JetBlue Airlines Case Analysis

7061 Words29 Pages
JetBlue Airlines

Strategic Management Case Analysis

Introduction to the Company

History of the Firm JetBlue was established in 1999, and was the third airline start-up for founder and CEO David Neeleman. Neeleman managed to gather $130 million, the most ever raised for a start-up airline, from investors that included Chase Capital and financier George Soros. With the large start-up capital he purchased new Airbus A320 jets equipped with satellite TV, a first in the industry. In 2004 the company ordered an additional 30 new A320 aircrafts from Airbus. The airlines first flight was from New York to Fort Lauderdale in 2000. During the year, the airline added nine more destinations in California, Florida, New York, Utah, and
…show more content…
Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume routes. These airlines generally form alliances with the major carriers and provide service from their hubs to smaller cities in the region. Low cost carriers such as Southwest developed after deregulation in 1978. Southwest pioneered the low cost airline model, which many other airlines have tried to copy. Although there are currently four low cost major U.S. carriers (JetBlue Airways 2006 Annual Report, n.d.), major competitors according to market share include (Figures 1 and 2; JetBlue Airways Corporation Overview, n.d.):
• AMR Corporation
Southwest Airlines, and
• UAL Corporation.

Industry Profitability

Intensity of Rivalry The airline industry can be considered an imperfect oligopoly. There are several large carriers that dominate long distance flights, and many small carriers that compete for short distance flights. Competition is fierce, and the return for most carriers is very low. Some airlines are trying to differentiate themselves, like JetBlue for example, by offering superior services at low prices. Other low cost airlines, like Southwest, offer low costs with no frills. Most airlines offer a frequent flyer programs in order to develop brand loyalty. In recent years there has also been several alliances formed between airlines. These alliances enable
Get Access