Strategic Analysis of Jet Blue Airlines
Executive Summary
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.
From his humble beginnings as a University of Utah drop-out, CEO David Neelman shorlty became a self-taught airline industry guru - gaining a comprehensive understanding of the inner workings of the industry as the co-founder of
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Clerk: Well, first I need to ask you a few questions. When do you intend to use it?
Customer: I want to paint tomorrow on my day off.
Clerk: Sir, the paint for tomorrow is $200 per gallon.
Customer: What? When would I have to paint in order to get $9 paint?
Clerk: That would be in three weeks, but you will also have to agree to start painting before Friday of that week and continue painting until at least Sunday.
Customer: You've got to be kidding!
Clerk: Sir, we don't kid around here. Of course, I'll have to check to see if we have any of that paint available before I can sell it to you.
Customer: What do you mean check to see if you can sell it to me? You have shelves full of that stuff; I can see it right there.
Clerk: Just because you can see it doesn't mean that we have it. It may be the same paint, but we sell only a certain number of gallons on any given weekend. Oh, and by the way, the price just went up to $12.
Customer: You mean the price went up while we were talking?
Clerk: Yes sir. You see, we change prices and rules thousands of times a day, and since you haven't actually walked out of the store with your paint yet, we just decided to change. Unless you want the same thing to happen again, I would suggest you get on with your purchase. How many gallons do you want?
Customer: I don't know exactly. Maybe five gallons. Maybe I should buy six gallons just to make sure I have enough.
Clerk: Oh, no sir, you can't do that. If you buy the
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.
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.
Joe: Yeah. That's the stuff. Now look, I've got a sure thing: double your money back in two days.
A regular customer of Next Door, Brian Rudnick, came out and was extremely pleased to finally meet the people that make the products he enjoys. Mr. Rudnick pulled out his camera and did an
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 is a low-cost passenger airline that provides customer service primarily on point-to-point routes. They strive to make every aspect of travels as stress free as possible. To do this they offer the lowest fares, some of the best in-flight amenities and top of the line customer
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.
Jet-blue Airways is American low cost airline head quartered near New-York city. It’s foundedin August 1998 by David Neeleman with Joel Peterson as a chairman and David Barger as apresident and CEO. By late 2006,like some other airlines, JetBlue faced some softening demand and high cost due to the increase in fuel prices. Barger realizes that JetBlue needs to take further steps to slow its rate of growth. Barger was not sure about the reductions across E190 and A320. The E190 showedpromising growth opportunities and challenges for JetBlue. At the same time, the A320 wasconsidered as proven plane that had succeededover past 6 years. Most of the airline industries were using hub-and-spoke system and point-to-point services. Due to this service, South West Airlines showed consistent profits. After September 11th, the airline industry experienced trouble due to attack. Looking at the history of Jet-blue, it started with just 10airplanes in 2000 and by 2011 the company planned to have 290 planes in service. To support customers, Jet Blueprovided
JetBlue is known as the airline that promises, and also delivers. JetBlue delivers Air flight of the future, with new jets and the lowest fares available. JetBlue has proved to the world that one can have it all. JetBlue’s Airways started in 2000 with the mission as stated by the founder Neeleman: “to bring humanity back to air travel by offering passengers low fares, friendly service, and high-quality product” (Ford, 2004, p.139). JetBlue has five core values that they operate by on a daily basis, which includes, safety, caring, integrity, passion and fun. JetBlue continues to adapt to the changing environment, and its community by evaluating the risks and
The second major strategic issue facing JetBlue is that it needs to attract customers. Initial customer response has been strong, a function of low fares, strong customer service and new airplanes. The company's first year growth objectives have it trying to go from none-existence to filling fifty-three flights per day. This will require an extensive marketing effort for each new market in which it operates, especially as the company is not affiliated with any airline groupings that might drive business from other carriers.
"Can you believe how empty this aisle is?" she frantically asked " Do you think they will get more in time for the storm?"
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.
The case study, prepared by Arthur A. Thompson, University of Alabama, and John E. Gamble, University of South Alabama, focuses on the rise to business prominence of Southwest Airlines, a regional airline with a low-cost no-frills approach.
With the JetBlue Airways experience, passengers enjoyed free amenities such as watching live satellite TV, listening to XM satellite radio, brand name snacks, coffee and drink. Passengers can also experience paperless ticketing, assigned seating with more legroom. These experiences have helped to streamline JetBlue’s business strategy as being the best customer service in the airline industry.
Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9