Last updated: 02:00 PM ET, Wed March 30 2016

Why Is JetBlue Opening Offices in Silicon Valley?

Airlines & Airports | Josh Lew | March 30, 2016

Why Is JetBlue Opening Offices in Silicon Valley?

Photo courtesy of JetBlue

JetBlue is getting into the tech startup game. The airline has decided to set up offices in Redwood City, California, which is part of the famous Silicon Valley area.

This kind of move is not unheard of. Some non-tech companies have moved into the region dominated by the likes of Google and Facebook in the hopes of striking it rich by discovering the next major app or social media platform.

Finding the next major idea before anyone else does

But JetBlue has a slightly different reason for heading into the world of Silicon Valley venture capital. It wants to find and develop ideas that it can use in its own operations.

Other industries have been shaken up by major tech innovations in the past decade. Uber and other ride sharing apps have taken a huge bite out of the taxi business, which may never be able to recover. The hotel industry was likewise challenged by sharing-economy inventions such as Airbnb.

JetBlue has always been interested in innovation

JetBlue CEO Robin Hayes explained to Fortune Magazine that this kind of game-changing innovation has not affected the air travel industry yet. However, it could be the next target for startups and JetBlue wants to be ready: “In other parts of the travel industry there has been a lot of disruptions with Uber and Airbnb, but the airline industry hasn’t yet faced that."

READ MORE: The Rapidly Changing World of In-Flight Entertainment

It is no surprise that JetBlue is leading the charge into Silicon Valley. It has always been at the forefront of the industry in the United States when it comes to innovation. It was one of the first carriers to delve into the world of live in-flight TV streaming when it made a partnership with DirecTV. It currently has one of the best in-flight internet setups of any carrier in the United States, and it is in the process of renovating planes to offer even better IFE services.

So the fact that JetBlue will now be neighbors with Google and Apple is actually not as surprising as it might first seems.

Not "flashy" apps, but behind-the-scenes tools

Though 'Blue has been in the news for its in-flight entertainment innovations and its high speed Wi-Fi, many of the projects its Silicon Valley offices will be working on will not involve IFE systems.

Its first venture capital gamble will be on a data company called Flyr. Flyr uses constantly-updated algorithms to predict changes in flight and hotel prices.

READ MORE: Which Airline Is the Most Social Media Savvy?

Other ideas on the airline's radar include tools to help streamline operations in call centers.

JetBlue told Fortune that it plans to invest in five to seven ideas annually, and hopes to have the most successful of these new tech tools in use in its day-to-day operations within the next three years.

There is a precedent for this kind of investment and development in air travel startups. Israeli flag carrier El Al has a venture capital wing called Cockpit that funds and develops new ideas for the industry. 


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