Amid economic uncertainty and soaring fuel costs, there's one airline that didn't just meet Street expectations, but also put on an impressive show. I'm talking about discount carrier JetBlue Airways (Nasdaq: JBLU), which recently posted better-than-expected first quarter results as it reaped the benefits of an increased number of air travelers along with its ability to charge higher fares.

Flying through the rainbow
During the first quarter, JetBlue generated $1.2 billion in revenue, an impressive 19% increase over the previous year. The company's profits increased to $30 million, or $0.09 per share, which was higher than what analysts expected.

This wasn't the case for some of its industry rivals. For instance, despite benefiting from extra charges such as cancellation and baggage fees, thanks to its recent acquisition of AirTran, discount carrier Southwest Airlines' (NYSE: LUV) profits were in the red, something the company was already expecting. Why? Same old problem plaguing most airline companies -- rising fuel costs.

JetBlue was able to offset the high fuel costs by increasing its fares in the wake of strong demand for air travel. The airline recorded 7.9 billion in revenue passenger miles during the quarter, a staggering 14% increase over last year. This phenomenon was quite apparent in Boston, which saw an increase in the more profitable business-traveler segment. In fact, JetBlue's traffic increase was so substantial that it had to add new flights to accommodate the surge.

A combination of higher passenger traffic and higher fares improved the company's revenue per passenger (an important metric in measuring airlines' profitability) by 6%.

The rising cost of jet fuel continues to be the single biggest cause of concern for almost all airline companies. United Continental (NYSE: UAL) recently reported a 21% surge in its total fuel costs, which greatly outpaced its 5% revenue growth. Similarly, competitor Southwest Airlines complained about a staggering 45.5% increase in fuel costs, which were partially offset by increased passenger traffic and higher fares.

However, JetBlue played a smarter game. The company experienced a mere 10% increase in realized fuel prices to $3.25 per gallon, compared with the $3.44 per gallon Southwest paid in its first quarter. JetBlue hedged 42% of its fuel consumption, resulting in a $9 million gain, and has also hedged 26% of its fuel requirement for the second quarter. JetBlue expects to pay $3.33 per gallon during the current period, while Southwest may pay an average of $3.42 over the same timeframe.

The Foolish takeaway
JetBlue stands out against the current uncertainty in the airline industry, both in terms of managing costs and grabbing a bigger share of the growing market for air travel.

Airline ventures can be a risky business, as Warren Buffett learned the hard way after his investment in US Airways in the early 1990s. However, there's another industry that Buffett is incredibly bullish on. Find out which stocks he would find attractive at today's prices in our recent special report, "The Stocks Only the Smartest Investors are Buying."