Business Tip: Dave Neeleman, founder, JetBlue & Azul Airlines - The Main Street Entrepreneur
JetBlue founder David Neeleman shares tips for 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 .
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.
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 9 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 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.
Video: Airline Weekly Featured on Fox 5 News D.C.
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