David Neeleman founded JetBlue in 1999. David Barger was previously president and COO of JetBlue, and then was promoted to the CEO role. Steven Predmore, was the vice president and chief safety officer. Vicky stennes was the vice president of in-flight service. Tom Anderson was senior vice president of Fleet Programs. Scott Green was vice president of flight operations. Russ Chew was the new COO of JetBlue. JetBlue was one of low-cost carriers (LCC), serving by mainly two models of airplanes: E190 and A320.
Before late 2005, JetBlue like other LCCs only use one type of aircraft. But in late 2005, JetBlue added E190 to its fleet. By late 2006, JetBlue like other airlines, faced softening demand and higher costs due to increasing fuel prices. Barger played a large role in the airline’s decision at the end of 2006 to slow its rate of growth by reducing its purchase commitments for new planes. In light of the operational challenges JetBlue faced in Feb 2007, as well as the unabated rise in fuel costs, Barger realized that the airline would need to take further steps to slow its rate of growth. Given the current pressures facing JetBlue and the industry, the decision would not be easy. Questions and Analysis
1. How would you describe JetBlue’s operation strategy prior to the November 2005 adoption of the E190? JetBlue is a low-cost carrier; it offered fares up to 65% lower than legacy competitors. Also JetBlue is different from other LCC, it is not only focus on the low-cost and on-time performance, but also added comfort features such as assigned seating, leather upholstery and satellite TV on individual screens in every seat. And more over, JetBlue was that flight cancellations should be avoided at all costs. JetBlue flew long-haul flights more and offered numerous overnight flights. 2. Compare the economics of the E190 and A320 for JetBlue. What are the key drivers of profitability of each type of plane? Compare CASM, E190 is 12% higher than...
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