Reference no: EM131286469

When low-cost carrier JetBlue Airways began operations in 1999, it promised customers cheap fares combined with exceptional service. JetBlue planes offer more leg room and all seats on JetBlue planes offer passengers 36-channel DIRECTV® service on seat-back screens. For seven years, JetBlue, with a few exceptions, kept its promise to passengers and shot to the top of customer satisfaction surveys J.D. Power and Associates conducted. On Valentine's Day, 2007, however, the airline suffered the worst crisis in its history. Due to an unexpected New York ice storm, nine JetBlue planes full of passengers were stranded on the tarmac for over 6 hours-one plane and its 130 passengers sat on the tarmac for 10 hours. The planes left the gate and then found they couldn't take off, but the airlines, feeling that the storm would let up by midmorning, did not allow the planes to return to the gate.

In the end, the wheels of the planes were frozen in the slush, unable to move. In the next few days things got even worse for JetBlue as a snowball effect (pardon the pun) from the storm caused hundreds of flights to be cancelled-JetBlue's flight attendants and pilots were not where they were needed, and the company's communication system staff people were not trained to tell them what to do. At some airports, police had to be called in to help calm down the irate customers. While the airline was far less than satisfactory in its response to the Valentine's Day ice storm, its response to the crisis was a model of excellent PR.

Seeking to swiftly respond to the crisis and appease angry customers, CEO David Neeleman quickly apologized to customers and explained what went wrong. He said he felt "mortified" and "humiliated." To get his message across, he appeared on CNN's American Morning, Today, Fox and Friends, and Squawk Box early the next day. But JetBlue did more than just apologize to consumers. The airline offered passengers who were stranded on JetBlue planes for three hours or more a full refund plus a free round-trip ticket to any JetBlue destination.

In all, the airline spent $30 million on vouchers for passengers of the 1,102 cancelled flights. In addition to its immediate response to the February cancellations, JetBlue cited its dedication to "bringing humanity back to air travel" and established a Customer Bill of Rights retroactive to February 14. The Bill of Rights outlines what JetBlue will provide to its customers in cases of flight cancellations, departure delays, overbookings (customers who are denied boarding will receive $1,000), and even when the DIRECTV® is inoperable. But will these changes satisfy customers?

Most customers reacted with caution, saying that they would be watching the airline to see if it lived up to its promises. Other stranded passengers were less positive, and some vowed never to fly JetBlue again. Will the Bill of Rights allow JetBlue to gain the level of customer loyalty it enjoyed before the crisis? While most customers of delayed flights may be satisfied, others may not. What about customers whose delays fall 10 minutes short of receiving a full-price trip voucher? And what will happen when another crisis occurs? JetBlue must continue to develop customer service and PR programs if it is to stay in the air for the long haul. You Make the Call

1. What is the decision facing JetBlue?

2. What factors are important in understanding this decision situation?

3. What are the alternatives?

4. What decision(s) do you recommend?

5. What are some ways to implement your recommendation?