Jetblue: Managing Growth

Topics: Low-cost carrier, Strategic management, US Airways Pages: 5 (1239 words) Published: April 13, 2011
Managing Growth

JetBlue Case
JetBlue’s main strategy is to be a low cost carrier (LCC) and use differentiation as a competitive advantage. The main problem that concerns this case is that JetBlue has the need for slower capacity growth but the exact size of the cuts from each of the airlines’ two aircrafts was far from obvious. The contents of this case analysis will show how they managed to get to this point through the use of business strategy tools. Also I will give some recommendations on how to resolve the issue at hand.

First, let’s take a look at the SWOT analysis (strengths, weaknesses, opportunities, threats). This strategic planning method should give us an overall understanding of all the aspects of JetBlue airlines. SWOT Analysis

High level of comfort with A320
Consistent profit for first 5 years
Low fares, up to 65% lower than legacy competitors
A320 has high fuel efficiency
With A320 as sole aircraft: standardized training and servicing process; gained flexibility in scheduling and capacity management •Assigned seating, leather upholstery, satellite TV’s in every seat • More long haul flights than Southwest

Numerous overnight “red eye” flights
Able to run reservations function significantly lower than other airlines because of part time agents working from home •Extra leg room on A320 because of the removal of two rows •Employees were not unionized, therefore did not face limitations on the size of planes it could use to serve on routes traditionally served by RJ’s •More comfortable flight on the E190 than a typical RJ

Played significant role in designing E190 interior to improve passenger comfort •Transfers at focus cities with the E190 improves utilization of existing airport facilities, therefore increasing productivity and reducing downtime for airport crewmembers •E190’s are utilized at least 2 more hours each day than RJ’s •E190 made it easier to penetrate new markets

Introduction of the Bill of Rights
No affiliation with a legacy carrier
Pilot dual certification was infeasible
Pilots shifting from one plane to another requires a period of non-revenue training •E190’s spend more time on the ground than A320’s for taxiing, loading, and unloading •E190 pilots are disadvantaged in accumulating flying hours •Nonskid flooring on E190 increased the potential for back strains and back sprains rather than preventing them •E190 flight attendants had to make significant adjustments due to the smaller galleys and shorter time to serve customers •Few opportunities to standardize parts and servicing procedures across the two types of airplanes •Few opportunities to outsource or share maintenance responsibilities of the E190 with other carriers at airports other than JFK •E190 overhead bins smaller than the A320’s

Informal patchwork of operating systems
To serve medium sized markets
Serve as launch customer to the E190
Could open a focus city in Kansas City and serve the entire U.S. market with the E190 •E190 brings new customers with new expectations
Increase number of flights
Scope clauses
Bad weather
Competing airlines
Mechanical problems
Loss of customers
Complex intangibles
Growing themselves to death
Slow growth hurts the pilot group and they could become unhappy • Bad press
Increasing fuel prices
Embraer and Airbus not being happy with future reductions or deferrals •9/11
Other modes of transportation (trains, buses, etc.)

To get a good understanding of the macro-environment in which JetBlue operates a PESTEL analysis should be used. PESTEL Analysis(external environment)
Political:After the attacks of 9/11 many people are afraid to fly and domestic airline yields dropped about 20%. Also, because of the attacks, many new regulations were put in place to increase the safety of passengers. So in order to keep...
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