Assignment 1:

JetBlue Airlines Competitive Status

Jean Elie Tabbal

R2009D11358246
SG7001
Managing Strategy, Operations and Partnerships
(23368)
Dr. Christodoulos Kakouris
Monday, 8th of February, 2021
 JetBlue Airlines Competitive Status

Since its inception in the 1999 by Mr. Neeleman, who has been in the market for many years,
JetBlue adopted a Low-Cost Carrier or LCC strategy delivered in a relatively special, unique,
innovative and differentiated image. An image which was different, to a large degree, from
all other companies in its categories of LCC like Southwest and other airlines. Mr. Neeleman
thought that in the airline industry where competition is at its highest and its profit margin at
its lowest, in order to compete and make some profit he needed to think more about his
customers to try to deeply understand their needs and their requirements. What people really
wanted from the air transport industry and what were their true requirements! People wants to
get to their destination as quickly as possible, on-time, comfortably, without too much
discriminating images, whilst relatively well entertained, and most importantly while saving
rather than spending money (Hernandez, 2010). A vision which was simple and
straightforward.

The airline industry has proven to be one of the most ‘infamous’ industry with many
companies entering and immediately exiting the market because of extremely inhibiting high
cost and absolutely low profit margin. (Brizek, 2010) However, it has its own prestige among
all other industries. To look and understand how did JetBlue succeeded in achieving its
vision, we have first to examine Porter’s Five Competitive forces which shapes every
industry and most specifically the airline industry to which Michael Porter refers a lot when
he wants to explain his theory of strategic planning. To explain his theory, Porter draw a
Diamond-shaped diagram depicting the different forces that affects each and every business
from its pre-inception, through its birth, growth, maturity, sustainability and ultimately
destruction. It was called ‘Michael Porter’s Diamond Model’ or the ‘Theory of National
Competitive Advantage of Industries’. (https://www.business-to-you.com/porter-diamond-
model/). How JetBlue did craft its strategy to meet Porter’s Diamond Model?

For the Byers, and I am one of them, JetBlue understood their needs from the beginning! First
and foremost it was reaching their destination as quick as possible and as cheap as possible
with absolutely no connecting flights. I asked all people around who travels frequently both
for leisure and for business; what is the first think you search for in your next trip and they all
answer, cheap tickets. When we all log in to the internet looking for flight, first thing we look
at is the cheapest ticket before even looking at the airline. JetBlue understood that point from
the beginning and set it out clear, we will travel people to their destination with the least
expensive fare. Moreover, we will create flights that more mostly point-to-point destination
without the hustle of changing plane or having a stop on the way. They made all their
reservation online based with no papers required. This was made possible with the
advancement of the mobile technology and the fact that all people are connected and on the
internet almost 24hours per day. They also added a great feature which was the addition of a
24 hour direct live TV on all its flights available to all its passengers. They also entered the
market with brand new planes with new extra comfy leather seats. All that was a huge
advantage over almost all the competitors in the airline industry. In addition, the corporate
company gave the employees the option to buy company stocks and become partners in the
company. The wages also were comparable to other carriers with lot of other benefits that the
employees have in order to offer the best customer services to the clients.

How was JetBlue able to do that? Few things they did at the level of the business itself. They
entered with a big capital which was almost 30 % higher than other carriers. (Corbo, 2017)
This gave them great amount of cash flow which is very essential for all businesses.
Nevertheless, JetBlue concentrated on many operations from using only one kind of planes
initially, the Airbus A320 and later expanded with another plane the Embraer E190. Limiting
the planes to only two cut down on cost and on operability of the planes, and thus increased
the experience of the maintenance department and decreased the risk of problems which
might occur with the planes (DIACONU and POPESCU, 2011). The company stopped
offering food on their flights so decreased the delay which might happen with the flights and
cut down on the cost further. On the other hand, and unlike similar carriers of its kind,
JetBlue made chips and other small snacks abundantly available on its service menu a go-go.
JetBlue also used airport hub that are less expensive with less number of employees. This
helped them cut down on cost further and decreased the power of the suppliers, gaining one
further point on the Porter’s Diamond Model.

During that time, the US government introduced new rules and regulations making air
transportation much easier on the carriers and that was taken as opportunity by the JetBlue
Company. (Riwo-Abudho, Njanja, Ochieng, 2013)

As we can see, JetBlue did it all. Entered the market with a huge capital which is already
have some of the worst entry barriers. It followed a low-cost strategy and placed itself as a
people-centered company giving it the highest competitive advantages. It did the best to
control the power of the supplier and gave up the need for a travel agent. It took advantage of
the governmental assistance to its benefit. JetBlue was able to distinguish all its services to
the best of its benefit with the live TV, leather seats, paperless ticketing, point-to-point
connection, free and abundant snacks, etc. Everything that the client really needed on their
flights to maintain low-cost, shorten the travel time, always be on time… All operations
which were also friendly to the environment. (Renner, 2013)

JetBlue knew that the process was dynamic in every aspect and it is keeping its eyes on the
operation, modifying it whenever need arises. Their only big problem was the cancellation
which happened the Valentines weekend of 2007 (Renner, 2013). The company faced lot of
mishaps which it could not attend to on time and acquired lot of losses which they considered
as opportunity so to improve their responses in time of similar crises.

Thank you.
References:

Brizek, Michael, G. (2010) Jet Blue Airlines – Trouble in the Sky, Journal of Aviation

Management and Education, Vol. 1,Pp. 1-13. https://www.aabri.com/manuscripts/10478.pdf

Corbo, Leonardo, (2017). “In search of business model configurations that work: Lessons
from The hybridization of Air Berlin and JetBlue”. Journal of Air Transport Management.
http://dx.doi.org/10.1016/j.jairtraman.2016.09.010

Diaconu, L., Popescu, C., C. (2011) ‘THE EVOLUTION OF THE LOW-COST AIRLINES
IN US. THE CASE STUDY ON SOUTHWEST AND JETBLUE AIRLINES’. The Annals
of The "Ştefan cel Mare" University of Suceava. Fascicle of the Faculty of Economics and
Public Administration Vol. 11, No. 1(13)

Hernandez, Gutav (2010). JetBlue Airways. Prepared by Gustav Hernandez, ID#:

200208884, MGMT256: Introduction to Strategic Management, for Don Ausman, Instructor
School of Business Northern Alberta Institute of Technology. July 7, 2010.

Renner, C., (2013). "Changing To A Different Shade of Blue: JetBlue And The Blueprint
For Successful Crisis Communication". Electronic Theses and Dissertations, 2004-2019.
2574. https://stars.library.ucf.edu/etd/2574

Riwo-Abudho, M, Njanja, L., Ochieng, I. (2013) Impact Of Organization Characteristics On

Sustainable Competitive Advantage During Strategic Change In Airlines. European Journal
of Business and Management. www.iiste.org . ISSN 2222-1905 (Paper) ISSN 2222-2839
(Online) Vol.5, No.7