Current Strategies

In order to make a few recommendations and evaluate some alternatives strategies that JetBlue Airways can implement in its near future, we will briefly touch upon a few facts generated from the SWOT Analysis. By taking a look at the key issues surrounding the organization, we can suggest a few strategies and recommendations the company should emphasize to retain its success and leadership position within the industry. For example, one of the key issues facing the company is the extremely competitive nature of the industry. JetBlue has been able to succeed in this environment by formulating a double-edged strategy; lowcost and service differentiation strategy. JetBlue is capable of providing its low priced tickets because of its successful cost saving policies. Within the airline industry, the biggest reduction in price a company can realize is on the actual planes themselves. In fact, the company has used only one model airplane, Airbus A-320, of which it uses to replenish its inventory every two weeks per year (JetBlue, 2011). By focusing on just one airplane, it has allowed the company to gain economies of scale. Moreover, the company can reduce unnecessary expenses and complications that can result from training pilots, multiple different maintenance costs, and intricate scheduling by exclusively operating with just one model. In 2005, the company announced that it would be introducing a new model, the Embracer 190, which offers customers one of the most spacious and relaxing cabins in its class (JetBlue, 2011). Nevertheless, with just two different models in its fleet, the company can still benefit from its

substantial cost savings compared to other competitors with numerous different models. Moreover, labor costs contribute to a substantial portion of JetBlues operating costs. In 2010 alone, salaries, wages, and benefits summed up 23% of the companys revenues (JetBlue, 2010). Compared to other major carriers, JetBlue has enjoyed a lower cost labor force. It accomplishes this by requiring its employees to assist with cleaning the cabin after every flight; usually done by other crewmembers in other companies. This provides a double advantage for the company, a faster turnaround time between flights and at the same time, lowering the companys overhead costs. JetBlues has been able to increase its operational efficiency and reduced its costs by heavily investing in technology. For example, it has implemented a paperless ticketing system that saves on both administrative and material expenditures. The airline has also chosen to supply their pilots with notebook computers to use for their training, which has resulted in considerable savings. Yet, another example is the companys customer service agents that use a reservation system that can be accessed from home using VOIP that further saves the company in office space and free phone calls. Its differentiation strategy consists on paying their employees with premium wages and treating them with a high level of respect. This philosophy provides great value to their HR management by stimulating its culture and driving employee motivation. At the same time, providing exceptional customer service creates a competitive advantage. If for example, Southwest Airlines offers a lower price,

JetBlues superior service will drive in more business. Furthermore, by providing inflight amenities as well as excellent service, it allows the company to reach a broader audience.

Recommendations
Due to the companys rapid growth, its unique and pivotal culture has the potential of being diluted. Throughout the companys history, top management has recognized its entire workforce from crewmembers to executives as a crucial factor of the companys success. As it continues to expand however, top management can eventually lose the type of interaction and close-knit culture it enjoys today. As with any other organization, when it significantly expands it can experience ineffective communication and loose the valuable aspects of the culture they have developed. This provides the company with a strategic opportunity to implement a management-training program that will focus on integrating the new hires to the companys dynamic culture and core values. Companies such as Enterprise Rent A Car, Hyatt Hotels, and Marriott Hotels have used management-training programs to develop new employees and train them to be the future leaders of the organization. This type of program will focus on teaching them the critical components of the companys culture from a management perspective and at the same time get feedback to continue to improve the process. In fact, it can present both short-term and long-term advantages. For example, JetBlue can continue to maintain a

connection between management and trainee at a time of rapid growth and, it can develop a solid management base that retains the passionate culture of the organization. By training the future leaders of the organization with these values, it will help guarantee that the exclusive culture will continue even after the departure of its CEO, David Neelman. Drawing from the companys strengths in the SWOT Analysis, we can see the importance the companys CEO has embedded into the culture. His asset to the company as a leader has made a substantial influence in creating a culture that supports both the structure and organizational goals of their organization. In regards to dealing with the instability of its operational costs, JetBlue has to create policies and procedures that harmonize the internal and external environments. In 2005, the company faced some difficulties that led them to reevaluate its operations in a plan called Return to Profitability. At the time, the company had decided to focus on new initiatives that ended up deviating from its traditional operations. Although this plan had important elements such as focusing on implementing quality service and cost control measures, it also needs to concentrate on innovative IT policies that has proven to save the company millions in operational savings. As mentioned before, JetBlue has reached considerable savings by having paperless ticketing and telephone reservation systems. This has allowed the company to offset some of the other uncontrollable operational expenses like fluctuating fuel prices and increase labor wages. The heavy investment in these systems has proven effective in the past. In the future, they

should continue to invest in IT because their competition will also find other technologies to exploit for increased market share and cost saving measures. Going back to the SWOT analysis, one of the weaknesses facing JetBlue is that their company only provides service to a limited amount of destinations. In trying to find new ways to expand, their management has been discussing the expansion into international destinations. In my opinion, this strategy would prove ineffective because it has several flaws. There are a few ways they can expand internationally. They can enter a joint venture with another carrier, raise additional capital through the securities markets, or take out additional financing to support their expansion. By entering a joint venture, they will lose its competitive advantage because the company will be forced to share its know-how, surrender some control regarding its decision-making, and share some revenues with its potential partner. JetBlues competitive advantage has been a low-cost carrier in the domestic US market. If they would expand into global markets, they would be forced to partner up with another organization, which will in turn, dilute the organizations strong management team. Additionally, there is heavy government regulation in the airline industry with regard to global expansion. Therefore, the combination of heavy government regulations and thus costs, disadvantages of a joint venture, and the inexperience in global markets make this strategy highly unappealing. Instead, JetBlue should continue to expand in the U.S. in areas of the Midwest or other regional airports they do not currently compete in. The company can efficiently compete in these markets by focusing on their dual advantages mentioned earlier; low cost airfare and differentiation thru service. Growth in these

types of markets will provide JetBlue with the opportunity compete with smaller carriers and leverage their economies of scale to reach operational efficiencies. Similarly, JetBlue needs to maintain a solid relationship with its suppliers (Boeing and Airbus) and other players within the industry. Recognizing that the cost of airplanes and jet fuel are the most expensive item in their financial statements, it is important for the company to build relationships to gain other efficiencies in their operations. In regards to its fuel costs, the company should also look into hedging in financial markets to try to offset the escalating price of fuel especially with the rise in political events in OPEC producing countries in the last few months.

Works Cited
JetBlue. 2011. Our Planes http://www.jetblue.com/flying-on-jetblue/onboard/our-planes.asp JetBlue. 2011. Annual Report 2010. http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9NDE3Mzg3fENoaWxkSUQ9NDMwMDAzf FR5cGU9MQ==&t=1