Jetblue Crisis Feb 2007- Synopsis

Business Strategy – BAD 4013 – SUMMER 1999 Case Study Southwest Airlines I. Strategic Profile and Case Analysis Purpose The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Twenty-seven years ago, Rolling King, owner of floundering commuter airline, and Herb Kelleher, King’s lawyer, got together and decided to start a different kind of airline that would provide a short-haul, low-fair, high-frequency, point-to-point service in the United States. The company began service on June 18, 1971 with flights between Dallas, Houston, and San Antonio (“The Golden Triangle” as Herb called it). Southwest Airlines is the fourth

JetBlue Airways, the latest entrant in the airlines industry has gone through the initial stages (entrepreneurial and collectivity) of the organizational life cycle rapidly under the successful leadership of David Neelman. JetBlue Airways is currently in the formalization stage of the life cycle where in it needs to create procedures and control systems to effectively manage its growth. Also as it proceeds to grow further to reach the elaboration stage, JetBlue needs to continue to align itself with the environment in order to maintain its sustained growth.

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.

JetBlue is a pro at utilizing its resources and structure. As such, JetBlue has proven to be efficient in its internal environment. Out of the physical and human aspects of the internal environment JetBlue focuses on human as the key factor. JetBlue views its employees and their skills as the key to a successful structure by emphasizing elements of loyalty, satisfaction, service quality, productivity, capability, and output quality. JetBlue reflects a culture of employees that understand how to retain customers and can perform under various situations with an equally varied consumer base. In addition to human capital, JetBlue uses physical assets to set them apart from the rest. The airline fleet of JetBlue is very precisely selected. From its new Airbus A321 to its Airbus 320, JetBlue prides itself on comfort and luxury. Other perks offered by JetBlue include lower priced airfare compared to that of its competitors and in-flight entertainment options that succeed its competition. Internal weaknesses include a

A major operational cost saving involved entering the major air industry with a new fleet of Airbus aircraft. Although European made, Airbus was chosen due to their fuel efficiency, easier maintenance, and five-year warranty (Gajilan, 2003). Neeleman realized that quick turnaround time was a crucial factor in maximizing profits by simply keeping the new planes in the air longer than the competition. Because JetBlue worked largely out of secondary airports (Midway vs. O’Hare), its flights avoided more

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 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.

The key external factors like the growth in the economy, disposable income, and fuel prices have negatively affected JetBlue. It was compelled to change its strategy several times and in 2011 had an income of $86 million down from $97 million in 2010. The growing consumer interest in leisure travel has positively affected JetBlue. The success of JetBlue has been attributed to growing consumer interest in leisure travel.

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

David Neeleman, CEO of JetBlue Airways and his management team have realized that JetBlue is still making profit despite the many challenges facing the airline industry after the September 11th 2001 terrorist attacks. Despite these positive returns; JetBlue plans on raising capital through an Initial Public Offering (IPO) to support its aggressive growth and to also offset portfolio losses to their venture capital

JetBlue has been one of the most successful airlines since it first entered the industry in December of 1999. Founder, David Neeleman, set out to succeed by offering low-cost air travel in hopes of perpetuating his services to as many people as he could across the US. He was very adamant about having a very customer oriented business that catered to the needs of all. In doing so he wanted to emphatically promote his obligation to safety, caring, integrity, passion, while allowing the customers to have fun while traveling. There motto helps portray Neeleman’s belief stating “You Above All”. His primary goals had been to follow Southwest’s objectives of offering low rates to customers, focusing on customer’s needs and comforts while distinguishing itself with their amenities. Neeleman’s other goal was to establish his low-cost leadership strategy by concentrating his airline in a large popular metropolitan area that already is already correlated with high airfare (Peterson, 2004). He then began operating based out of the New York metropolitan area at John F. Kennedy International airport with his secondary locations in Washington D.C., Boston and Los Angeles.

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

1. JetBlue's strategy for success in the marketplace is based on the cost leadership strategy, as outlined by Michael Porter (QuickMBA, 2010). This strategy relies on delivering products or services at a lower price than competitors, and using that cost leadership as the basis by which to attract customers. JetBlue essentially built their business model after Southwest Airlines, and the company's founders had experience with Southwest that helped them learn about the business. The JetBlue approach to cost leadership is focused on the mass market.

•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 related to three types of the management concepts in my personal understand, they are: product and marketing. First of all, in product concepts the company focuses on offer the best to fulfill their customer’s expectation “holds that consumers will favor products that offer the most in quality,