Can JetBlue Airways stay in the black over the long term? Founded by David Neeleman, a savvy entrepreneur who sold his regional airline to Southwest Airlines in 1994, JetBlue sent its first flight into the skies in 2000. The airline quickly attained profitability and built a loyal customer base on the winning combination of customer-friendly service and low airfares. In recent years, however, JetBlue's high-flying profitability has lost a little altitude owing to high fuel costs and sagging revenues.

1. In an industry in which pricing has driven many firms out of business or into bankruptcy protection, why does JetBlue compete so successfully on the basis of price?

2. How does JetBlue use pricing to deal with demand fluctuations?

3. Is a businessperson's demand for air travel likely to be relatively elastic or inelastic? Is a vacationer's demand for air travel likely to be relatively elastic or inelastic?

4. What other factors related to pricing are most important to JetBlue's management when making pricing decisions?