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East West University

Case Study-2 Topic: JETBLUE: HIGH-FLYING AIRLINE MELTS DOWN IN ICE STORM

Submitted to:

Saadia Shabnam
Senior Lecturer Department of Business Administration

Submitted by: Name Tareque Siddique Al-Hossain Abdalur Rahman Sadi Shejuti Binte Shahnaz Tasmia Kalam Jubair Rahman Md. Zahidul Islam ID 2009-2-10-176 2009-2-10-167 2009-2-10-215 2009-2-10-066 2009-2-10-155 2009-2-10-229

Section: 01
Q1. Summary of the case

Date of Submission: 25th March, 2013

JetBlue airline was founded in 1998 by David Neeleman who began his entrepreneurial career by establishing his own travel agency. After that, Neeleman launched a regional carrier company known as Morris Air and sold it in the year 1992. In the year 1998, Neeleman and his gathered team of investors founded New Air Corporation which has been changed into JetBlue in July 1999.It announced that it will provide high quality service in a low cost. JetBlue began its flying in February 2000. The firm was well capitalized and travelling publics were responding favorably to JetBlue. The company went to public in April 2002. By 2005, the company has positioned itself as one of the successful business in US airline business. Travelers were enjoying free cobranded amenities, brand named snacks, Dunkin Donuts coffee, XM satellite radio, purchasing 20th century fox movie, wine etc. It was the first airline which deployed the new Embracer 190 regional jet and offer free live television. In 2006, JetBlue had got the second lowest rate of consumer complaints. In 2007 it was named most admired airline and ranked 3 by Fortune.

But February 14, 2007, JetBlue passengers were suffered the most severe disruption of service in its seven years of history. JetBlues foundation and purpose of providing low cost flights with top-notch
customer service didnt matter on the stormy day. A winter storm scrambled all operation in JFK airport

in New York, which severely hampered the flights of JetBlue; as a result it had to cancel more than 1900 flights, affecting 130,000 travelers before it became normal on February 20. The service failure costs more than $30 million dollars. The commitment the airline offered that bringing humanity back to air travel has been forsaken due to service failure. Stranded passengers wrote in blogs which also hampered the image of the company. As A result the company had to come forward and undertaken some necessary steps for service recovery to regain the passengers loyalty. The company has spent millions of dollars on passengers refund and vouchers, employee overtime and other storm related cost. David Neeleman has become the public face and repeatedly responding to public that this type of disruption will not take place again. The company also hired new chief operating officer and executive vice
president was resigned from the position after the incident. . But JetBlues stock price was still falling

down and it appeared that market had lost the confidence from high flying company.

Q2. Identifying the service failure point of JetBlue airline


1. Jet planes were stuck: JetBlue avoid the cancelation for the bad weather and the gate agents loaded passengers into six planes thinking that they could get out during the break in the weather. 2. Terminal was blocked: As four more new aircraft arrived and remained on the tarmac, which results all terminal gates were occupied and ground equipment to tow planes were also frozen. 3. Failure of 20-crew service department: The reservation system could not handle the amount of incoming customer calls which were trying to rebook their flights by calling the reservation office. 4. Shortage of food and air: As the plane passengers were stuck in the plane they were suffering from lack of air as the gate could not be opened due to stormy weather and food crisis had started in the plane. There was no power and it was hot. 5. Lack of communication and coordination: Because of the bad weather all staffs were shocked as they never had this type of experience before so lack of internal communication and coordination had become visible.

Q3. Service Recovery Strategy undertaken by JetBlue


Instantly steps taken by JetBlue: JetBlue asked the port authority of New York and New Jersey for rescuing stranded passengers. Pilot was providing instant updates and about the situation inside the plane. Flight attendants distributed snacks liberally, allowing passengers to recharge the cell phones and let the children help to push the service carts. JetBlue also cancelled the next two days 23% of all flights in order to reposition planes and allowing pilots to rest. JetBlues step to recover public loyalty: 1. Public Apology: On the evening of February 14, JetBlue issued a public apology to repair firms damaged image. It offered a full refund and a free roundtrip ticket to any passengers

who were detained for more than three hours. Those passengers whose flights were cancelled will also get refund. 2. Relaxing Policy: The airline also announced that it will relaxing its policy that those customers who were affected by storm will not be penalized for rebooking new flights. 3. Practicing Visible Leadership: Dave Barger, one of the top executives went to JFK to oversee the operational responses and speak with the passengers and crew members. David Neeleman had become the public face by giving dozens of interviews in which he accepted responsibility, expressed remorse and told that this types of problem will not happen again. 4. Personal apology: Neeleman also issued his personal apology which appeared in the blog and in the newspapers. 5. Customer Bill of Rights: One of the most revolutionary changes that JetBlue took in was creating a
Customer Bill of Rights. It provided compensation for a variety of delays. It states that customers will be notified of any cancellations or delays. If a flight is canceled then customers will have the option of rebooking or getting a full refund.

6. Editorial Published: On February 21, an editorial had been published on USA Today by praising JetBlues response to the inexcusable service failure. Later on March 2008, the company announced that John Owen, executive vice president of supply chain and information technology had resigned and will going to be served as a senior advisor and Russell Chew had been hired to serve chief operating officer.

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