Jet Blue Strategic Management

Topics: Southwest Airlines, Low-cost carrier, Airline Pages: 8 (2141 words) Published: October 20, 2008
Executive summary

JetBlue was founded by David Neeleman in 1998 and is America’s youngest airline flying to over 35 destinations including Caribbean and Atlantic regions.

The key strategies and competitive advantages of JetBlue are the maximisation of its workforce productivity, high quality of service and innovation with affordable prices, low cost ticketing system, and efficient aircraft utilisation.

JetBlue is a low-cost airline with a differentiated approach in regards to the high level of customer service it offers. It thus follows a best-cost provider strategy because it aims to give customers more value for money. As we will see in this report, JetBlue achieves a best-cost position from its ability to incorporate attractive features at a lower cost than its rivals.

This report also investigates the significant factors driving change in the airline industry, and while it may seem unattractive, JetBlue has the capabilities and resources to continue its growth and profitability.

The recommendations for JetBlue’s management is to continue with its best-cost strategy through identifying cost minimising opportunities within its value chain, while at the same time investing aggressively in technology and innovation to differentiate from its rivals.

Table of Contents

1.Strategic vision

2.Functional strategies and key activities

2.1Customer service
2.2Human resources
2.3Policies, practices, and procedures

3.Factors driving change in the airline industry

3.4Economic crisis

4.Future strategies

4.1Key recommendations/primary focus
4.2Secondary focus

1. Strategic vision

Neeleman himself is noted for summarising his revolutionary strategic vision through his statement of wanting to “bring humanity back to air travel” (Rovenpor, 2005) through offering passengers low fares, friendly service, and a high quality product that follows Porter’s generic strategy of being a best-cost provider. His vision is reflected in JetBlue’s values of safety, caring, integrity, fun, and passion (Rovenpor, 2005).

Neeleman’s strategic vision hasn’t really changed but it has evolved somewhat due to the factors in the external environment, the most prominent being the September 11 terrorist events. Now, JetBlue must not only be the low-cost carrier with comfort but also the carrier with a customer safety strategy, which the airline has been quick to implement. This slight change or addition to the strategy might be considered a minor inflection point because this change in the environment requires a change in strategic direction in order to sustain JetBlue’s success.

2. Functional strategies and key activities

The functional strategies of JetBlue focuses on minimising costs while providing superior customer service which enables them to implement and execute their chosen strategy of being a best-cost provider.

2.1 Customer Service

The customer service strategy for JetBlue is superior and is a source of competitive advantage because they simply understand their customer wants something more from an airline that isn’t provided by many of JetBlue’s rivals. The strategy includes fitting out all their planes with leather seats and personal satellite TV screens which isn’t reflected in the cost of their fares. As part of the customer service strategy, JetBlue also needed to incorporate additional safety measures especially after the September 11 terrorist attacks. It was the first airline to install cameras in planes so that pilots could observe actions within the cabin without leaving the cockpit, which itself is protected by a bullet proof door. All these things add value to the customer because they are not done or cannot be done by the rivals such as Southwest Airlines and American Airlines.

A key indicator of how well this strategy is...

References: 1. Access Intelligence (2008), “Industry poised for more stability says Unisys”, Regional Aviation News, Feb 18, 2008. Retrieved from Expanded Academic ASAP, 19 Sept. 2008.
2. Dodds, B. (2007), “JetBlue Airways: Service quality as a competitive advantage”, Journal of Business Case Studies – Fourth quarter 2007, Vol.3 No. 4, pp. 33-43.
3. Flourish, T. and Dostaler, I. (2007), “Strategic management as a key to educating the new aviation professional”, International Journal of Professional Aviation Training & Testing Research, Vol. 1 Iss. 1.
4. Pierceall, K. (2008), “JetBlue’s only flight at LA/Ontario International to stop”, McClatchy-Tribune Business News, Jul. 23, 2008. Retrieved from ProQuest database on 19 Sept. 2008.
5. Rubin, R.M. and Joy, J.N. (2005), “Where are the airlines headed? Implications of airline industry structure and change for consumers”, The Journal of Consumer Affairs, Vol. 39 No. 1, pp. 215-228.
6. Rovenpor, J. (2005), “JetBlue Airways: Can it survive in a turbulent industry?”, in Thompson, A.A., Strickland, A.J. and Gamble, J.E., Crafting and Executing Strategy (15th ed), McGraw-Hill, New York, NY.
7. Thompson, A.A., Strickland, A.J. and Gamble, J.E. (2007), Crafting and Executing Strategy (15th ed), McGraw-Hill, New York, NY.
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