Cornell Tech @ Bloomberg Audience Learns How Innovation Makes JetBlue Fly

Known for its low airfares, free Wi-Fi, and seatback live TV, JetBlue encourages its people to identify opportunities and solve problems to create a better customer experience. There’s an egalitarian culture among employees, and JetBlue recently forged its first labor pact with its pilots and soon, its flight attendants. Founded in 1999, JetBlue has become one of the stalwart options for airline travel. Still, the airline contends with industry pressures from rising jet fuel and labor costs, a looming pilot shortage, and competition from foreign carriers. Despite these, Robin Hayes, CEO of JetBlue, and Bonny Simi, President of JetBlue Technology Ventures (JTV), are working to evolve the airline, while maintaining every inch of legroom.

On Tuesday, November 13, 2018, Bloomberg Television’s Scarlet Fu discussed the airline industry, venture capital investing, and technology innovations with Hayes and Simi at Bloomberg’s Global Headquarters in New York City as part of the Cornell Tech @ Bloomberg Speaker Series.

Hayes is an engineer by training with a passion for transportation. He’s an airline industry veteran. Coincidentally, one of his summer jobs was at the duty-free shop in Terminal C at Boston Logan International Airport, which was then home to Delta and TWA and is now JetBlue’s terminal. He spent almost 20 years at British Airways before joining JetBlue in 2008 as the airline’s Chief Commercial Officer.

To achieve her childhood goals, Simi studied at Stanford University, competed on the USA Luge team at the 1984, 1988 and 1992 Olympic Winter Games, worked as a TV sportscaster, and then, on the advice of a weatherman, took flying lessons. She earned her pilot’s license and flew for United Airlines, and now, after 15 years at JetBlue, Simi continues to fly routes along the East Coast on the Embraer 190, while also making strategic venture capital investments for JetBlue Technology Ventures.

Since Hayes became CEO in early 2015, JetBlue has updated its planes’ interiors, embarked on a fleet overhaul and has boosted revenue by more than 20 percent from before he took the helm. To create a conduit for new ideas and technologies, the company established JTV, the first Silicon Valley venture capital arm of a U.S. airline. JTV focuses investment on five areas: providing a seamless travel journey; improving customer service; enhancing maintenance and operations; innovations in distribution, revenue and loyalty; and new modes of regional travel. Since its inception almost three years ago, JTV investments have ranged from ground transportation booking platforms and micro-weather analytics to electric passenger aircraft and a cloud-based insurance platform.

“The idea was to be out in Silicon Valley, separate from the airline, so we can move quickly and nimbly, but with a corporate venture capital lens. The whole point of corporate venture is strategic investments, not just financial,” said Simi.

Investing in the Customer Experience

JTV looks for startups to help the airline innovate from the outside-in and complement what’s already going on internally. As customer and business needs change over time, companies must adapt. “You’re only innovative for one point in time, and then innovation moves along,” said Simi. “You have to keep up.”

JTV’s goal is to help JetBlue increase revenues, reduce costs, enhance safety, improve customer service and, most importantly, measure this impact. About 40% of the investments are technologies that can impact JetBlue in the near term – within two years – while the remaining 60% are longer-term focused and look five to 10 years out.

Investments include travel startups and broadly, anything Enterprise 2.0. This year, JTV estimates it will review about 2,500 startups and fund 10 new companies. JTV tracks every startup so it can take advantage of future investment opportunities.

JTV invested in ClimaCell, for example, which uses cell towers rather than radar to provide localized weather prediction. “The cell signals attenuate differently depending on the type and intensity of weather,” said Simi. “They tell you whether or not it’s raining in New York – that’s what weather radar does – but they can tell if it’s raining right here versus raining one block away.” JetBlue is testing ClimaCell’s technology to predict future weather patterns and increase operational efficiency of its airport operations.

Sprinting to Solutions

JTV also partners with different JetBlue business units on 12-week internal “innovation sprints” to understand unique business needs that new technologies and startups could potentially help address. This process is how the JTV team identified Gladly, an omnichannel customer service platform that allows customers to engage with JetBlue via various channels, including phone, text, email, and webchat. All customer communications are synced so the customer service representative can treat all interactions as one ‘conversation,’ without requiring customers to repeat and recap prior interactions. This helps JetBlue customer support representatives resolve issues more efficiently.

“You’ve got to be thoughtful about change management,” said Hayes. “You can’t just put it out there and hope it works, especially when you have a complex operation flying 40 million customers a year on thousands of flights.”

To maximize value for its portfolio companies, JTV is now building partnerships with other travel providers, like Air New Zealand, so that applicable startups can test their products with different types of organizations.

Finding Future Revenue

JetBlue recently launched a sister company called JetBlue Travel Products. “This is expanding the JetBlue brand. We’re identifying travel opportunities beyond air that are poorly served today and creating new products to improve the entire travel experience,” said Hayes.

The opportunity lies in finding partners to disrupt the travel space beyond the core airline and to think about the travel experience with a clean slate. JTV will be an integral part of this process. “Of all the people flying JetBlue today, only a small percentage of those are buying anything more from us than just the flight, and we think that’s a tremendous opportunity,” said Hayes.

Disrupting Shorter Flights

While there’s risk of disruption in any industry, long-haul flights have less risk than regional travel. “The express carriers are flying fewer aircraft to fewer airports,” said Simi. “Consolidation is happening and there’s more congestion at those airports.”

Rather than fly, people are taking buses which creates a marketplace with opportunities for underutilized corporate charter aircraft that sit on the tarmac for most of the day. JetBlue has invested in JetSuite, which includes JetSuiteX, a small regional airline in California that flies between private terminals. “They’ve taken Embraer 135s and fitted them with 30 seats,” said Hayes. “You can get there 15 minutes before the flight. They valet your bag onto the airplane, and the customer scores are off the charts.”

Even shorter flights are ripe for disruption though as electric propulsion technology advances. “We do believe that, by the year 2023 or 2024, electric vertical takeoff and landing (eVTOLs) and air taxi services will launch,” said Simi.

You can watch the entire discussion below: