Key strategic issues faced by JetBlue Airways
JetBlue Airways was established in USA as a low-cost domestic airline carrier. The company started operating as a point-to-point carrier, providing quality customer service at competitive prices.
Basically, the main strategy of JetBlue is to offer its clients a combination of low fares and product differentiation. In terms of strengthening its market positions, the following key strategic issues are faced by the company: How to achieve “cost leadership” and “product differentiation”? JetBlue achieves “Cost leadership” through efficient operations and innovations. For instance, serving no-meals allows the company to maintain quicker turnarounds at the airports. New airplanes minimize repairs, maintenance and fuel costs. Being highly productive in the usage of its workforce and assets also helps the company to follow its low-cost strategy. Innovations such as software for electronic ticketing and network of home-based reservation agents reduce need for physical infrastructure, hence decrease overhead expenses. In addition, the differentiated strategy of the company is achieved through various features such as leather seats, 100 channels satellite radio, in-flight entertainment system and friendly services. Offering assigned seats is another valuable characteristic that distinguishes the company from its low-fare competitors.
In attempt to maintain a low-cost operation, the company follows a strategy to pay lower base salaries than its rivals. To offset the payment differences JetBlue offers its employees health coverage, profit-sharing and 401(k) retirement plans.
In 2007, due to a severe winter ice storm the company experienced an operational disaster and customer relations nightmare. Unfortunately, this was a quite expensive lesson for JetBlue with an extremely negative impact on the company image. The case itself required quick strategic actions. Trying...