JetBlue case analysis

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Contents

External Environment
To evaluate the external environment of JetBlue airways we will use the PESTEL analysis. PESTEL analysis stands for “Political, Economic, Social, Technological, Environment and Legal analysis”.
Political Factors
How and to what extent the government does intervenes in the economy. Political factors can be tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors that are found in the JetBlue case are:
Government monitors the airline industry more scrupulously as a result
60% of airline industry is unionized
Heightened sense of consumer information privacy
Airport slot/gate allocations
Security considerations since 2001 attacks
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Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.
In terms of the threat of substitutes there are not a lot serious threats and alternatives to products within the aviation industry, therefore the threat can be rated as medium. However, private aircrafts can be seen as a substitutes within the industry. Within the transportation industry there are more alternatives for substitutes such as trains, buses, cars and boats.
The threats of new entrants is very low as there are certain barriers to entry such as a high amount of investments that are required and it is rather

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