The Target Market of JetBlue and Southwest Airlines

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 JetBlue case gives students the opportunity to apply concepts in cost leadership. At the time of the case, JetBlue has enjoyed a meteoric rise to success in the airline industry by coupling a low-cost strategy while giving customers the sense that they are actually providing better features to their service (e.g. leather seats, satellite TV).

Economic, social-cultural, and technological forces are the external macro-environmental factors Southwest Airlines should be most concerned with. Weak economic growth reduces the purchasing power of an airline’s target market. Southwest, known for being a leader in low cost airline, provides flights at a higher frequency and capacity to attain profit. However, the company experienced increasing overhead through the lapse of long-standing fuel contracts, which previously helped provide a competitive advantage. This factor is also amplified by the growth the company experienced with success. Southwest is the fourth largest airline and has seen fuel cost skyrocket from 29 percent to 35 percent over a seven-year period.

JetBlue is able to accomplish this low cost structure through its point-to-point model that allows them to fly in and out of second tier airports that are cheaper to rent space at. JetBlue has also historically used only two types of aircrafts, making it easier and cheaper to fix airplanes when they are broken and allows less training for its staff on using the different aircrafts. Another strength of JetBlue is its reputation for good employee relations. With a positive corporate culture, JetBlue has been able to maintain very low turnover in its employees, thus reducing expenses for retraining employees. For years, JetBlue has been able to maintain stable finances, and a strong balance sheet. For more information on the financial standing of JetBlue, see appendix -0-. Lastly, one of the most recognized strengths JetBlue has is its customer Bill of Rights. As stated in JetBlue’s mission statement, JetBlue is trying to bring humanity back to air travel through a customer-oriented approach. After a huge event left the airline canceling and delaying many of its flights, JetBlue set out to create a program that provides financial reciprocation if a customer’s flight is cancelled or delayed for an extended period. To this day, customers have been able to view the guidelines easily on the company website and enjoy the extra protection they receive through the Customer Bill of Rights.

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.

Southwest Airlines has effectively used a variety of promotional elements in its integrated marketing communications, making it one of America’s largest airlines with 3,300 flights a day to 72 domestic cities. Southwest Airlines has used all four possible elements of the promotion mix: advertising, public relations, personal selling, and sales promotion, but has focused primarily on advertising and public relations to add value to the product offered to customers. Its focus on advertising and public relations is directly related to its large size and it’s nationwide reach. Also, advertising and public relations are the

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

Another strength that JetBlue has is that they have newer planes, advanced technological aspects that are more cost efficient. However, JetBlue’s weakness includes high debt due to the cost jets and high dependence on the metro area. JetBlue’s opportunity in the industry includes the industry growth and JetBlue’s commitment in partnering with other companies to draw in more customers. Some threats to JetBlue is an over competitive market, raising fuel costs and constant increase in stricter government restrictions ("Blue Airways Corporation SWOT Analysis," 2014).

Moreover, according to John Owen, JetBlue had prepared the initial registration statement with security and exchange commission (SEC) for the IPO on September 11, 2001. However, based on the September 11 attacks, they delayed IPO before it came into force. In fact, not only the terrorist attacks on September 11, 2001, but several events happened negatively affected the global economy during the period of going public for JetBlue. For example, the contagion of bird flu was quite severe during taking flights, which definitely influenced the demand of flights. The increasing oil price also raised the basic cost in any transportation industry. Another negative condition could be the economic downturn, including crash of the dot-com bubble and financial crisis in Asia. From this point

David Neeleman founded the Jetblue Airline Company in February 1999, under the name "NewAir." David G. Neeleman is a Brazilian-American entrepreneur who has founded three commercial airlines; Morris Air, JetBlue Airways and Azul Brazilian Airlines. In April, JetBlue placed a $4 billion order with Airbus Industries for up 75 new A320 aircraft, and commences leasing arrangements for another eight aircraft. In July, JetBlue reveals that all its aircraft will offer 24 channels of live satellite television at every seat, a first for the airline industry. In September, JetBlue receives an unprecedented exemption for 75 take-off and landing slots at John F. Kennedy International Airport (JFK). On December 4th 1999 JetBlue takes delivery of its first Airbus A320 aircraft. Several of JetBlue 's executives, including Neeleman, are former Southwest Airlines employees. JetBlue started by following Southwest 's approach of offering low-cost travel, but sought to distinguish itself by its amenities, such as in-flight entertainment, TV at every seat and Sirius satellite radio. JetBlue was one of only a few U.S. airlines that made a profit during the sharp downturn in airline travel following the September 11, 2001 attacks. In October 2005, JetBlue 's quarterly profit had plunged from US$8.1 million to $2.7 million largely due to rising fuel costs. Operational issues, fuel prices and low fares, JetBlue 's hallmark, were bringing its financial performance down. In addition, with

As indicated that employees working with JetBlue is not unionized and majority consists of them working on lower level which forms a strength for JetBlue being the fact they are highly trained and offer better customer service. Also after the attack of 9/11 security concerns on airport have increased to create trust among the passengers.

Because what JetBlue did was stop thinking about looking right customers for their business, this way they devoted himself to transform the company to focus on its customers, so used all the basics of marketing which seeks that customers have an important value in the company so that they can better understand consumers and achieve satisfy in the best way, this is the ideology that drives this company, the most important thing for them is that the customer are happy with JetBlue and does not change the company for any reason, and then for the next plans they came back.