On the day JetBlue hit its fifth birthday this month it was valued at nearly $2bn - $500m more than American Airlines, the world's largest airline. Its valuation that day was no birthday quirk: it was once valued at more than the four largest US airlines combined.

That fact speaks volumes about the strange economics of airline stocks: American Airlines has 1,000 aircraft to JetBlue's 71, and annual revenues in 2004 of $18.6bn to JetBlue's $1.3bn.

Yet JetBlue's high valuation is also a reflection of its success. It reached major carrier status (with revenues over $1bn) faster than any other airline, raised the largest financing sum for any airline start-up at $130m and, along with Southwest Airlines, is the only US airline currently expected to be profitable in 2005.

Blue Streak, by Barbara Peterson, provides some answers as to why JetBlue has been so exceptional: its conscious decision to model itself on Southwest, the efficiency of using a single type of aircraft, the installation of televisions in seats, and attentiveness to customer service at a time when legacy airlines were exploiting passengers with high fares.

The book was not authorised, but might as well have been. It often reads as a hagiography of JetBlue, and especially of David Neeleman, its founder, introduced to readers shuffling through an airport terminal in slippers and pyjamas to promote a new red-eye flight.

Yet it provides some lively character sketches. Mr Neeleman, a Mormon and father of nine, who has been diagnosed with attention deficit disorder, is an obvious focal point. There is an enjoyable encounter with Herb Kelleher, the famously hard-drinking, heavy smoking co-founder of Southwest, who acquired Mr Neeleman's first airline creation, Morris Air.

"Uh, Herb, could you go a little easy on the smoking and the drinking?" asks Mr Neeleman when escorting him into the headquarters of the Mormon church in Salt Lake City. Clearly Mormonism didn't take - Mr Neeleman was sacked five months later by Mr Kelleher.

The author is at her best when discussing the softer, cultural issues that influence start-ups, such as the absurd amount of time spent naming the airline and the benign cult of JetBlue imposed on recruits.

She highlights, too, the role of administrative challenges, such as the battle over slots at New York's John F. Kennedy airport. JetBlue's recognition of JFK's potential for a domestic operator was key to its success.

Yet much is also missing. How long, for instance, can JetBlue avoid the union politics that dominate the industry? How well is it managing the transition from family start-up to a mature business?

There is little probing of the industry environment that enabled JetBlue to flourish. The bankruptcies of United and US Airways, for instance, are covered in a single sentence. "And, amid all this, JetBlue beat even the rosiest of forecasts with a 16 per cent profit margin," Peterson writes elsewhere.

This context matters. JetBlue's rapid success was as much a function of timing as its internal quirks. It benefited from the fact that network carriers were more intent on saving themselves than killing rivals. And as one of few companies to purchase aircraft during the downturn, JetBlue was able to buy them on enviable terms from Airbus.

The current challenge for the airline is to maintain profitable growth when network carriers are becoming more aggressive. For instance, Delta's recent SimpliFares initiative, which will cap its most expensive fares for late bookings, is expected to erode JetBlue's revenues.

While the company plans to grow in 2005 by 27 to 29 per cent, its operating margins have fallen steadily, from 19.7 per cent in the third quarter of 2003 to 7.1 per cent in 2004. Nevertheless, they remain the second best in the industry.

Mr Neeleman has joked to Michael Lazarus of Weston Presidio Partners, which doubled its money with its stake in Morris Air, that if he delivered a ten-fold return on his investment in JetBlue, Mr Lazarus should convert from Judaism to Mormonism. It is a testament to JetBlue's success that Mr Neeleman won his side of the bet within five years. Given the challenges ahead, however, he is unlikely to be placing any similar wagers in future.

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