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Amid Cost Cuts, JetBlue Will Boost Its Training Budget

July 5, 2006
Related Topics: Latest News
Mike Barger had never even heard of a corporate university when he started at JetBlue Airways. But today, he is not only the man who oversaw the creation of the airline’s extensive employee training and leadership development program, he is its biggest champion.

Like its competitors, JetBlue is struggling to turn a profit as fuel costs continue to rise. In April, the Forest Hills, New York-based carrier posted its second consecutive quarterly loss, citing fuel prices as a major factor. The company said it paid an average of $1.86 per gallon for fuel during the first quarter, up 43 percent from a year earlier.

As part of a plan to return to profitability, the company has outlined plans to cut costs. One proposal that came up at a recent management meeting was cutting the company’s leadership development budget by half.

But that’s where Barger, chief learning officer at JetBlue, drew the line.

"I said we should double the leadership development budget because we are asking these people to be on the front lines," he says. "I said that we couldn’t afford not to increase it."

Most of the time when companies hit financial hurdles, their training programs are the first to go, analysts say. But that’s a huge mistake, and can result in demoralizing employees and increasing turnover, says Jan Rose, a principal at Capital H Group, an HR consulting firm based in Chicago.

Keeping these programs intact now is particularly important for JetBlue. The entire company is based on the concept of low-cost service, which means encouraging customers to use the Web for transactions but also providing them with a staff that is trained in conflict management and problem-solving techniques, says Robert Mann, an airline analyst.

"What really distinguishes an airline is its service delivery," he says. "It’s how the staff bridges those, hopefully, occasional mishaps."

JetBlue hired an average of 10 new people a day last year. And as it continues to grow, it’s going to be harder to find the best people, Mann says. This means that training and developing its current staff is going to be even more important.

JetBlue’s management understands this and has agreed to increase funding for the leadership development program for next year, Barger says, although he will not say by how much. In line with its "return to profitability" campaign, the airline is adding workshops to teach managers about the financial aspects of the business, Barger says.

Among other things, instructors will explain how each of the company’s procedural changes will affect JetBlue’s bottom line. For example, the company has occasionally waived fees when customers change flights, but it is now trying to get away from that practice.

But it’s still up to the employee to look the customer in the eye and make that decision on a case-by-case basis, Barger says. By teaching managers about the financials behind such decisions, JetBlue hopes to give them the tools they need them to make the right calls.

"It doesn’t mean that it’s us against them," Barger says. "It means play it as it goes."

Jessica Marquez

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