Out-of-the-box airline carries over offbeat approach to IT

What do you call a relative startup that runs 40 per cent of its operations on beta software in an industry that's bleeding millions of dollars a day? 'Nuts,' said Jeff Cohen, vice president and CIO at JetBlue Airways

What do you call a relative startup that runs 40 percent of its operations on beta software in an industry that's bleeding millions of dollars a day? "Nuts," said Jeff Cohen, vice president and CIO at JetBlue Airways Corp.

When the discount airline was launched three years ago, few people gave it much chance for survival. JetBlue offered low-cost travel to Florida with new planes, plush leather seats and free satellite TV for all its passengers. Other airlines that have tried to create low-cost spin-offs have been hampered by high overhead and operating expenses such as hefty pilot salaries.

But three years since its maiden flight on Feb. 11, 2000, from New York's John F. Kennedy International Airport to Fort Lauderdale, Fla., JetBlue has been laughing its way to the bank. The Forest Hills, N.Y.-based carrier, which generated a handsome 16.8 percent profit margin in 2002, is one of just a handful of airlines that have managed to wring out a profit in the wake of the Sept. 11 terrorist attacks in 2001.

This year, JetBlue expects to post more than US$1 billion in revenue from flights, which it now offers to 20 cities nationwide. The airline ranks first among U.S. airlines in on-time arrivals, load factor (meaning it fills its planes better than any other airline) and utilization of its aircraft -- all while fielding the fewest number of customer complaints.

JetBlue's emphasis on holding down costs and turning flights over quickly mirrors the low-cost, aggressive personality that its IT department has developed.

"I have nothing but Windows," said Cohen. "No Unix, no AS/400s. It helps us keep our total cost of ownership low." Cohen spoke yesterday at a luncheon of the New York Metro Chapter Society for Information Management (SIM NY).

By maintaining a Windows-only environment supported by roughly 250 servers, JetBlue's 60-person IT staff can keep its application development and support costs relatively low, said Cohen. JetBlue's IT budget is roughly $19 million, or 3 percent of the company's $635.2 million in revenue in 2002.

Cohen also works feverishly at hammering out joint-development, early-adopter and other beta-testing sorts of arrangements with Microsoft Corp. His goal is to hold down software licensing costs while procuring cutting-edge technologies that provide a good fit with the business. JetBlue is currently either running or testing state-of-the-art Microsoft systems ranging from Windows 2003 Server to Microsoft Exchange/Titanium e-mail to Office 11.

"Getting the inside track at Microsoft was a lot of work, a lot of lobbying," said Cohen. Microsoft representatives, he said, "don't line up for you. But at the end of the day, you're getting a lot of free technology."

The approach helped JetBlue hold its Microsoft licensing fees to $346,000 last year. It has also provided a strong work incentive to the company's IT staff. "I have people who look forward to coming into work every day because nothing stays the same," said Cohen. "If you're not going to be the leading dog, the view is always going to be the same."

IT has also helped JetBlue avoid some of the costly overhead problems that have constrained other airlines. For instance, instead of leasing space or building an expensive call center to field customer calls, JetBlue supports 760 customer service representatives who work from their homes by providing them each with voice-over-IP telephones, said Cohen.

Cohen and other executives have also worked hard at fostering the culture at JetBlue, where it's not uncommon for Frisbee fights to suddenly erupt. "Our success is due to having the right people," said Cohen, who avoided hiring tech professionals with airline industry experience.

Airline IT people "tend to bring big, bad legacy ideas with them," he said. "We treat everybody like a crew member, not like an employee. People with great performance will give you great prosperity."

Cohen might be cost-focused, but don't expect him to outsource IT functions anytime soon. "I've been a consultant. I know how much they cost and how much outsourcers cost," he said. "I don't subscribe to outsourcing anyway," outside of occasional Microsoft-certified consultants that JetBlue has used on a project-by-project basis.

Michael Brenner, principal at New York-based headhunting firm Brenner Executive Resources Inc. who attended the SIM NY luncheon, said he was impressed by his initial encounter with Cohen, who was previously chief architect at US Web/March First.

"After 30 years of recruiting and identifying talent, even after talking to him for five minutes I could tell he (Cohen) is very special," said Brenner. "It plays to his experience in an entrepreneurial environment, where you need to do many things well." -- Computerworld (US online)

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