JetBlue founder David Neeleman shares tips for airline business

JetBlue and Azul founder
David Neeleman.
David
Slotnick/Business Insider

• David Neeleman is one of the
  most prolific and successful airline entrepreneurs in the
  world.
• He’s the founder of JetBlue and Azul as well as a co-founder of Morris Air
  and WestJet.
• Neeleman is also a co-owner of TAP Air Portugal.
• The JetBlue and Azul founder shared with Business
  Insider some of his secrets to success in the airline
  business.

David Neeleman is quite possibly the most prolific and successful
airline entrepreneur in the world. He’s the founder of JetBlue
and Azul Brazilian Airlines as well as a co-founder of Morris Air
and WestJet.

He’s also a co-owner of Portuguese national
airline TAP Air Portugal.

Earlier this year, the Brazilian-born, Utah-raised airline boss
announced plans to launch his fifth airline, an American low-cost carrier
called Moxy. 

With WestJet, JetBlue, and Azul all thriving, Neeleman has been
able to do something few entrepreneurs have been able to over the
years, build an airline from scratch and turn it into a
profitable business. 

REUTERS/Paulo Whitaker

Recently, Business Insider had the chance to speak with David
Neeleman about why his airlines have succeeded when so many
others have failed. 

The first thing is to the get into the business for the right
reasons and not just “for the sake of doing it.”

“Sometimes people do things, start businesses and get into the
airline industry particularly because it’s sexy and exciting, but
they don’t have a lot of experience,” Neeleman told us in an
interview shortly before he announced plans for Moxy. “There’s
been a lot of money lost in this business like that.”

According to Neeleman, investing in industries in which you have
very little knowledge and experience is a surefire way to quickly
fail. 

You have to figure out whether there’s an opening or
opportunity in the marketplace for the business to fill, he
said. 

“I would never start an airline or take over an airline that I
thought didn’t have a reason for being, a ‘raison d’être,'”
Neeleman said. 

AP

For example, WestJet, which began service in 1996, came about
when Canadian Pacific Airlines and its successor Canadian
Airlines suffered through more than a decade of
financial instability. With the possibility of Canada’s
second largest airline going defunct, there was room in the
market for an upstart to take on the country’s national airline,
Air Canada, Neeleman explained. 

Air Canada ended up acquiring Canadian Airlines in 2001. These
days, WestJet is Canada’s second largest airline.

And then there’s JetBlue. 

According to Neeleman, JetBlue came about when he noticed that
the shortcomings of America’s major carriers made them vulnerable
to a newcomer. 

“It was a time when the legacy carriers were offering really bad
service, their costs were ultra high, and they were just right
for the plucking,” Neeleman said. 

In response, Neeleman founded JetBlue which calls itself a
customer service company that
flies airplanes.

Bruce
Bennett/Getty

The New York-based boutique carrier, which launched in 1998, has
successfully delivered low-cost carrier prices with friendly
service and luxurious amenities. 

After parting ways with JetBlue, Neeleman launched Azul Brazilian
Airlines in 2008. A low-cost carrier with hints of JetBlue
DNA.

The entrepreneur noticed that many of Brazil’s cities had
airports, but no airline service. Azul has gone and filled in
those service gaps. As a result, it’s now the third largest
airline in Brazil. 

But things don’t always work out and it’s important to know when
to get out, Neeleman said. 

Neeleman co-founded his first airline, Morris Air, in 1984 and
served as the company president until it was sold to Southwest
Airlines for a reported $129 million in
1994. 

“I sold Morris Air to Southwest because (the airline) was really
vulnerable,” he said. “I’m sitting in Delta Air Lines’s hub in
(Salt Lake City, Utah), I didn’t have a lot of capital at the
time and one of my guys told me ‘you know if Delta just matched
all your fares they’d be revenue positive’ and take so much of
our market share.”

REUTERS/Rafael Marchante

Since Morris Air competed on price, Neeleman decided the most
prudent thing to do was to sell.  

“We were pretty vulnerable and Southwest wants us plus when
someone hands you $15 million at 33 years old you’re like ‘Yeah!
I’ll take it,'” Neeleman said. 

Finally, there’s the need to build around loyal and competent
people or as Neeleman put it, folks “who know what the heck they
are doing.”

“I’ve got a team of people that’s been with me since the early
days,” he told us. “I’ve got one person who is working with me at
Azul that was at Morris Air.”

“Those guys and gals have always been at my side and they know
how to run an airline,” Neeleman added.