JetBlue: Trends in the US Airline Industry

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1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011). Each of these trends can have an impact on strategy. Consolidation affects all firms because not only does it change the competitive dynamic of the industry, but it also creates a situation in which any firm can be involved in that activity. If JetBlue falters, it could find itself a takeover target because of its relatively small size. As a low cost carrier, JetBlue has actually benefitted from this trend. Only Southwest is a larger low cost player in the US, but the strong performance of these types of airlines in Europe and in Asia makes it more likely that they will grow in prominence in the US market. As for fuel prices, every firm handles this differently, but most hedge fuel prices to reduce volatility, and to allow them to have a

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