Jet Blue Case
Part 1 Analysis:
JetBlue, despite the hard times facing the airline industry, is doing well in comparison to its competitors. It is a much smaller company earning as much as $18 million less than its competitors in operating revenues (American had the most at 20,657 million and JetBlue had 1,701 million). However, with that being said, it is the only leading airline to show an operating profit besides Southwest. Does this mean JetBlue was successful? Along with all of its competitors, with the exception of Southwest, it had a negative net income and negative earnings per share. However, its losses are much less than its competitors. Its gross profit margin was .028, while its competitors such as Delta at -.12 and American at -.17 showing that while it may not look like a success in the larger picture; it is at a competitive advantage, with the exception of Southwest.
JetBlue has a competitive advantage over its competitors. It entered into the market offering prices that were low. In addition, it offered luxuries such as leather seats and satellite televisions on the back of all the seats on the plane. These luxuries were not offered by competitors at the low prices that JetBlue was offering, not even Southwest, and offered value for consumers that were rare. While these services can be imitated, it would be very costly to do so. Airlines would not only have to purchase planes that were comparable to JetBlue’s and with the low airfare cost JetBlue was offering, competitors were already having difficulty competing without additional costs. JetBlue, in order to continue growth, decided to enter into the new market of short-haul flights that it did not currently offer. To do this it purchased the E190 which operated a t a CASM of 34 % less than the typical RJ. This put competitors at an even greater disadvantage. However, JetBlue ran into complications with organization with the new plane. It...
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