Professional Documents
Culture Documents
JetBlue Airways Corporation is a passenger airline that we believe has established a new airline category a value airline based on service, style, and cost. Known for its award-winning customer service and free TV as much as for its competitive fares, JetBlue believes it offers its customers the best coach product in markets it serves with a strong core product and reasonably priced optional upgrades. It was founded by discount airline veteran David Neeleman in 2000; JetBlue Airways (JetBlue) has quickly become one of the largest discount airlines in the United States. Starting primarily by serving the East coast, the airline has since expanded throughout the country and entered the international market. Growth both financial and geographical has continued despite a challenging economy in recent years.The reasons for this early success are numerous: JetBlue entered the market with one of the largest levels of liquidity of any start-up airline; it met the needs of customers whose primary concerns are price and route; and it successfully defined its brand and differentiated itself from competitors by offering an above average customer experience and amenities for a discounted price. Looking ahead, JetBlues competitive advantages are increasingly at risk. The company must find a way to deal with much heavier debt load and industry reorganization while competing with leaner and stronger legacy airlines. JetBlue operates primarily on point-to-point routes with its fleet of 115 Airbus A320 aircraft and 45 EMBRAER 190 aircraft the youngest and most fuel-efficient fleet of any major U.S. airline. As of December 31, 2010, we served 63 destinations in 21 states, Puerto Rico, and eleven countries in the Caribbean and Latin America. Most of our flights have as an origin or destination one of our focus cities: Boston, Fort Lauderdale, Los Angeles/Long Beach, New York/JFK, or Orlando. By the end of 2010, we operated an average of 650 daily flights. For the year ended December 31, 2010 JetBlue was the 6th largest passenger carrier in the United States based on revenue passenger miles as reported by those airlines.
Mission Statement:
JetBlue Airways does not operate to a traditional mission statement. Rather, JetBlue operates to a set of core values. Those core values are: SAFETY CARING INTEGRITY FUN PASSION
The inculcation of this set of core values within the JetBlue organization is best summarized as delivery of the JetBlue experience. The depth of delivery of the JetBlue experience is best measured by the level of customer satisfaction. Delivery of this JetBlue experience and the resulting high customer satisfaction ratings do not happen by accident. JetBlues training organization, JetBlue University, is successful at developing the core values within all of the JetBlue employees. The effect of that training manifests itself in satisfied customers. SAFETY *Supports compliance with all regulations
*Sets and maintains consistent high standards *Committed to safety first *Ensures sense of security for co-workers and customers *Never compromises safety in making business decisions *Possesses and demonstrates broadbusiness knowledge *Committed to self-improvement
INTEGRITY
*Exhibits honesty, trust and mutual respectin all aspects of the job *Gives the values a heart beat *Unwillingness to compromise the valuesfor short term results
P.E.S.T Analysis
Political issue
September11, terrorists attack: after the terror attack on US certain travel rules and security factors were imposed. Competitive Airline industry: other airlines such as Virgin America have come in to the market as competitors. Regulatory factors: US Government imposed a ceiling and a floor pricing, and as a result the competition among the airline becomes very low. Political stability: US is one of the most politically stable nation. But the country has a high treat by the terrorist groups.
Economic issue
Global recession: during the global recessions, the purchasing power is low and the number of passengers travelling gets reduced. Rise in Inflation: Due to inflation the number passengers travelling would be less. Considering the on a more positive fact, due to inflation the public chooses budget airlines over the airlines. Rise in oil prices: Affects the expenses of the airline. Being a low budget airline, JetBlue is obliged to sell the ticket in a very low cost. who tends to
Social issue
Greater customer awareness: Airline has to make the customers aware of their services, and what they save in travelling on JetBlue. Also savings that they would be able to make by travelling on JetBlue. Security level of customers: It is vital for JetBlue to ensure the safety of their customers and the customer would appreciate the steps taken for their safety by travelling on JetBlue. Bad services & lost baggage: JetBlues one of the priorities are their excellent service and baggage handling.
Technological:
Beginning of e-ticketing. Automated systems (cockpits). Advertisements (newly introduced animated).
S.W.O.T Analysis:
Strengths
1. JetBlue Airways has differentiated itself by providing various facilities to the customers such as in-flight entertainment, Satellite radio and TV on every seat etc. 2. As of December 31, 2009 JetBlue provides 60 destination in 21 states and 11 countries in the Latin America and Caribbean. 3. JetBlue was one of only few U.S. airlines that ended a profit during the prickly decline in airline travel subsequent the 9/11 attacks. 4. JetBlue has turn into one of the most admired airline stocks in history and now has about two billion dollars in market capitalization. 5. The robust marketing campaign, developed in association with JWT New York, give emphasis to service, complimentary, and aggressive fares onboard services. 6. JetBlue was listed the number one U.S. home airline by famous magazines "Readers Choice Awards" for the sixth year in a row. 7. It was also ranked top in Customer Satisfaction amongst Low Cost Carriers in North America.
Weaknesses
1. Operational issues, low fares, high fuel prices, JetBlues trademark, contributed in bringing economic performance of JetBlue down. 2. JetBlues higher costs linked to the airlines several facilities were making the company less competitive.
3. Although JetBlue continued to add routes and planes to the convoy at a fast pace but it witnessed unsustainable growth rate. 4. JetBlue estimated a loss for 2006, due to lofty fuel prices, fleet costs, and operating inefficiency. 5. JetBlues website and airport cabin are not easy to get. 6. The company has less international destinations because it only covers 11 countries. The company does not have presence in Asia and other unsaturated areas. 7. Introduction of new planes has created the opportunity for additional route.
Opportunities
1. Increase international tourism and investment is consequently vital to the globalization taking place in numerous other industries. 2. Introduction of new planes has created the opportunity for additional route. 3. Technology has increased the ways of advertisement. Similarly, it has facilitated the ways of ticking such as internet etc. Therefore, improvement in technology is a good opportunity.
Threats
1. Demand for air travel fluctuates generally for the services to be provided. 2. Fuel prices are increasing as economic conditions gets better. 3. Customers have complaints about refunds. It means that people are not getting their money in time. 4. The majority of the major airlines have undergone cost reformation. 5. Strong competitors, in terms of limitation capacity, pricing, consolidation scheduling, and alliance activities. 6. Increasing impact of the governmental regulations to the industry operations. 7. Due to the terrorism number of customers is decreasing to fly for South Asia, Iraq, Iran, Africa etc.
T.W.O.S Matrix:
Strength:
Low fares: By having low operating costs provides an advantage in an industry which allows
JetBlue to reach a higher level of operational excellence. By monitoring operation cost closely allows for improvements where operation and maintenance cost fluctuate.
Superior customers services: Without customers you do not have a company. This is the
most importance aspects of a company. Customer satisfaction is the key component between thriving and failing in a business. Because customers have a large variety of options customers are becoming more demanding and less tolerant.
More efficient and reliable planes: In 2005 JetBlue was rate #10 in Top Performing Airline
in Aviation week & Space Technology magazine. In an airline company performance and technology go hand and hand.
Hiring better people: Giving employees incentives to do their best everyday creates a
cohesive and efficient employee working environment. Because JetBlue has such efficient employees give the company a better image and corporate a peace of mind. When hiring employees a company wants the employees to be the best because they are the face of the companies they are the ones the customers see and interact with on a daily basis.
Brand loyalty: By creating a strong brand creates recognition, loyalty, strong image of
quality, size, experience and reliability. Having a strong brand means a consumer is much more likely to remember the business.
Opportunities:
Increasing demand for air travel: International travel by not long ago was only an option
for high class society and was never ioen for the middle class. Now that countries are closer
than ever international travel is an option for almost anyone, which creates a totally new market for entering.
Many competing airlines have been hurting since 9/11: If the weather is bad where a
connecting flight for another company is flying to yet JetBlue has a direct flight to the same destination you have the opportunity to gain customers you originally didnt have before.
Threats:
High labor Cost: Since labor cost are continuously increasing and to balance the companies
expenditures many employees wages should be cut to reduce this cost this cant create inefficiencies in other employees
High Fuel Cost: The price of fuel is constantly fluctuating and since 2005 jet fuel prices have
increased from $3.29 to $4.49 in 2007. The rising cost in fuel has affected all airlines in general and many airlines have even resorted to the internet to search for low costing jet fuels.
Security issues: Despite the fact that statistics tells us that flying is one of the safest modes of
transportation many people still fear flying. Some people are so afraid of flying they will never travel by air. This is a huge threat because no matter what someone says the fear never fully goes away.
Stage in life cycle: mature for domestic, growth for international JetBlue Airways is currently in the formalization stage of the life cycle where in it needs to create procedures and control systems to effectively manage its growth. Also as it proceeds to grow further to reach the elaboration stage, JetBlue needs to continue to align itself with the environment in order to maintain its sustained growth.
Scope of competitive rivalry: primarily major carriers (revenue more than $1 billion). Legacy carriers developing low-cost offshoots
Degree of vertical integration: mixed; some have low cost reservation systems, alliances with regional and international airlines as well as hotels. Hedged fuel costs. Sabre Holdings and
Galileo International connect airlines with travel agents. No mention of airlines employing inhouse catering.
Technology/Innovation: R & D essential in creating efficiencies and reducing expenses with turn-around times, fuel costs, reservations etc
Product Characteristics: diverse; customers can receive top end service through to low cost travel and ongoing international hook-ups.
Scale Economies: the industry contains several very large players and multiple medium to small players
Industry profitability: subpar to above average; fuel and maintenance costs, a growing senior staff division, unionization of employees and competitive price wars are margins concerns.
Rivalry is High
Consolidation notwithstanding, rivalry is high as numerous competitors remain in the airline business. Major airlines such as Delta, United and American offer a substantially similar flying experience to the customer, even though they try to differentiate by focusing on features such as frequent flyer programs and legroom. Given their hub-and-spoke systems, these airlines tend to fly to the same cities and tend to appeal to business travelers who have the least price sensitivity. This commodity-like quality intensifies rivalry by engendering price-based competition. Additionally, the industry is extremely sensitive to economic cycles. When the economy contracts business travel declines, which is particularly adverse for airlines insofar as corporate travelers display relatively priceinelastic demand. Their comparatively price-sensitive counterparts, leisure travelers, also diminish booking flights when the economy slows.
probability that a new entrant will be a money loser. So the question is not whether there are barriers to entry though there are moderate ones but would a new company want to enter?
How are they likely to impact the future attractiveness of the industry?
Economic factor:-
Political factors:-
Geographical factors:-
Technology factor:-
Fuel prices
Safety standards
International
Internet
Certificates
National
Regional
Cargo
All of these factors have and will impact the attractiveness of the industry. Individuals who wish to establish their own airline companies will have to take into consideration the market share of the cities they wish to serve, the aircraft and their capabilities and effectiveness, the economy both national and global, and consumer demands regarding air travel.
Competition
The airline industry is highly competitive. Airline profits are sensitive to even slight changes in fuel costs, average fare levels and passenger demand. Passenger demand and fare levels historically have been influenced by, among other things, the general state of the economy, international events, industry capacity and pricing actions taken by other airlines. The principal competitive factors in the airline industry are fares, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, code-sharing and interline relationships, capacity, in-flight entertainment systems and frequent flyer programs. Our competitors and potential competitors include Southwest airlines, AirTran airways, U.S airways and Alaska airlines. Five of the other major U.S. airlines are larger, have greater financial resources and serve more routes than we do. Our competitors also use some of the same technologies that we do such as laptop computers in the cockpit and website bookings. In recent years, the U.S. airline industry experienced significant consolidation, bankruptcy protection, and liquidation largely as a result of high fuel costs and continued strong competition. The merger of United Airlines and Continental Airlines created the worlds largest airline in 2010 on the heels of the Delta Airlines and Northwest Airlines merger in 2009. Additionally, in September 2010, low cost carrier Southwest Airlines announced plans to acquire AirTran Airways. Further industry consolidation or restructuring may result in our competitors having a more rationalized route structure and lower operating costs, enabling them to compete more aggressively. Price competition occurs through price discounting, fare matching, increased capacity, targeted sale promotions, ancillary fee additions and frequent flyer travel initiatives, all of which are usually matched by other airlines in order to maintain their share of passenger traffic. A relatively small change in pricing or in passenger traffic could have a disproportionate effect on an airlines operating and financial results. Our ability to meet this price competition depends on, among other things, our ability to operate at costs equal to or lower than our competitors, including only charging for fees that we believe carry an intrinsic value for the customer. All other factors being equal, we believe customers often prefer JetBlue and the JetBlue Experience
2. Price
3. Place(distribution)
4. Promotion
2) Managing its fleet JetBlue manages its fleet with fast turnaround times, using the smaller aircraft for shorthaul flights and the larger aircraft for longer distance flights and having the flight crew clean up the aircraft after each flight.
3) Managing its people JetBlue manages its people by providing training opportunities to each member of the team and even job cross training to maximize the effectiveness of its personnel.
4) Managing its finances Jet Blue manages its finances by selling shares of stock to other airlines and developing code-share relationships with said carriers to not only help market their brand, but to keep potential and future customers by allowing them to travel to other international destinations through their services.
JetBlue also delayed the acquisition of several new aircraft and reduced its fleet size to accommodate for the turbulent economy. In addition JetBlue has now started charging for second checked bags on all of their flights, in-flight meals and other services to help boost revenue.