Strategic Management – BUS599
January 16, 2011
Crafting and Executing Strategy
Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy.
The U.S. airline industry has experienced rising fuel costs, increased competition, higher labor costs and a dearth of trained pilots. According to (Thompson Jr., Strickland III, & Gamble, 2010, p. C-67), “in addition to soaring fuel prices, the airline industry faced an increasing ‘crack spread’ between the cost of a barrel of jet fuel and crude oil”. The airline industry had to accurately hedge fuel costs in order to realize savings on future jet fuel consumption. This affected operations because airlines had to develop ways to increase ancillary revenues. Airlines decided to implement surcharges for customarily complimentary items such as headphones, blankets, pillows, and baggage. These fees were implemented to reduce the effect that increased overhead had on the industry’s bottom line. Airlines ceased offering meals on transcontinental flights and only served light snacks to its passengers, while also employing tactics such as lighter load, one engine to taxi on the runway, and refueling aircraft in destinations that had lower fuel costs to make all travel as fuel efficient as possible.
Discuss Jet Blue’s strategic intent.
Jet Blue’s founder, David Neelemen, understood that customer service and convenience played an important part in the traveling needs of its customers. Quoting from (Thompson Jr., Strickland III, & Gamble, p. 36), “a company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.” Jet Blue’s strategic intent is to provide passengers with the lowest cost airfare while offering a lot of the same amenities and comforts... [continues]
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