better food. How resilient is that trend? Is that here to stay and.
Why we've been seeing the premium trend for the last ten years. It's why we introduced Mint several years ago. But we want to be careful about it because we don't have the road warrior customer, but we know we have a high value leisure customer. And so when I think about the girls trip to Caribbean, you know you want a special experience. You want you know, a fun drink, you want a little extra leg room, you want to
be able to stream on your phone. Those are things that we can offer and there's a great customer demographic to do that. But we also have to remember some customers don't want those perks and low fares are a real priority, so we want to balance it all. You know, an aircraft is a tube, and we think that there's a whole bunch of different things we can offer within that.
But you know, you have to be mindful of how many customers, how many customers you're going to cater to in each section of the aircraft.
How expensive are these lounges.
So we haven't gotten into costs. You know, we're not talking about that publicly, but we're going to do it in a very affordable way and it's very much tied to our train Atlantic service, our co brand partner, as well as customers who want to pipe by day passes that are part of our mosaics.
You mentioned the credit card that you're going to be unrolling, and I've seen this with Delta and United and how the credit card has been the key component of a lot of resilience and profitability. Do airlines now have to be credit card companies to survive?
I don't think they need to be credit card companies to survive, but it definitely helps. Listen to credit card that is associated with an airline keeps the brand top of mind when you take it out to buy a meal and you get points on Jet Blue. That's something that reminds you that those points are there to earn
travel for your next experience. And so from our perspective, we have a great credit card program, a great partner in the form of Barclays and MasterCard, and it's something that we know we have opportunity to continue to grow. Tied to our loyalty program, we also get points on vacations with Jet Blue and that's something unique avis as well rental cars. So we like how we've designed the program really around the leisure customer and the perks that they want as part of that program.
So you haven't transformed any of the locations that Jet Blue flies to in terms of spreading out beyond just leisure. Is that really still the focus?
So right now we're focused on really trying to make sure that we're growing our points of strength. So our focus is being the best East Coast leisure network Boston, New York, the surrounding cities down to Florida, the Caribbean. We've got some great transatlantic flights. We definitely have to make sure in this world where we're not growing as much that the places that we fly earn their way into the network, so we've moved some unprofitable flying out.
We've actually pivoted pretty significantly back into the Northeast and really doubling down and offering a great schedule and great network for customers here.
There have been a number of changes. In February, carl Icon took a ten percent stake or just under that in jet Blue and it has two board seats that he has filled. How many of these changes are coming with his urging, So.
This is very much a plan that Jet Blue has had in place. We've been working it for the last year as we were kind of cycling through the Spirit transaction. The carl Icon board members have been very construc and we all feel very strongly that we need to become profitable again, and we need to remember that we have these tremendous strengths that we need to drive more value out of.
You mentioned that Spirit deal. You mentioned a couple of deals that have fallen through. We did see Alaska and Hawaiian tie up. Are you still out there looking to consolidate or are you just basically saying that's enough, We're done.
We've got a great brand we've got a great organic plan. We're focused on delivering the organic plan. Going through a transaction can take its toll on an organization. It also creates a level of distraction, and so we're very much focused on executing our Jet Forward plan and bringing Jet Blue back to what it was when we were founded around bringing humanity back to air travel.
Is there a certain critical mass, so a certain economy of scale that's required in a world where the overhead is getting more fickle and more volatile, and frankly, a lot of people, the staff actually are a lot more expensive.
I think scale matters. We're trying to build that scale
with art within our core geography. So again, if you look at what we're doing in the Northeast, it's building scale and schedule in depth in the Northeast, in the Caribbean, in Florida, And that's our focus is if we can't build scale on a national level, let's build scale and the geographies where there are high populations of people, where our brand is well known, where customers love the experience, and where we can deliver a great leisure offering to customers.
There's a question right now about how long we can remain in this cycle where people can really lean into the Instagram moment, and I'm wondering how much you see ongoing spending or whether some of the new offerings really reflect the fact that spending has been strong in the upper income tier and has been tapering off in people who are looking more for just value.
You know, customers definitely look for value, and we need to be there for them, which is why low fares matter. But we also know customers value experiences too, and we're continuing to see strength in interests in those experiences and we want to be the airline to do it for the leisure customer.
Do you need to increase prices significantly to keep up with the pace of how much things are increasing, especially given you know some of the renewed contracts and how you know the overhead costs have reportedly gotten significantly more expensive.
We're definitely seeing labor costs increase, and it's important we want to pay our people for the service they deliver. They're an important part of the Jet Blue product. They're what differentiates us. But we also have to be mindful that we have to keep our costs in check, and that's always been a key priority for Jet Blue. Because low costs drive lower fares. We're focused on how do we do that through data science running a more efficient operation.
We've seen great progress this summer in terms of better operational performance and that drives costs out of the business.
Do you see demand sort of level picking up? How would you characterize it?
I'd say demand, as we communicated in our last update, is solid. You know, the fall troughs are definitely more challenging. The troughs are a bit deeper for the leisure customer now than they were pre COVID, So we're focused on rationalizing capacity during those troughs to drive the best results for jet Blue.
What's your favorite route of That's a tough one.
They're all my favorite, Oh for.
All, My children are my favorite children. Joanna Garritty, thank you so much for being with us. Joeta Garrity, the CEO of jet Blue,