Jet Blue - Case Study

However, despite the correct decision to privatize, the company continued to have troubles. The financials of the newly privatized airline were unreflective of the successful stock offerings. “Air Canada reported losses of C$74 million in 1990 and C$218 million in 1991, and it reported that it had nearly two million fewer passengers in 1991 than in the previous year.” These failures were blamed on the effects of the economic recession and the decrease in travel due to the war in the Persian Gulf. However, it was clear that competition with international carriers was a major cause. To elaborate, the airline industry is considered to be a cyclical industry, meaning that it is directly affected by the business cycle. As such, during times of

September 11, 2001, was a horrific event that rocked the world and the way people viewed the safety of airline travel. The airline industry was hit the hardest after that day and it was uncertain if they could regain their customer’s

Some argue that the 9/11 attacks hastened the airline industry to make changes that would have come sooner or later because many carriers were already in financial trouble. The airlines were forced to make cuts in their cost structure and renegotiate labor expenses due to a decline in passenger demand, which realistically was needed regardless of the 9/11 attacks (Logan).

I would characterize the U.S. airline industry in the early 1990’s as a steak being trimmed of all its fat, the economic climate created a financial calamity of bankruptcies and collapse by major airlines, which in turn created opportunity for smaller more efficient carriers with cost advantages to enter a near oligopoly industry. The economic distress the airlines industry encountered was spawned from recession and a doubling of fuel prices during the Gulf War in 1991. Fuel, the second largest cost to the industry, an uncontrollable cost that raised havoc on this industry,

The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being

Airlines must operate within a low-margin, high-fixed-cost environment, making profitability particularly sensitive to decreases in volume, either from environmental factors (e.g., the September 11,2001 attacks) or from competition. Moreover, the airline business is labor-intensive. Labor costs as a percentage of revenues ranges from a low of about 25 percent for the low-fare airlines to almost 50

The airline industry is one of the largest global industries in the world. Airline companies in the airline industry have gone through challenging obstacles in the past decade. Many changes have occurred within the industry and increased regulations have driven up cost for the industry. The attacks on 9/11 left the industry in shock when planes were used in terrorist attacks in the United States. These attacks changed the mentality of the industry and shifted the focus towards safety. Safety was also a major concern in the industry with the breakout of SARS in 2003 and the H1N1 flu in 2009. The airlines had to ensure that public health and safety of the travelers were

All industries experience change at some point, but few were as large as the airline industry after 2001. There were multiple major environmental factors that impacted the industry, and not all carried equal weight. By far the biggest effect on the airline industry was the terrorist attack that occurred September 11, 2001, where multiple planes were hijacked and crashed into buildings. It became evident to Southwest airlines how events like 9/11 and changing times would prevent many costs and barriers to overcome. The company understood their marketing strategy depended on understanding the different environmental factors that influence marketing.

The airline sector had already been suffering a slowdown as a result of lower economic growth and cutbacks in business travel. Then, at the moment the

A drop in fares has been the best result of the Airline Deregulation Act of 1978. It has been the impetus for the increase in the number of flights, which in turn has spurred a drive for greater safety in airlines. But with the current airline market, this development has given us one negative. Since ticket prices have dropped to new lows, the realities of an industry which operates on such economies of scale dictates that only a few competitors have the capacity to operate within the market. This is not the desired effect of either political side on this issue, but it is an economic necessity with the environment that has been created, very similar to that of public utilities and phone companies.

The purpose of this paper is to evaluate the business strategy of JetBlue Airways. JetBlue was founded by David Neeleman in 2000 and quickly became one of the largest discount airlines in the United States. It was started in the east coast primarily and expanded throughout the country and entered the international market soon after that. JetBlue received the “#1 Airline Brand” rating10 even while keeping its advertising costs significantly lower than Southwest Airlines. Jet Blue’s talent in formulating and executing effective strategies has enabled the company to rapidly grow in the domestic and international market base.

Economy airlines suffer during down economies and reduce their orders, and the industry has become dependent on the Middle East and Asia in recent years to offset this (Crooks & Weitzman, 2010).

The airlines can be affected if the fuel price will rise, for example due to inflation during economic crisis, the rate of the currency can fall and that can cause the fuel prices to go up. In this case the airlines have to raise their flight prices and that wold affect customers in negative way. They will reduce the spending power and this would cause the cuts to the airline companies profits. (Tiernan & Morley, 2013).

The established major airlines, with the exception of those that were failing, shared in the traffic growth, but the new entrants made substantial inroads into market share. Between 1978 and 1986, the share of total traffic of incumbent trunk airlines declined from 94 percent to 77 percent.

The current global economic crisis has changed the way aviation industry goes about its business. It has brought about a boom in low-cost carriers, which has made travelling by air cheaper for the masses. Services offered by airlines and airports are also of higher standards to make people want to travel by air.