Running head: Jet Blue

Jet Blue Jet Blue: A Case Study 1. Discuss the trends in the U.S. airline industry and how these trends might impact a companys strategy.

The airline industry is consistently evolving and companies have to deal with heavy regulation along with aggressive competition. Aviation is the newest form of movement in the transportation field and as mankinds newest form of travel, there are a lot of lessons to learn. The new millennium has brought a lot of new challenges to the industry and this has made it hard for many companies. Newspaper articles discussing bankruptcy and mergers have become a norm in the airline/aviation industry. The strategies that airline companies have used have been revolutionary and the success of them has still yet to be evaluated. During the time of this case study, aviation had to deal with the new regulations in passenger screen and the cost of covering this, the effect of losing thousands and the fear that customers had of flying, maintenance issues with aircraft, constantly changing technology, the raise of smaller carriers, an up and coming recession, and the rising cost of gas. These few things along with being a highly competitive market can and did challenge the innovators in the industry and their strategies. In this case Jet Blue had to find other avenues to raise money because their pricing strategy had been to not follow the industry in charging for bags and aisle seats, and provide direct routes to more cities. They had to adjust this by taking on some of the same measures of their competitors such as: cutting flight routes, scaling back on aircraft updates and purchases, and charging for things such as aisle seats and baggage. They also began to offer incentives to corporate travelers. Furthermore, JetBlue delayed the purchase of 21 new aircrafts in order to save money and began to use services like Expedia to sell seats. 2. Discuss Jet Blues strategic intent.

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Jet Blues goals were to bring humanity back to the airline industry (Thompson, C-53), and to become the preferred air carrier to retain retention. They did this by providing low cost flights that offered comfort and a unique experience along with excellent customer services. Jet Blue provided comfortable leather seats and was one of the first airlines to publish a Passengers Bill of Rights. They also utilized technology to enhance the experience by offering electronic ticketing, in-seat televisions powered by satellite signal, PayPal ticket purchase ability, appealing snacks and they preferred to delay flights instead of canceling them. 3. Discuss Jet Blues strategic elements of cost, organizational culture, and human resource practices and evaluate whether each element provides the organization with a competitive advantage. The key player behind the airline was David Neeleman, who had an extensive career in the airline industry, and his vision is what kicked off this awesome company. His knowledge and experience with the industry gave him a plethora of industry inside outlook and contacts. He had the ability to raise capital quickly and he carefully selected his senior management team. He selected individuals that had proven to be experts in their fields. -Human Resources: The human resources strategy is essential to the operations. Member are selected through pre-screening calls and then invited to an eight-hour, one day event in Forest Hills, New York. The selection committee included the HR department, and leadership from within the company. They had individuals from all of departments involved with the process and at the end of the day selections were made. Training these individuals was done at JetBlue University and attended one of five colleges. The company promoted from within and after an employee survey the company decided to provide a leadership program which drastically proved to be effective. In February of 2008, JetBlue started a

Jet Blue program called Aviation University and they worked with Embry-Riddle Aeronautical

University to identify exceptional pilots; they received an internship and pilots still had to make it through the interview process before starting. Although, JetBlue paid lower wages, an extensive benefit package was provided to its employees. There was also a no-layoff policy and downsizing was done through volunteer means and a severance package. -Organizational Culture, the values of JetBlue safety, caring, integrity, fun and passion are what make this what it is. Safety being the companys number one concern, an example of this was displayed after September 11th when they installed Kevlar cockpit doors and cabin surveillance cameras in all of its aircraft, being one of the first airline to do so. The company has a no-layoff policy and when the industry experience downturns, JetBlue continued to pay benefits and salaries and the CEO donated half of his pay to a crisis fund. This fund helped members that had to deal with disasters their lives. This company didnt mind apologizing and the few that they have had to give were seen as sincere by the media and industry analysts. This company also has an intensive history of going above and beyond for their customers. They also offered their employees things such as job sharing. The company also appealed to young individuals and they would cater to this crowd by offering low-carb snacks. The company also believes in constantly improving itself and they did things such as employee surveys; which this company took the comments made by the employees seriously. -Elements of Cost They offered low cost flights and although demand/purchase was strong it didnt reflect in their stock prices. JetBlue had a high liquidity value and it was the highest in the industry. Obtaining credit wasnt difficult however; the interest payments were a phenomenal cost.

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4. Discuss Jet Blues strategies for 2008 and beyond and evaluate whether or not Jet Blue will be successful implementing these strategies. After the horrible Valentine Days 2007 accident JetBlue evaluated their strengths during this time and weakness. From this JetBlue, expanded on their reservation system, crossed trained employees, upgraded its website to allow passengers on canceled flights and have the ability to rebook online. A computerized tracking system for luggage system was put in place. As the cost of fuel began to hit records high the cost of operating become astronomical and the need to generate revenue was key to the survival of the company. They raised their fares, delayed delivery of 21 new aircraft and began to impose new fees. These strategies JetBlue feel like is the new norm. As of 2012, they are still in business however; I do believe that JetBlue has lost its edge. The economy is one of the biggest killers in this industry and the money/capital is just not there. Jet Blue charging the fees that they are has taken away from their beginning goal. They have never had profitable stock and they would need to become extremely aggressive, which I dont believe is in this companies nature, in order to survive.

Jet Blue References Carter, Grant. (2002). Is JetBlues strategy conducive to sustaining profitability.

Thompson, A.A., Strickland, A.J., Gamble, J.E. (2010). Crafting and executing strategy: The Quest for Competitive Advantage: Concepts and Cases. New York: McGraw-Hill-Irwin.