Jetblue Airways: Managing Growth Essay

Given the fierce competition in the airlines industry and the additional competition being offered by the new ultra-low cost carriers, it has become imperative for Southwest Airlines to find a solution that will be sustainable and insulate them verses these and any other future threats. Southwest has initiated a merger proposal with JetBlue that will result in the newly formed SouthwestBlue being much larger and able to compete for control of the North American Continent as the number one provider for customers concerned with both low-cost and excellent customer service. Because both Southwest and JetBlue have similar core values, customer service policies, and business models, it will be an easier merger than it would be for two carriers with drastically different layouts.

Before David Neeleman’s non-compete agreement with Southwest Airlines expired, he envisioned the concept of starting a low-fare airline that would combine common sense, innovation, and technology and bring the humanity back into air travel (Gittel & O’Reilly, 2001). In 1998, JetBlue was born. In order for David to fulfill his goal of a “do-it-right” kind of airline, he needed to recruit superior industry veterans who were willing to start from scratch and place an emphasis on employees and customers. Each of these individuals, from the President, General Counsel, CFO, and the HR director, wanted to create an airline that was fun, had

JetBlue Airlines today is known for their low-cost flights and many in-flight perks, such as free TV channels, and overall has become a favorite of many travelers because of the more pleasant flight experience JetBlue can provide. In 2007, about 9 years from when they started, an ice storm in New York tested JetBlue’s mission to be a different kind of airline when the weather caused many delays and a bottleneck of troubles at the gates of the airport. Hereinafter is an analysis of the JetBlue’s strategic plan and how it was affected by this system failure (Brennan & Morgan, 2007).

JetBlue is an American airline company whose headquarter is located in the New York City. They are a low-cost airline who is rapidly growing in the Unites States. According to Wikipedia, “David Neeleman founded the company in February 1999, under the name "NewAir.” Many of their approach come from Southwest Airlines include low prices airfares. However, they differ in the amenities offered to the customers.

David Neeleman is the founder of JetBlue Airways, which began under the name of “New Air” in 1999. Many JetBlue executives were previously employed by Southwest Airlines, a competitor in the area of low cost travel. However, Mr. Neeleman’s vision was to offer more amenities to its passengers, like in flight entertainment, leather seats, and unsurpassed customer service (Discounting, 2009). His idea was “to launch a new airline that would bring humanity back to air travel (Schill, M. J., et al,

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).

JetBlue Airways Corporation was formed in August 1998 as a low-fare, low-cost but high service passenger airline serving select United States market. JetBlue's operations strategy was designed to achieve a low cost, whilst offering customers a pleasing and differentiated flying experience. JetBlue has had a successful business model and strong financial results during that period, and performed well in comparison to other airline companies in the US during the period between 2000 and 2003. It had been the only other airline apart from Southwest airlines, to have been profitable during the aftermath of the September 11, 2001

Introduction JetBlue Airways is a passenger airline founded in 1999 by David Neeleman. Neeleman aimed to provide the customer with first-rate service at reasonable prices. In order to ensure this strategy, JetBlue had to recruit and hire the right people to complement its core values. The company encompasses five core values: safety, caring, integrity fun, and passion. JetBlue uses a targeted selection process to identify employees which fit the company values.

According to (Smith, 2012), JetBlue was the best-funded startup in the history of U.S. aviation established in 1999. The company started when the founder realized that there are many needs to minimize the time taken by travelers to book their traveling. Neeleman decided to utilize the technology to come up with a system that will enable the customers to reduce their time that they use while waiting to be attended. The founder of the airline was working with different carriers before deciding to come up with JetBlue Company which come after the first fail. He was a great admirer of Kelleher and Southwest, but he noted that there were two seemingly contradictory forces at work if an airline could be successful.

JetBlue is a low cost US airline. The firm was founded by former Southwest Airlines employee, David Neeleman, and incorporated in 1998 in Delaware. The firm was not originally known as JetBlue, the initial name was NewAir. The plans for the new airline were announced by Neeleman in February 1999, and in April an order worth $4 billion was given to Airbus for up to 75 new A320 aircraft, at the same time leases were arranged for 8 aircraft. The firm gained exemptions for 75 take off and landing slots at JFK Airport in September, takes delivery of the first aircraft in December, and officially starts flights on 11 February 2000 (JetBlue, 2012). The first was being between JFK and

JetBlue Airways Corporation has established itself as a low-fare passenger airline with a differentiated product and a high-quality customer service. They focus on serving underserved markets and large metropolitan areas that have high average fares. They offer both short-haul and long-haul routes that are point-to-point rather than the 'hub and spoke" route system that has been adopted by most major U.S. airlines.

Jet Blue managers have not managed the company 's assets efficiently and effectively. Because of the September 11 terrorists attack, Jet Blue 's Return on Assets (ROA) has drastically dropped from 2003 to 2004. It is very far from showing profitability and best use of its assets. Southwest Airlines also experienced a drop from 2001 to 2002 but has sufficiently recovered and is on an upward trend. Their increase from 2002 to 2003 was at 35%. It is showing profit and increasing its ROA. Jet Blue 's performance shows that the company is currently improving and may be stronger in its future performance. Southwest Airlines shows that their current performance and future performance expectations are good.

•Neeleman offered passengers a unique flying experience by providing new aircrafts, simple and low fares, leather seats, free Live TV at every seat, pre-assigned seating, reliable performance, and high-quality customer service. JetBlue focused on point-to-point service to large metropolitan areas with high average fares or highly traveled markets that were underserved. JetBlue’s operating strategy had produced the lowest cost per available seat mile of any of the major U.S. airlines in 2001—6.98 cents vs. 10.08 cents.

JetBlue is a company built on a focus strategy of low-priced, no-hassle ticketing and refreshingly efficient customer service. The company began with the goal to eliminate many of the complexities and asininities of commercial air travel and set a new standard for customer service. Thus far the company has flown beyond these goals and everyone's expectations while returning a handsome profit to whomever chooses to invest in this airline industry success.

Over the years, one of the main competitors of jetBlue has been Southwest. In a 2009 report it was mentioned that two other low-cost airlines, Virgin America and SkyBus, were some of the biggest competitors for jetBlue (case study); however, a 2013 analysis might have suggested in some way that JetBlue was about to have new airlines to compete with, Singapore Airlines and Emirates Airlines, by introducing new features and “technological innovation in their offerings” (Popova, 2013). Airlines are implementing these improvements in order to attract more customers that look for comfort, but at the same time affordability. It can increase the competitivity, but it is not noticeable immediately.