Jetblue Case Study

Topics: Airline, Low-cost carrier, Southwest Airlines Pages: 7 (1027 words) Published: October 22, 2010
JetBlue was established with a goal to make itself a leading low-fare, low-cost

passenger airline by offering customers high-quality customer service and a differentiated

products. During a period when all major airlines were posting losses and going out of

business, JetBlue emerged successful and posted profits in its first year of operation in

2000. In this case we will analyze the competitive strengths of JetBlue that helped it

achieve its goals, and the possible internal and external threats that can hinder the

company’ s growth. Also, based on the analysis we shall recommend strategies that it

could adopt to compete effectively in this highly uncertain airline industry.

JetBlue’s Competitive Strengths

Low –Cost leadership and Differentiation Strategy:

JetBlue adopted a low-cost leadership and differentiation strategy1 to compete

with other airlines in the industry. The company differentiates itself from other airlines by

offering customers a better alternative for air travel and a distinctive flying experience

that includes new aircraft with more leg room and wider cabins, leather seats, simple and

low fares averaging 65% low than competition, pre assigned seating, and reliable

performance. Also the company placed a very high emphasis on customer service and

human relations2. The key to JetBlue’ s low unit costs is the high productivity of their

assets and highly motivated employees. Some of the factors that contribute to its low unit

costs are : efficient utilization of aircrafts by maintaining “ the perfect 30-minute

turnaround” schedules, productive and committed workforce because of excellent training

and effective use of advanced technology such as laptops to pilots and compensation

packages exceeding industry standards, and low distribution cost by moving to paperless

Strong Company Culture

JetBlue’ s top management team created a strong and vibrant company culture,

which is built around five key values: Safety, Caring, Integrity, Fun and Passion. The

company placed enormous importance on hiring the right people who fit into the

company’ s culture. The company reinforced its adaptive culture (See exhibit 4) through

an extensive orientation program for new employees that emphasize the importance of

customer service, productivity and cost control to help maintain its success. JetBlue working environment.

Proven M anagement Team

JetBlue is led by a management team with significant airline industry experience,

including experience at successful low cost, customer focused airlines, such as

Southwest Airlines. Based on their experience, the top management team made several

critical decisions such as starting the airlines with strong capital base, new aircrafts,

building organizational culture inline with organization’ s strategy etc., which gave them a

competitive edge and laid a very strong foundation to survive in the really bad industry.

JetBlue’s I nternal and External Threats


As the size of the company grows JetBlue may face several threats to its positions.

One is its non-union philosophy. Airline industry is one of the most highly unionized

industries. JetBlue believes in creating positive environment to keep it union-free. Also, it

believes in judging people based on their decisions rather than attempting to control

people through rules and supervision. This principle of clan control 3 might work for a

company which is in entrepreneurial stage like JetBlue in its first year. But as the

company starts growing larger, it might show signs of strain in its culture as shown by

Southwest Airlines4, which also follows clan control. This weakening of family-like

culture might demotivate employees and may instigate the development of unions which

may increase company’ s operating expenses and affect its profitability.


The airline industry is highly...
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