JetBlue’s Attempt to Serve Stakeholder Interests Ahead of a Winter Storm

So the Valentine’s Day winter storm was approaching and JetBlue leadership was facing some very difficult decisions in support of a large collection of stakeholders. What would our customers want us to do? Would they want us to try and fly, or would they want us to cancel and have them forego their vacation plans? How about our investors? Would they want us to cancel much of our flying on the only holiday weekend of the quarter if there was a chance that we might be able to operate? What would our crew members, the term we use for our employees expect us to do?

Interestingly, they all owned equity through our crew member stock purchase program and we’re all entitled to profit sharing if we were able to earn any, which means they were an interesting group to consider, part employee and part shareholder. How would the FAA, our regulatory authority want us to be thinking about our operations? How about the media? What kind of stories would they want to capture during JetBlue’s departure from convention? Fly against all odds and embarrass our much more experienced competitors or collapse, tragically illustrating the over-confident, flawed logic of an adolescent startup.

Speaking of our competitors, what were they thinking as they do to flee and in accordance with a remarkably inflexible operating plan, closed up shop ahead of the weather, leaving customers with vacation plans at home, bags packed with nowhere to take them. All these are great questions with no easy answers, particularly in the face of a developing winter storm. As you might have imagined as I was sharing that list, the thought of trying to satisfy all stakeholder interests even when everything is going according to plan can be daunting. But for the sake of this discussion, allow me to tell you a little bit about how JetBlue leadership was thinking about our primary stakeholders.

Our customers were watching the weather and most fully understood the implications of the winter storm. The likelihood of our operations wasn’t very high. But this was JetBlue, and JetBlue isn’t like every other airline. As a leadership team, we knew that our customers would understand if we canceled operations until after the storm had passed, but we also knew that if there was a chance to operate as long as we could do so safely, we should try to live up to the commitment we made to our customers when they purchase their tickets. We made a commitment to try and operate our schedule and try and get our customers to their friends and families.

So torn a bit by the tension between canceling and attempting to operate, knowing that our customers would understand if we cancel but also knowing that we can be heroes if we operated when no one else did, we decided to make an effort to fly our schedule. Our investors; clearly as a leisure airline, looking at the only holiday in the quarter and coming off of two consecutive unprofitable years, our investors were very interested in having us attempt to fly, if of course we could do so safely. Yes, it would have been easy to cancel flights and try to move customers to other flights that operated after the storm had passed, but that would likely mean a two or three-day delay.

So many of our customers would likely miss their cruises or lose their rental properties because they failed to show up on time. Investors knew that this weekend was make it or break it if we wanted the shot at a profitable quarter. Our crew members; as our crew members were both employees and shareholders, they were a stakeholder group with a very complex set of interests. As employees, who doesn’t want a few extra days at home, especially during a winter storm? But we also had crew members already away from home because they were out operating trips on the days leading up to the storm. For those folks in particular, they really wanted us to try and operate.

Of course as stockholders, all of our crew members wanted us to make choices that would allow us to generate revenue and subsequently profits. Profits that we would not only share with them through our JetBlue profit sharing program, but also profits that would increase investor confidence, driving up the stock price, and increasing the value of company ownership. The forces at play had our crew members wanting us to operate. The FAA; our regulatory partners were not only those at the FAA, whose clear primary objective is to ensure the safety of all who travel on or operate aircraft in the United States.

We also work with the Port Authority of New York and New Jersey as they owned and operated JFK and all the New York airports. They had responsibility for all the terminals and gates, ramps, space, and taxi ways on the airport property. What were they interested in? Primarily, they wanted things to run as smoothly as possible around the airports. So their interests would be best served by all airlines canceling everything. That way they could plow snow and care for airport grounds without airline operations getting in the way. That said, if any airlines did intend to operate, their job would be to support them. The media; what did the media want? Ultimately they wanted a story.

When the winter storm threatened to devastate travel plans for New York residents, they had their first story. Even if airlines canceled everything days in advance to the storm, they had a story. When it became clear that JetBlue might try to operate while all others had canceled everything, another story began to take shape. Would JetBlue be hero or a goat? Either way, the media wanted to be there to watch and report on what was sure to be an entertaining show irrespective of the outcome. Competitors; in the airline industry, most decisions are made by corporate leaders with their own companies and customers in mind.

In most cases, it doesn’t really matter what the competition is doing, particularly when it comes to weather-related issues. The law is generally pretty clear on safety related decisions and company policies, which have evolved over years of trial and error and there are a lots of both in the airline business generally favor the more conservative option, when decisions come down to a choice between two or more possibilities. So as JetBlue was facing their decision to operate or not, competitors had already made their choices, independent of JetBlue or any other competitor. But once JetBlue decided to operate, my competitors have wondered if this might just be another unexpected feather in the cap of the startup carrier.

So JetBlue’s stakeholder interests were pulling in both directions. Some stakeholders wanted JetBlue to do everything they could to fly, others wanted JetBlue to take a couple of days off. Still others like crew members felt somewhat strongly both ways. This is why we talk about stakeholder interest is typically creating a tension of some sort for high-stakes leaders. Rarely you will find do all of your stakeholders want you to do the same thing, to make the same decisions. As if crisis leadership wasn’t hard enough, just working to resolve the crisis, you’re going to have to deal with groups of stakeholders that want, perhaps demand different things. In the end, JetBlue of course decided to try and operate.

Hindsight being 20-20, it turned out to be a bad choice, a choice we will explore in greater detail as we go on. For now however, consider how the decision to operate might originally appear to be a lay-up. Just cancel like everyone else and start back up when the sky is clear and everyone else starts flying again. But as you can see from the various stakeholder perspectives, that wasn’t a lay-up. Just as we now know, an opportunity to learn from mistakes.