The Sky’s the Limit

It doesn’t look like the United States headquarters of the fastest-growing airline in the world, this second-floor suite of offices above a bank on the Post Road in Darien. Sure, there’s a conference room—one, anyway—where a smattering of photos of planes and ribbon-cuttings share the walls with framed newspaper stories and schematics of jet configurations. A radio station plays. There’s nothing fancy here. Mostly, the place is unassuming and unpretentious, just like the guy in charge.

After he and his assistant wrap up a conversation, David Neeleman strolls over. He’s wearing loafers, a pair of jeans and a white oxford shirt with a robin’s-egg-blue pattern, the same color as his eyes and his airlines. Neeleman, the fifty-five-year-old founder, chairman and CEO of Azul Brazilian, and the founder, former chairman and former CEO of JetBlue Airways, grabs a bag of potato chips from the table and settles in for a chat.

Success is coming fast to Azul. The airline, which Neeleman founded in 2008, currently flies more than 25 million passengers a year to more than 100 destinations in Brazil. Last December, Azul added the United States to its list of destinations, flying non-stop from Campinas, about an hour outside of Sao Paulo, directly to Fort Lauderdale. The tourism director in Florida called the Azul flights an answer to her prayers, as the economic impact from the Brazilian arrivals is estimated at $65 million a year per flight. Azul added Orlando a couple of weeks later. The airline was supposed to add New York as a destination this month, but that’s been delayed so that the company can reconfigure planes for better seating. In the meantime, it has added more flights to Florida where, Neeleman says, “business is exceeding expectations.”

That’s not surprising, given the talented entrepreneur’s track record. As a college student, he started a little travel agency that eventually generated millions in revenue each year. A charter airline he helped grow was sold for nearly $130 million to Southwest Airlines; another airline he built morphed into WestJet, Canada’s most profitable. Then there was JetBlue. And while all of this was going on, he found some time to invent the e-ticket. More often than not, Neeleman’s businesses have exceeded expectations, but it’s the trying times that show his true grit.

Here in the conference room, Neeleman seems to be nothing if not adaptable. The Brazilian-born Utahan who now lives in New Canaan and whose career has endured more ups and downs than a commuter jet, appears relaxed and enthusiastic. He talks about his children (all nine of them), some of whom have played lacrosse at New Canaan High School. Over the years, Neeleman has made it a point to attend their weekend games. He works in Brazil on Mondays through Wednesdays, then returns home on the red-eye, arriving before the sun does each Thursday morning. He flies back to Sao Paulo on Sunday nights, via American Airlines. While some businessmen would call the commute drudgery, Neeleman uses it as research on how to improve the passenger experience.

The goal to transform that experience was at the heart of the creation in 1999 of JetBlue, which featured low fares on brand-new planes that had leather seats, lots of legroom, unlimited free snacks and live TV on the seatbacks. These elements were developed based on Neeleman’s own in-flight experiences. “I have A.D.D. I’d get bored flying,” he says, munching on the chips. He makes the strategy sound so simple, but in fact the TV alone was “an $80 million bet,” says Michael Lazarus, managing partner of Weston Presidio in San Francisco, and an investor in Neeleman’s businesses for more than twenty-five years. Yet the bet certainly paid off. “He’s like Midas,” Lazarus says in a phone interview. “Everything he touches turns to gold.”

Lazarus remembers when JetBlue was conceived. “We had breakfast at Little America, in an old-school hotel in Salt Lake City. It’s the kind of place where a lot of blue-hairs go. David leans over almost to my nose and says quietly, ‘Michael, I have a new idea. Let’s start a discount carrier, but this time let’s do it in New York.’ I said, ‘Why New York, David?’ and he said, ‘That’s where all the people live.’”

Supply and demand. It’s the foundation for any new product, and the principle that enabled Neeleman to realize his first business success when he was a student at the University of Utah. “I knew somebody who knew some guy who had some timeshares in Hawaii that he couldn’t rent,” he says. Neeleman offered to pay the maintenance fees on the condos in return for the right to rent them out and keep the difference. In short order he was generating thousands of dollars a week. He dropped out of school, hired a few employees and started a travel agency. Getting to Hawaii was expensive, so Neeleman’s business booked flights for passengers on a small charter airline, buying tickets in bulk ahead of time. Just when his package-tour business was booming, with a staff of eighteen and millions of dollars in revenue each year, the charter airline Neeleman had depended on went bankrupt, seemingly overnight, taking his agency’s ticket deposits with it. At age twenty-four, Neeleman was bankrupt.

While he was still smarting, June Morris tried to track him down. She ran a corporate travel agency and needed help growing the leisure side. Neeleman dodged her for a while. “She called me and I wouldn’t call her back,” he says, smiling at the thought. He was through with travel and was back working at his grandfather’s convenience store in Salt Lake City. Eventually, Morris wooed him and Neeleman became the travel agency’s executive vice president, then president of the company. The agency started its own charter airline, Morris Air, where Neeleman became known for things like peddling tickets at the mall, sweeping out planes between trips and heading out on the tarmac at 4 a.m. to de-ice the planes.

When Southwest Airlines bought Morris Air in 1993, Neeleman reportedly made more than $20 million. Many thought Neeleman was being groomed to succeed CEO Herb Kelleher, but Kelleher fired him five months later. Neeleman says he simply didn’t fit in. “I got down there and I was so full of ideas,” he remembers. “Maybe they saw me as a pain in the ass.”

Not so, says Lazarus, who contends that Neeleman’s simply not a meetings guy. “This is a person who should never work at a Procter & Gamble. He’s A.D.D. and dyslexic and doesn’t do meetings. He’s an entrepreneur and an old-school service provider. He could be on a plane or driving a taxi. He is exactly what you see, with no calculated or hidden agenda.”

Neeleman was thirty-three years old when Southwest dumped him. Because he’d signed a five-year non-compete clause, he commuted to Canada to help develop WestJet, currently the most valuable airline in Canada. All the while he dreamed about his own airline. When the clause expired, Neeleman and Lazarus began to build the team that would create JetBlue. “We brought in our limited partners and off we went,” remembers Lazarus, who would become JetBlue’s founding chairman of the board.

Neeleman packed up his family and moved from Utah to New Canaan in 1999, selecting the town because of its proximity to New York City and because his brother Steve, a surgeon, had a friend who attended New Canaan’s Church of Jesus Christ of Latter-Day Saints and spoke highly of the town’s vibrant Mormon community.

The LDS religion has been a guiding light in the Neeleman family for eight generations. Neeleman’s father, Gary, had served a mission in Brazil and was working there as a reporter for United Press International when David was born in 1959. The family returned to Utah when he was five. Neeleman revisited the country of his birth at age nineteen, when he returned to serve a two-year mission in poverty-ridden Recife. The country was off his radar after that but remained in his heart and his future. First, though, was his well-chronicled tenure at JetBlue, where stories abound of the CEO who sat in the last row when he flew and walked the plane, introducing himself to passengers. “I’ve seen him do it,” says Lazarus. “He’d walk down the aisle, stop at every seat and say ‘Hi, I’m David Neeleman. How can I make your experience better?’ People would say, ‘Why can’t I have a lid on my coffee?’ or ‘I’d like a bottle of water to keep my child happy.’” Neeleman would write their suggestions and names on business cards, then take the ideas back to the airline. If the suggestion was put into practice, the airline sent the passenger free tickets. Neeleman earned $200,000 a year at JetBlue and donated his salary to the Crewmember Crisis Fund. He said he would take care of the crew members; they in turn would take care of the passengers; the passengers would then take care of the shareholders.

One day, though, those passengers were left in the cold. An ice storm on Valentine’s Day 2007 stranded more than 130,000 JetBlue ticketholders. In May, Neeleman was ousted as CEO. While he publicly shouldered the blame for the debacle, Lazarus says there was so much happening behind the scenes that the real story never came out; the upshot, however, was that “the board kind of did him in.”

In the conference room in Darien, the memory still seems to sting, all these years later. Neeleman puts a positive spin on the whole episode, though. “With every challenge comes an opportunity,” he says. “We don’t have the depression gene in our family. We stay positive. Instead of jumping off a cliff, we rethink things.”

After JetBlue, Neeleman visited Brazil to investigate a fledgling airline at the behest of investor George Soros. That airline wasn’t going to last, Neeleman reported back to Soros, but it got Neeleman thinking about starting a new discount airline in his home country. He enlisted his friend Lazarus to help him build a business from scratch. “My worry was how do you marry the culture of aggressive New Yorkers who are Mormon with the laid-back culture of Brazil?” says Lazarus, a Jewish man from Amish-country Pennsylvania who had been at Neeleman’s side when the pair met with “chain-smoking, whiskey-drinking Texans” to arrange the marriage between Southwest and Morris Air. “But it has been a real joy. It’s like JetBlue relocated to Brazil.”

The first anniversary of JetBlue in December 2000 was marked during a Buffalo snowstorm with CNN coverage and news of the airline’s 1-millionth passenger. By comparison, after just one year in business in December 2009, Azul was flying nearly half a million passengers per month. This coming year, the company will fly its 100-millionth customer on May 13. In the U.S., there’s one commercial plane for every 65,000 people; in Brazil there is one for every one million people, but Lazarus reports the country has the fastest-growing middle class anywhere. Plus, there’s little to no union activity, little to no terrorist activity and no cold weather issues. “And Brazilians are very family-oriented,” Lazarus says, which makes Neeleman feel right at home.

In the conference room, Neeleman’s cell phone rings and he picks it up for a quick conversation with a business associate, then promises to return the call. The phone has hijacked his attention, though, and he starts flipping through text messages.

“My kids are so funny,” he says, chuckling, his nose to the phone. The Neeleman clan, various members spread between Fairfield County and Brazil, stay in touch each day via the real-time messaging service WhatsApp. Victoria is on a quest to start a giant cookie business. Isabella, the youngest, is looking forward to the return of her sister Vanessa, who is currently on a mission in Brazil. A couple of the boys work in Brazil. Those still in Fairfield County check in with Dad in person every other Sunday for dinner. “Everyone in our family is a foodie,” says Neeleman, who sometimes beckons his children home with his flank steak recipe. He also woos the kids with travel. “If you set something up that’s really nice, they come along.” He was speaking about family trips, but he may as well have been talking about passengers on his airlines.


Up in the Air
Where does a man with his own airline travel when he has some downtime? We asked David Neeleman to tell us about some of his favorite destinations

The entire Neeleman clan regroups each year in Orderville Canyon, up on the rim of Zion National Park in Utah, where the family has a getaway. Neeleman and his brother Steve own nearby Zion Ponderosa Ranch, a 4,000-acre resort in Mt. Carmel.

Neeleman took his daughters to Fernando de Noronha, an archipelago off the Brazilian coast. The main island stretches only about five miles long and two miles wide, and it’s a World Heritage Site, so the number of visitors is limited each day.

The whole family has vacationed together at Playa Grande, a nature reserve on the north coast of the Dominican Republic. “It’s secluded, full of nice people and just perfect for family time,” says Neeleman, even if it can’t be reached by Azul.

Disney World recently gave Neeleman and his family a giant thank-you gift for bringing more than 700 Brazilians to Orlando every day: a trip to the resort and its theme parks, complete with fast passes to the front of the line for all of the rides.

An independent tour operator recently set up a ten-day trip to Italy for the Neelemans. The family of foodies began in Venice, wound their way through Tuscany and ended in Rome, where they spent the Easter Sunday holiday at the Vatican.

 

 

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