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JetBlue Is Fighting a Flight Cancellation Disaster Right Now

Flying in the wintertime is always a risky proposition. Winter storms can wreak havoc on the air transportation network. In the first week of 2014, JetBlue Airways (NASDAQ: JBLU  ) customers have found out just how bad things can get when the weather doesn't cooperate.

Since Thursday, JetBlue has canceled more than 1,000 flights. This has left many JetBlue customers stranded at their vacation destinations for days (in some cases, up to a week!), while preventing others from getting to where they were going in the first place.

JetBlue has been inundated with flight cancellations in the first week of 2014. Photo: JetBlue.

While every airline has encountered weather-related trouble in the last week, none could top JetBlue's woes. This could have a significant near-term impact on JetBlue's earnings as the airline has had to refund thousands of customers' airfares. Longer term, it could make some travelers wary of flying on JetBlue again, even though many of the problems were out of the company's control.

Hercules: the first blow
Winter Storm Hercules dealt the first blow to JetBlue on Friday. The storm brought heavy snow to the Northeast, with Boston getting well above a foot of snow. Unfortunately, JetBlue's two biggest bases by far are New York and Boston -- most of the airline's flights touch one of those two cities.

This caused hundreds of JetBlue flight cancellations on Friday. By Saturday, the airline was telling customers that while the worst was over, it would still take some time to get flight schedules back to normal . With so many of its planes affected by the snowstorm, JetBlue knew that it would have a hard time getting all of its planes, pilots, and flight attendants back to where they needed to be.

A change in pilot rest rules added another big twist. New regulations went into effect on Saturday and reduced the amount of time that pilots are allowed to work in a given day, while increasing the amount of rest time required between shifts. The result: Many flights had to be canceled because delays would have taken the pilots beyond the maximum permissible time on the job.

More complications
However, JetBlue did not anticipate the full extent of the headache involved in repositioning planes and flight crews. On Sunday, JetBlue began telling passengers that it would take days -- not hours -- for everything to get back to normal.

Aggravating matters, freezing rain moved into the New York area on Sunday morning. This caused a Delta Air Lines (NYSE: DAL  ) commuter plane to skid off a taxiway at JFK Airport. Authorities were forced to close JetBlue's primary hub for about two hours while airport crews salted and sanded JFK's runways and taxiways.

On Monday, weather in the Northeast started to improve, but airports in the Midwest were hit with record low temperatures that forced even more cancellations across the industry. As these frigid conditions move into the Northeast on Tuesday, it will continue to impede recovery efforts for JetBlue and other airlines.

As a result, JetBlue finally threw in the towel on Monday afternoon, canceling most of its flights for the rest of the day and for early Tuesday morning. (According to FlightStats, JetBlue canceled 380 flights on Monday, about half of its schedule.) By cutting most Monday afternoon and evening flights, JetBlue hoped to get all of its planes into position and to allow all of its pilots to get their "mandatory rest" so that the airline can be back to a normal schedule by Tuesday afternoon.

What's the impact?
JetBlue has done its best to explain to customers why bad weather in the Northeast caused days of long delays and cancellations throughout the country, but customers are still angry. Numerous media outlets have carried stories about JetBlue customers having their flights canceled and having to wait for several days to get home.

It took JetBlue years to recover from the reputational hit caused by a similar snowstorm-induced travel nightmare back in 2007. JetBlue is being fairly generous in terms of offering customers refunds, but that's a small compensation for people who are missing work and paying for extra hotel nights.

The company needs to continue putting customer needs over near-term profitability in order to avoid a long-term blow to its reputation as a relatively customer-friendly airline. JetBlue may also need to invest in some additional PR work in the next few months to minimize the damage to its brand.

Longer term, JetBlue executives need to think long and hard about whether it's wise to have so much of the carrier's capacity allocated to the Northeast. By putting all of its eggs in one geographical basket, JetBlue is especially vulnerable to regional weather problems.

JetBlue is already planning to add flights in Fort Lauderdale in the next few years, and it should be looking for other opportunities to diversify its route network with new focus cities outside the Northeast. By doing so, the carrier may finally be able to assure customers that the recent weather-related chaos will not recur in the future.

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Adam Levine-Weinberg

Adam Levine-Weinberg is a senior Industrials/Consumer Goods specialist with The Motley Fool. He is an avid stock-market watcher and a value investor at heart. He primarily covers airline, auto, retail, and tech stocks. Follow him on Twitter for the latest news and commentary on the airline industry!

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8/28/2015 3:59 PM
JBLU $22.30 Down -0.09 -0.38%
JetBlue Airways CAPS Rating: ****