Jetblue Case Analysis

Topics: Southwest Airlines, Low-cost carrier, Airline Pages: 5 (1419 words) Published: May 15, 2011

The purpose of this paper is to evaluate the business strategy of JetBlue Airways. JetBlue was founded by David Neeleman in 2000 and quickly became one of the largest discount airlines in the United States. It was started in the east coast primarily and expanded throughout the country and entered the international market soon after that. JetBlue received the “#1 Airline Brand” rating10 even while keeping its advertising costs significantly lower than Southwest Airlines. Jet Blue’s talent in formulating and executing effective strategies has enabled the company to rapidly grow in the domestic and international market base.

JetBlue – the Low Cost and High Customer Satisfaction Airline

JetBlue’s growth in both financial and geographical areas has grown continuously despite of recent global economic challenges. One reason for an early success is JetBlue entered the market with a pretty large level of liquidity of any start-up airline. This way it was able to focus more on the market necessities like High Customer Service and Low Price. It met the needs of the customers whose primary concerns are price and route. The way it differentiated itself from competitors is by offering an above average customer experience and amenities for a discounted price. Airline Industry Overview

Discount airlines have lot to handle when they enter into the market which is already competitive and well taken over by the legacy airlines. The airline industry has its own challenges – Strict federal regulations, safety for passengers, customers driven mainly by price and route. The key challenges to survive in this market are: 1.Limited Suppliers - Boeing and Airbus are the only suppliers in the market and control the overall pricing and force the airlines to get into long-term contracts 2.Fuel – The rising cost of fuel is one the most significant challenges and has a significant impact on the airline’s financial performance. 3.Price-Sensitive Customers – Online research shows that people continuously seek out for low prices even if required to compromise on the customer service. The airline search engines offer a quick way to instantly compare the prices across airlines, which lets the customers pick the cheapest one.

The JetBlue Strategy

The Vision

JetBlue founder David Neeleman envisioned that JetBlue would combine the low fares of a discounted airline carrier with the comforts of a cozy travel. He started JetBlue with the notion of “bringing humanity back to air travel”. Neeleman’ s customer service philosophy fit in well with the sociocultural and political environment of the times. In addition to the key strategy of “Low Price and High expectation”, JetBlue had some key strategies relevant to Operations and Management. JetBlue operates only two types of planes – Airbus and Embraer. This strategy reduces maintenance expenses and also simplifies processes for scheduling and training.

To further increase shareholder and customer value, JetBlue took a strategic decision of starting up a service in the congested JFK airport by finding a segment that was lighter with less traffic. JetBlue made use of this hidden opportunity and expanded its city roots strongly in New York.

High Performance Team / Corporate Culture

JetBlue also took the staffing of the senior management team very seriously. Neeleman did not hesitate to hire top talent from other airline companies. For example, John Owen was hired as JetBlue’s Executive vice president and Chief Financial officer. His career began as a financial analyst in American Airlines, and he later worked as Vice President, Operation at Southwest airlines. Owen continuously evaluated the operational statistics and realized, however, that sometimes financial officers need to see the big picture, the essential part of JetBlue experience is the “service” and that is what contributed to “loyalty and passenger demand”.

David Neeleman served as a role model to...
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