Jet Blue Airways Case Study Summary

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JetBlue Airways: Starting from Scratch

Summary

Introduction (Exhibit 1)
• JetBlue’s service had grown from 9 departures per day at launch in February 2000 to more than 50 per day in the past 11 months. The fleet had grown from 2 planes to 10 with the arrival of one new Airbus A320 every five weeks. The business plan called for adding 10 new planes every year through the end of 2003, bringing the fleet to 40.



Ann Rhoades, Executive Vice President for People, had been extremely busy – growing the JetBlue team from the original 10 people to almost 1000. She would continue to add approximately 100 new “crew members” with the arrival of every new airplane and, if they hit their plan, JetBlue would employ nearly 5000 people within the next 4 years. She was charged with achieving this rapid growth while building a values-based, high commitment organizational culture. Her experience as head of human resources for Southwest Airlines from 1988 to 1994 provided her with both appreciation for the challenge and expertise to meet it. She was committed to attracting, developing and retaining outstanding people who could make the JetBlue concept a reality. Still, she recognized that JetBlue’s expansion goals were more aggressive than any she had met before.







Birth of an Airline
• JetBlue was the best-funded start-up in U.S. aviation history, founded in early 1999 with an initial capitalization of $130 million.



JetBlue’s strategy was to combine common sense with innovation and technology to “bring humanity back to air travel”.



JetBlue aimed to be the first “paperless” airline, substituting computers and information technology for everything from flight planning to aircraft maintenance to the sole use of etickets. The company was also focused on service: “We believe that all travelers should have access to high quality airline service at affordable fares.” – David Neeleman, founder of JetBlue Of the 51 U.S. airlines founded during the 1980s, only 2 were still in operation and one of them had flirted with bankruptcy on several occasions. In 2000, only 17 of the 39 jet carriers that started operating between 1989 and 1999 remained in operation.





David Neeleman
• Started in the airline industry running the Southwest Airlines’ look-alike Morris Air.



In just over one year increased the value of Morris Air from approximately $59 million to $130 million. Southwest Airlines acquired Morris Air in 1993. Southwest Airlines was the most prominent success story in the U.S. airline industry and had always prided itself on growing from within at a steady rate of 12% to 18% per year. Morris Air was so similar to Southwest, by design, that Kelleher (Southwest’s CEO) believed the merger would be a success. Neeleman joined Southwest top management team as an executive vice president. Rumors abounded within the company that Neeleman was slated to be Kelleher’s successor. This rumor, along with Neeleman’s aggressive, restless personality, always seeking to innovate, created tension in Southwest’s top management. Ann Rhoades, executive vice president of human resources at the time, was given the task of letting Neeleman go in 1994. According to Rhoades he didn’t fit the culture. In 1998, when the non-compete agreement with Southwest Airlines ran out, Neeleman decided to capitalize on his Morris Air, Open Skies and West Jet successes to develop a new start-up airline. He wanted to follow the successful example of Southwest, simulating demand in under-served markets with low fares, enabled by the highly productive use of employees and aircraft. His













new airline would improve the passenger experience with technology and would use technology to increase employee and aircraft productivity even beyond the record levels achieved by Southwest. • He noticed that at Southwest despite their focus on efficiency, the passengers had to stand in as many as three lines....
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