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JetBlue ’07 Valentine’s Day Crisis – The Case For Chief Reputation Officer (CRO)

JetBlue’s crisis response in the airline’s Valentine’s Day debacle has been superb. Because they are, by themselves, reactive, they miss crucial valuable elements: benchmarks and right timing to launch, creating uncertainty amidst too many unknowns.A proactive crisis management stance delivers predictable solutions. A chief reputation officer or CRO, however, fiercely protects this invaluable, yet fragile company asset, suggesting that a kairos (well timed and measured) response would reduce uncertainty and likely produce better, more predictable results.

What were they thinking?

The 2007 JetBlue Valentine’s Day crisis falls in the category: what were they thinking? Firstly, it was Valentine’s Day. Secondly, most of the travelers literally could not wait to get to their destinations to see their loved ones. Thirdly, and most importantly, any form of captivity for one, two, three, four, five, six, and in one case, nine hours on an airport runway was simply bad PR

Six to nine plane-loads of stranded, hungry, tired and angry executives, men, women and children, for however many hours, was the wrong image to project no matter JetBlue pre-crisis stellar reputation. Because JetBlue built its reputation as a low-cost carrier, chances are financial considerations dominated the company’s thinking during the crisis. However, more than its bank account, this debacle threatens to irreparably damage JetBlue reputation, an even more valuable and hard to replace company asset.

JetBlue crisis response

JetBlue founder and CEO, David G. Neeleman, deserves an A+ in his crisis management efforts in the Valentine’s Day jetliners’ grounding. Underscoring his appreciation for the seriousness of the crisis and the danger of reputation damage, he has been front and center in the fight. he has appeared on every form of media to communicate with JetBlue stakeholders. Contrite, direct and to the point, Neeleman’s well-crafted messages have been: We learned a huge lesson. We made a mistake, we take full responsibility. I am humiliated and mortified. – A refreshing change, according to the editorial page of February 22 Houston Chronicle. Evasiveness, pontification, shifting the blame would, in this case, only exacerbate the crisis, increasing the chance for further reputational damage.

A damaged reputation has far reaching, long term negative ramifications on a company’s good name, operations and bottom line. ExxonMobil still bears the scars from its 1989 Valdez oil spill environmental crisis; Houston based Enron Corporation is no more. The name ValuJet airline ceased to exist after its 1996 Florida Everglades crash, and its subsequent merger with AirTran. The cost of reputation neglect is simply too high to pay. Smart organizations, therefore, spare no expense and no efforts in their quest for survival when facing a threat to their reputation.

That’s the reason for announcing the $30 million dollars overhaul of procedures at JetBlue. That’s the reason for proposing a rather capitulating passengers’ bill of rights guaranteeing refunds and vouchers for delays caused by the airline in the future. it remains to be seen, however, how effective JetBlue efforts are long term, based on the number of return passengers.

Though nearly flawlessly executed by David G Neeleman, crisis response strategies, by themselves, have inherent flaws. Firstly, they are reactive, missing two very crucial elements: benchmarks and right timing to launch. Secondly, they depend on too many unknowns for success: possible new damning revelations, misquotes, unexpected lawsuits, and so on. Thirdly, cynics are more likely to question JetBlue’s motives for such generosity after a potentially devastating crisis.

A proactive approach to crisis management, on the other hand, provides a better chance for survival. Imagine if the bulk of the same proposals from Neeleman were put forward before the crisis, by a duly appointed chief reputation officer of the company. not only would the overhauling price tag be far less than $30 million, the proposed customer bill of rights would probably have been less conciliatory, yet be just as effective, possibly enhancing JetBlue already solid reputation. From a proactive stance, the chief reputation officer would have carefully monitored the situation for benchmarks and the all-important crisis tipping point to launch a planned response, sparing passengers the nightmare; and the company precious time, embarrassment and money.

Chief reputation officer

Because JetBlue built its reputation as a low-cost carrier, financial considerations possibly dominated the company’s thinking during the crisis. More than its bank account, this debacle will dent JetBlue reputation, an even more valuable, and hard to replace asset to the company. just as JetBlue has a chief financial officer in charge of financial matters, it needs a chief reputation officer or CRO to take charge of company reputation. His or her core mission will be to create, shape and fiercely protect the company’s hard earned reputation. The cost of reputation neglect is simply too high to pay.

Rising Cost of Air Travel

It’s as if the airline industry has flown directly into the perfect storm. Just as air travel volumes reclaimed their pre 9-11 levels, surging oil prices began threatening airline profitability. In response to oil prices, some airlines locked in rates while others took their chances with the volatile oil market. On average fuel costs consume 24% of an airline’s operating budget and labor takes another 22%. Pilot unions have a firm grip on labor costs and negotiations with the unions have been futile. Additionally, security costs and stringent FAA regulations put additional strain on airline operating costs without signs of relief. These issues hurt the entire airline industry; even low cost carriers like Jet Blue, Southwest, and Ryanair have been impacted by the storm.

As competition continues to drive down ticket prices, airlines struggle to trim fat. more fat means more fuel and airlines are looking for way to lighten their plans in an effort to reduce fuel costs. many airlines have turned to baggage to solve their fuel cost problems. two bag limits and excess baggage fees are becoming the norm for most airlines. In October 2005, Jet Blue tightened their baggage policy by reducing their checked bag quantity and size constraints. last week Ryanair took it one step further with their controversial decision to charge for all checked baggage.

Airlines have taken away free meals and replaced them with overpriced al carte snacks. they have automated much of their customer service functions with kiosk type solutions. they have raised ticket prices to cover rising fuel costs. now, Delta and Northwest say that labor pay cuts are necessary to survive, but the pilot’s unions are holding their ground. It’s hard to imagine what will happen next, but it’s sure to have an impact on travelers’ wallets.