Theresa Jn.

Baptiste Strategic Management

Jet Blue Case

Jet Blue Airways Corporation was created by Utah entrepreneur David Neeleman to bring humanity back to air travel. It was also a good way to add another chapter to a successful career in budget air travel. Jet Blue was launched with a huge amount of capital, brand new planes, and expert personnel in key positions. It grew rapidly as customers flocked to it to escape the steep fares and frequent delays of the major airlines.

David Neeleman grew up in Salt Lake City with seven siblings. According to Time, a red airplane on his second birthday cake first attracted him to aviation. As a young man, he served in Brazil as a Latter-Day Saints missionary, then studied accounting at the University of Utah. But he dropped out of school before graduating in favor of entrepreneurial pursuits.

Before long, Neeleman was running Morris Air, an innovative, successful low-fare carrier that was the first to offer ticketless reservations. He reportedly earned $20 million when he sold it to Southwest Airlines in 1993. He was just 33 years old at the time. Bound by a five-year noncompetition agreement, in 1995 he left the U.S. to help launch Canadian startup WestJet Airlines.

" was Neeleman's bold rallying cry.) ." in the skies. dubbed "New Air. As if that were not enough. (Neeleman observed that the non-peak hours were quite suitable for quick turnarounds. Neeleman raised $130.2 million. In mid-July 1999. the Department of Transportation awarded JetBlue 75 takeoff and landing slots at JFK. Kennedy International Airport (JFK). Massachusetts Mutual Life. JetBlue claimed to be primarily aiming to stimulate air traffic like Southwest. two George Soros funds and Quantum and Soros Fund Management ($40 million combined). and Nationsbank Montgomery Securities also invested $10 million each. The carrier received an exemption allowing it operate there between the peak hours of 3 p. It also took quite a bit of money.m. and 8 p. For its base. "We're going to bring humanity back to air travel. Banc Boston Ventures. JetBlue chose John F. which was further from Manhattan than LaGuardia but still busier than the out-of-the way airports favored by Southwest. JetBlue aimed to undercut other airlines' fares by an average of 65 percent. A group lead by Neeleman invested $10. from backers that included Chase Capital Partners ($20 million). a new name for "New Air" was unveiled at a press conference: JetBlue Airways. an unprecedented amount for a start-up airline.m.Neeleman told Sales and Marketing Management that it took 30 months of planning to get his next project. In September 1999.2 million in start-up capital. rather than stealing existing passengers from the established airlines. and San Francisco venture capital firm Western Presidio ($30 million).

. One perk JetBlue did lack was a frequent flyer program.The company was touted as the first airline launched from scratch in the computer age. These and the company's marketing savvy brought it into comparison with Virgin Atlantic Airways. more legroom. (Neeleman also maintained a high level of technology at home. ESPN. Animal Planet. All-leather seats. a joint venture between the Harris Corporation and Sextant In-Flight Systems. CNBC. The airline would serve no meals but did offer gourmet blue potato chips and soda. and larger overhead bins were some of JetBlue's other attractive amenities. the Food Network.) The in-flight entertainment system boasted 24 channels of live satellite television broadcasts (including A&E. but none of the four major broadcast networks) at every seat. A "telemedicine" service from MedAire allowed in-flight consultation with physicians. where instead of watching television he kept himself and a family of nine children entertained with four networked PCs. Pilots received laptop computers. so tempting to high-mileage business travelers. LiveTV. and the Weather Channel. noted Air Transport World. which usually aired taped shows. Home & Garden. from which the company had in fact obtained some key personnel. a first among airlines. not manuals. provided the service.

Business grew rapidly in JetBlue's first year in the sky. It launched its first route. The company's 300 call center employees in Salt Lake City. were receiving 12. on February 11. according to Informationweek. Also the cabin features.forbusiness. (Ref. .JetBlue began flying in early 2000 with just two newly leased Airbus A320s. Advance-sale. Florida. Still. ticketless travel and pre-assign sitting. one-way fare was $79. Jet Blue delivers this service by offering additional preflight and on board convenience that other low cost carriers did not provide as a whole package. Six days later. New York to Fort Lauderdale. For example customers benefit from Jet Blue simple to use reservations system. who had the option of working at home and saving the company overhead. leather seats and an additional two inches of leg room space than most carriers. the company was booking 40 percent of its business over the Web.000 calls a day. the company began service to Buffalo for $49 each way.com) 1) With reference to the case David Neelman’s original strategic vision for Jet Blue was to introduce low and affordable fares for all travelers as well to compete by uniqueness and differentiation.

. but maintaining a values based. From there. JetBlue has many strengths that is its uniqueness that set it apart from its competitors. funds. That is exactly what JetBlue and founder David Neeleman wanted from the very start. Now that JetBlue has established itself in the airline industry. so without that value based culture. to be unique and provide its customers with a flying experience for them to remember and more importantly. New planes. Staying alive in the airline world is easier said than done though. The company made all the right decisions from which planes to buy. keep them coming back. maybe even too fast. high commitment organizational culture” as well. JetBlue would suffer.JetBlue started from scratch in 1999 and has since become one of the most successful airlines to date. To JetBlue though. The company feels that their success comes from within. The airline business has proven to be one of the hardest industries to stay alive in. and new employees are coming in fast. JetBlue was able to start with a good sized budget and find a great management team with experience in the industry. Recent struggles by companies such as United have proven that. the company needs to ensure that it stays there while it continues to achieve rapid growth. JetBlue's customer and employee friendly environment as well as its critical decision making have made the company prosper. All the company needed was a few planes and gate openings to get things going. profits. no matter the airline. as well as location decisions. They need to expand while keeping everything within the same. being successful not only means being profitable and staying in business. technological decisions.

For example one of the airline’s philosophy was to delay flights than to cancel them and they got caught in that when flights were affected by an ice stormed which lasted longer than forecasted and flight delays at JFK caused cancellations at other airports. 2) What were the key elements of JetBlue’s strategy in 2008? In 2008 Jet Blue began following several new strategies in response to the difficulties facing the industry such as the rise in fuel prices as well as increase competition. would be able to use JFK as a quasi-hub.  Reduce capacity and cut cost that is Jet Blue agreed to sell nine used Airbus A320 which would result in a net cash gain of $100 million. Lufthansa. which held a 19% equity stake in Jet Blue and a 30% equity stake in BMI British midland with the option to buy more shares. So in effect Jet Blue new leadership need to improve on its operating procedures.  JetBlue re-evaluate the ways the company was using its assets in that they found new ways of deploying two of its airlines that is its JFK terminal and its Live TV library subsidiary. The airline’s reputation was tarnished because of this incident.Should Jet Blue strategic vision be revised now that the company has new executive leadership? I do not believe that Jet Blue strategic vision should be abandoned completely. . but they need to capitalize on the past mistakes of the airline and fix it. communications system and the use of information technology solutions to prevent another weather related debacle.

        Free television shows Low carb snacks Leather seats and more legroom. raising their fares  Offer improved services for corporations and business travelers such as meeting-specific discounts  Increase ancillary revenues such as charging for headphone. . meeting specific discounts. Nashville Tennessee and Arizona.5 hours in the fourth quarter of 2008. This would enable Jet Blue to postpone payment for the airplanes and save on operating expenses it would incur. Delay delivery of 21 new airbus A320s scheduled for 2009 through 2011 to 2014and 2015. How was the company chosen to attract customers in sufficient volume to earn profits? Jet Blue used many strategies to attract customers in sufficient volumes to earn profit by implementing the following. extra legroom. second baggage. manicure and hair styling for travelers at Terminal 6 at JFK Gave its customers in flight yoga cards They put children’s play area and TVs near its gates. Offered private massages.   Suspending service in and out of Ohio. call center charge.  Reducing its aircraft utilization rate from 13 hours per day to 12. They started to grow in certain markets. Introduced refundable fares. Raise fares and grow in select markets. complimentary travel certificates Agreement with Expedia and Travelocity to offer flights for business customers.

What are the factors driving change in the airline industry? The current airline industry has been plagued with adverse market conditions . increase in competition. Also with the recent 9/11 terrorist attack on airlines. In Bill of Rights JetBlue reaffirms its commitment that “JetBlue airways exists to provide its customers with superior service in every aspect of their customer’s travel experience.How does Jet Blue Offer its customers value? Jet Blue offer its customers value by setting forth Bill of Rights for its customers. Such an unfavourable environment has created a situation for the industry that is ripe for airlines to implement strategic move and changes. JetBlue has also True Blue customer loyalty program with no blackout dates and which allows customers to redeem awards whenever they want to travel. the industry has implemented a lot of measures to protect the security aspect of the industry. Airlines have gone as far as changing their doors to their cockpits. depressed economies as a result of the financial crisis and increased in fuel prices. 3. implementing stringent operating procedures etc. .

the industry suffered not only from world recession but travel was further depressed by the Gulf War. leading to significant excess capacity in the market. and more comfortable seating are just some of the product enhancements being introduced to attract and retain customers. Since then. new interactive entertainment systems. The financial difficulties were exacerbated by airlines over-ordering aircraft in the boom years of the late 1980s. In addition. Ticketless travel. less than 2% of total revenues. such actions have returned the industry as a whole to profitability: IATA airlines' profits were $5bn in 1996. some airlines are having to invest heavily in the quality of service that they offer. To meet the requirements of their increasingly discerning customers. . This is below the level IATA believes is necessary for airlines to reduce their debt. to reduce capacity growth and to increase load factors. Many have tried to cut costs aggressively. During the first half of the 1990s. both on the ground and in the air. At a time of renewed economic growth. In 1991 the number of international passengers dropped for the first time.How are they likely to impact the future attractiveness of the industry? Airlines' profitability is closely tied to economic growth and trade. airlines have had to recognize the need for radical changes to ensure their survival and prosperity. many airlines remain unprofitable. build reserves and sustain investment levels.

In order to appeal to prospective shareholders. The outlook for the air travel industry is one of strong growth. Hundreds of airlines have entered into alliances. It has done this through the establishment of alliances and partnerships between airlines. the airline industry has proceeded along the path towards globalization and consolidation. Forecasts suggest that the number of passengers will double by 2010. linking their networks to expand access to their customers.A number of factors are forcing airlines to become more efficient. . the European Union (EU) has ruled that governments should not be allowed to subsidize their loss-making airlines. the airlines are having to become more efficient and competitive. Successful airlines will be those that continue to tackle their costs and improve their products. characteristics associated with the normal development of many other industries. the future will hold many challenges. ranging from marketing agreements and code-shares to franchises and equity transfers. For airlines. Despite this. thereby securing a strong presence in the key world aviation markets. Elsewhere too. In Europe. governments' concerns over their own finances and a recognition of the benefits of privatization have led to a gradual transfer of ownership of airlines from the state to the private sector.

jetBlue. Gamble : Crafting and Executing Strategy – 17th Edition www.J.edu . Strickland III: John E.com www. Thompson. Jr: A.stanford.References Arthur A.

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