There is evidence that Song is making headway: In May, Reader’s Digest awarded the airline “Best In-Flight Service.” “Our mission is to create brand evangelists, to make travel fun again,” says Joanne Smith, president of Song. That sounds a lot like JetBlue, although despite repeated attempts on this reporter’s part, Smith could not be coaxed into even uttering her rival’s name, let alone acknowledging what Song has borrowed from the airline.

Like JetBlue, Song intended to reconfigure the economics of air travel—crews were to be smaller and expected to work harder and faster. But according to JetBlue, the formula isn’t working for Song. Though Delta won’t release separate figures for Song, JetBlue used data from Delta’s filings with the Department of Transportation to construct its own profit-and-loss estimates for its rival. And according to that research, it actually costs Delta more to fly Song on a per-seat basis than it does to fly Delta itself.

When I spoke to James Parker, an airline analyst at Raymond James, he supplied some harder figures, telling me that it appears that in the first quarter of 2005, Song lost $58 million on $209 million in revenues. When I asked if he was using the same information that JetBlue had, he replied that, yes, he had been pointed toward it by someone at JetBlue. (The JetBlue folks don’t mind uttering the name of their competitors.) In any case, Parker says the numbers do not surprise him. “What Song has to do is try to come up with something better than JetBlue,” he says. “They haven’t done that.”

Still, JetBlue is not above learning a thing or two from its competition. To counter Song’s vast audio offerings (passengers can customize their own playlists from 1,600 MP3s), JetBlue is rolling out XM Satellite Radio on its planes. But Neeleman has no interest in copying some of Song’s more extreme gimmicks, like the limited-edition, $238 “Mile High” jeans, complete with Song’s logo on the back pocket, that the airline produced to celebrate its nonstop New York–to–Los Angeles service in the spring.

To Neeleman’s way of thinking, JetBlue’s competitors are simply focusing on the wrong thing. “If you were a rational person running a big airline, you would stop trying to put people like us out of business, and instead build stone walls around your fortresses and defend those,” he says. By fortresses, he means two things—hubs and international flights, neither of which is really under attack from JetBlue.

JetBlue’s CEO says he doesn’t really mind if fuel prices keep going up—because he knows his beleaguered rivals won’t be able to handle it.

Neeleman adds that when JetBlue has found itself in wars of attrition, it doesn’t needlessly stick to its guns. A case in point is the Atlanta–Long Beach route, which JetBlue abandoned in 2003 after just six months, when Delta and low-cost competitor AirTran dug in their heels. According to JetBlue, the trouble started when it offered a $99 fare sale, which was quickly matched by the other two. Overnight, a route that used to have eleven or so flights a day, with fares up to $2,000, was swamped with 26 flights a day on which it became nearly impossible to get anything more than $99. In such an environment, the airline chose to retreat from Atlanta entirely.

Tim Claydon, senior vice-president of sales and marketing, says JetBlue was making its costs back, but not much more, and decided that the planes would be put to better use in Boston. “To say that the competitive response was irrational would be an understatement,” says Claydon. “But in a highly competitive environment, you can lose your shirt if you stick to a decision that ultimately isn’t working out for you.”

If Delta represents everything that JetBlue wishes to avoid becoming, Southwest Airlines is Neeleman’s model. When JetBlue was founded, the conventional thinking was that it intended to be “the Southwest of the Northeast.”

In the current environment, Southwest has continued to outmaneuver everyone in the business. When crude-oil prices plowed past $60 a barrel, crushing every airline in its path, Southwest was paying $26 a barrel for 85 percent of its fuel, because of its prescient hedging strategy. And as long as oil prices remain high, this competitive advantage will extend into the next few years. Sixty-five percent of Southwest’s oil in 2006 will come at a cost of $32 a barrel. By 2008, it’ll still be getting 30 percent of its fuel at $33 a barrel.

JetBlue did a fair amount of its own hedging, which is one of the reasons it was able to stay in the black for as long as it did. Through the first half of the year, it was paying less than $1.50 per gallon for fuel, while the market rate had exceeded $2.50.