Quick Take: Vouching for JetBlue

One week after a winter storm disrupted operations and stranded passengers, and one day after it cancelled hundreds of flights, JetBlue (Nasdaq: JBLU  ) CEO David Neeleman introduced a bill of rights for his airline's passengers.

The list of purported improvements includes flight vouchers for service disruptions. For example, customers subject to ground delays of 30 minutes or more on arrival, or three hours or more during departure, are eligible to receive free tickets. So are passengers denied boarding for flights that, because of operational problems, are delayed by an hour or more.

Also, JetBlue now promises to let passengers deplane after five hours on the ground. (Forgive me if this doesn't sound all that appealing.) Some were held up for 11 hours last week at New York's Kennedy Airport, as winter weather froze planes at gates and on the taxiway.

All told, Neeleman says last week's debacle at JFK will cost roughly $30 million. Investors responded by selling JetBlue shares, which were down 5% on the day.

But that may be just the beginning. Tens of millions of dollars will likely be allocated to Neeleman's bill of rights. Why? Most of the payouts have to do with delays, and JetBlue has the worst on-time record of the 10 major carriers operating in the U.S.

Maybe that will change, now that Neeleman has expressed a newfound commitment to service. But that commitment will cost money, which, in turn, will blur the once-distinct line between this airline rebel and legacy laggards like US Airways (NYSE: LCC  ) , UAL's (Nasdaq: UAUA  ) United, and AMR's (NYSE: AMR  ) American. Think about that before you invest.

Do you agree? Disagree? Let me know.

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Fool contributor Tim Beyers, ranked 1,573 out of more than 23,000 in our Motley Fool CAPS investor intelligence database, no longer flies frequently. But he still enjoys the occasional first-class vacation. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on travel, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy is always on time for departure.


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