Case Study – Jetblue Airlines
February 20, 2013 JetBlue Airways Corporation Case Study Report Bearings Assay History JetBlue Airways Corporation was created my David Neeleman. His eyes was to actualize an inexpensive, accessible way to biking by airplane. He was quoted adage he wants to “bring altruism aback to air travel. ” David Neeleman was already a acclimatized entrepreneur. Two years afterwards bottomward out of the University of Utah he accustomed his own business by renting out condominiums in Hawaii. Soon afterwards he accustomed his own biking bureau and began chartering flights from Salt Lake City to the islands to accompany in added -to-be audience to appoint his condo’s.
In 1984 Neeleman abutting armament with June Morris, who endemic a ample accumulated biking bureau in Utah, to accompany to the apple a aggregation accepted as “Morris Air”. (JetBlue Airways Corporation, 2011) Success followed and the aggregation was bought by Southwest Airlines for $129 Million. Soon afterwards the auction of “Morris Air” Neeleman pioneered the use of “at home catch agents”. By application their homes as offices the catch agents were extenuative money by blurred aerial expenses. He additionally developed the aboriginal cyberbanking ticketing arrangement in the airline industry. JetBlue Airways Corporation, 2011) Neeleman became the controlling carnality admiral for Southwest but accomplished it wasn’t a acceptable fit. He active a bristles year noncompete acceding and was on his way. During his bristles year acceding he developed the cyberbanking ticketing arrangement he had accomplished at Morris Air into one of the worlds easiest airline catch systems. He alleged it Open Skies. He again awash this addition to Hewlett-Packard in 1999. Finally in 1999 the noncompete acceding had accomplished its cessation and Neeleman launched his own airline.
He aloft the bare basic with affluence and JetBlue became the highest-funded alpha up airline in aerodynamics history. JetBlue commenced operations in August 2000. For a alpha up abject JetBlue chose John F. Kennedy International Airport (JFK). (JetBlue Airways Corporation, 2011)The aggregation relied on cyberbanking catch and ticketing to accumulate costs down. JetBlue was of the aboriginal airline companies to affair laptop computers instead of manuals to their pilots. One of their accomplished affairs credibility abreast from bulk was the in-flight entertainment. The airbus A320’s ere complete with 24 alive accessory broadcasts (including A&E, Animal Planet, CNBC, ESPN, the Food Network, Home & Garden, and the Weather Channel) at every seat. This affectionate of ball was of the aboriginal amid airlines. Airlines about aired taped shows or movies. To advice accumulate costs bottomward the airline provided no commons but did activity gourmet dejected potato chips and soda. The seats were able with added leg allowance and were all covering with beyond aerial accumulator compartments. Business grew rapidly in JetBlue’s aboriginal year of operations.
Reservation agents were accepting calls of up to 12,000 a day and still the aggregation was booking 40% online. In 2001 JetBlue opened a added abject in California at Long Beach Airport. JetBlue grew over the years to serve added than 52 destinations in 21 states, Puerto Rico, Columbia, Mexico and the Caribbean. In 2008 they added casework to Puerto Plata and St. Marteen. In 2009 they started confined Bogota, Columbia, San Jose, Costa Rica, Montego Bay and Jamaica. In 2007 JetBlue appear that they were entering into an acceding with Aer Lingus, and Irish banderole carrier, to facilitate accessible transfers for both airlines’ customers.
Unlike acceptable code-share alliances, barter could not accomplish one catch for both airlines if allegation be. They would accept to accomplish two anxiety instead. Again alone 8 canicule later, JetBlue appear a code-share acceding with Cape Air. Barter would be able to acquirement seats on both airlines beneath one reservation. A abundant bigger fit for convenience. JetBlue’s advance was acceptable harder to armamentarium due to advancing appraisement and aerial ammunition prices amidst alternative growing costs. On February 14, 2007 an accident took abode that would agitate the solid, able-bodied adjourned aggregation to its knees.
Not alone costing Neeleman his position in a aggregation that he created, it destroyed the companies acceptability for acceptable chump relations. There was a abhorrent storm headed appear the East bank and while all alternative airlines took the able precautions and canceled their flights JetBlue in all their antipathy did not. Aback the storm hit it was worse than accepted and JetBlue’s barter were larboard abandoned planes for 7 hours or more. David Neeleman aback interviewed about this abhorrent about-face of contest said “Things coiled out of control. We did a abhorrent job; we got ourselves into a ituation breadth we were accomplishing rolling cancellations instead of a massive cancellation. Communications bankrupt down, we weren’t able to adeptness out to cartage and they connected to access at the airports… it had a bottomward effect. ” It took the alignment added than a anniversary to get the bearings beneath control. This is breadth The Chump Bill of Rights came in. It basically categorical self-imposed penalties for JetBlue and above rewards for its cartage if the airline accomplished operational problems and could not acclimatize to weather-related altitude aural a “reasonable” bulk of time.
In 2007 the aggregation appear a $76 Actor accident with a primary acumen actuality ascent ammunition costs. JetBlue charcoal profitable, announcement a net assets of $128 Actor for 2012. JetBlue’s CEO and President, Dave Barger said “2012 was a actual acceptable year”. (Corporation, 2013) Mission JetBlue Airways does not accomplish beneath a acceptable mission statement. Instead they use a set of bulk values. Those bulk ethics are as follows: * SAFETY * CARING * INTEGRITY * FUN * PASSION These bristles things are best declared as “the JetBlue experience”. (John W.
Kelly for KR Consulting, 2008) (JetBlue Airways Corporation, 2012) Accumulated Activity There are two new strategies that accept been developed for JetBlue Airways; a advance activity and an adeptness strategy. Both strategies accept been created out of centralized and alien analysis. The advance strategy’s primary ambition is to booty advantage of contempo mergers and failures aural the airline industry. Aback companies absorb it takes abroad some of the competition. Failures in alternative companies actualize opportunities for JetBlue to footfall in and actualize new business. (John W.
Kelly for KR Consulting, 2008) (Corporation, 2013) The adeptness activity is developed based on the organizations position aural the bargain articulation of the airline industry. To adeptness this ambition an all-encompassing centralized assay is performed with a accurate attending at the activity force as able-bodied as an assay of the jet ammunition prices/purchasing. (John W. Kelly for KR Consulting, 2008) Strengths and Weaknesses of JetBlue Airways Strengths Able cast acceptance and their casework are competitive. If you accede acquirement commuter afar JetBlue is the sixth bigger commuter carrier in the United States and is a broadly accustomed all-around brand.
The aggregation has accustomed several awards such as “Top Low Amount Airline for Chump Satisfaction” seven years in a row and additionally “Best Coach Chic Experience”, “Most Chump Friendly Airline” and “Best Value Airline Domestic” for 2011. JetBlue is additionally accepted for their ample basement and alive accessory TV. The Chump Bill of Rights is additionally a key amateur in the companies strengths. It was created with acceptation and specific advantage for chump inconvenienced by account disruptions aural JetBlue’s control.
Another account offered alone by JetBlue is an expedited aegis acquaintance in over 30 cities and they alarm it “Even Added Speed”. JetBlue utilizes their aircraft best calmly to accept the adeptness to advance its anchored costs over a greater cardinal of flights and accessible bench afar and they do this by application Airbus A320 planes for the majority of their business. (JetBlue Airways Corporation, 2012) Weaknesses JetBlue has an acute bulk of aerial anchored obligations. In 2011 JetBlue had a debt of $3. 14 billion and it accounted for 64% of its complete capitalization.
As the years go on and the aggregation grows its debt will alone abound as well. Eventually their aerial akin of debt could accomplish it difficult to abound the business added because of abridgement of funding. That in about-face would put the aggregation beneath their competitors who could acquisition it easier to access all-important funding. (JetBlue Airways Corporation, 2012) Opportunities An accessible befalling for JetBlue is amplification in the biking industry. This specific industry has consistently fluctuated in the accomplished but, it is accepted to abound aggressively in the years to come.
According to The Federal Aerodynamics Administration (FAA), airline biking is said to bifold over the abutting 20 years. In 2011 about 815 billion bodies or seats awash is accepted to access of the abutting two decades to numbers abutting to 1. 57 trillion. That is an boilerplate advance amount of about 3. 2% per year. Actuality the sixth bigger commuter carrier in the US, JetBlue is in a acceptable position to apprehend a advance like that as well. JetBlue has additionally put accomplishment in to authoritative business relationships with Asia. The clip of the abridgement as a accomplished is slowing but Asian economies accept remained able domestically.
Cathay Pacific is the home carrier of Hong Kong. In 2012 JetBlue appear an interline acceding with this company. This acceding will articulation anniversary other’s arrangement amid Asia Pacific and the America’s. JetBlue additionally appear a codeshare acceding with Japan Airlines to activity ceaseless account to Tokyo’s Narita International Airport. For this acumen JetBlue’s broadcast partnerships with above Asain airlines will advice added strengthen its arrangement and aggrandize their services. (JetBlue Airways Corporation, 2012) (Corporation, 2013) Threats The complete bigger blackmail to JetBlue is the ascent costs of aircraft fuel.
Throughout history ammunition costs accept fluctuated out of the ascendancy of companies such as JetBlue. The costs alter broadly and are capricious at best. In 2011 ammunition costs represented about 40% of JetBlue’s complete operating costs. Another blackmail is acrimonious authoritative regulation. In the airline industry companies are accountable to all-encompassing authoritative and acknowledged acquiescence requirements that aftereffect in cogent costs. It is additionally actual big-ticket for the aggregation to accumulate their accepted certificates. Lastly there will consistently be acute antagonism in this industry.
As a attitude the industry is about bedeviled by the giants such as: United Air Lines, Delta Air Lines, American Airlines, Southwest Airlines and US Airways. Because of their admeasurement and power, some of these companies may be bigger ill-fitted for all-important funding. They may additionally accept added favorable ammunition prices due to aggregate of sales. Acute antagonism could advance to bulk wars which could abnormally affect the company. (JetBlue Airways Corporation, 2012) Identification of Problem(s) and Their Bulk Elements The aboriginal botheration with JetBlue is that the aggregation grew too big too fast.
The alignment was butterfingers of comestible this advance both financially and physically with staff, accessories and services. The added botheration was/is bad publicity. The airline was able-bodied accepted for aberrant chump account and relations but afresh they are ranked amid the everyman in chump satisfaction. JetBlue grew too quickly. In the 1990’s there were abounding baby start-up airlines. Best bootless aback faced with antagonism from the above airlines because they were not able to bear the allowance wars. The abate companies were additionally at a disadvantage aback it came to alpha up basic and administration talent.
Because of David Neelemans aptitude and allure he was able to access an affluence of alpha up basic which agitated the airline through the toughest allotment of a business, the beginning. Once JetBlue took off the aggregation had a difficult time befitting up with its acceptance and growth. Technology for one was defective and it all bent up with the aggregation on Valentines Day in 2007. The aggregation fabricated a few bad decisions and it escalated bound and their catch arrangement could not handle the accommodation of the situation. Their technology additionally bootless them aback aggravating to antidote the problem.
They were not able or accessible for article of this magnitude. (Damaraju, 2009) With the advance alteration from the company’s aboriginal plan was starting to booty place. They started off operation alone one blazon of aircraft, an Airbus A320. The activity abaft this was to lower training amount and provides a actual abreast agents with adaptability in manpower. The airline again included a added blazon of plane, the Embraer 190 which the agents was not able for. Furthermore the aggregation was embarking on alike added paths breadth it did not accept the bare experience. (Damaraju, 2009) JetBlue started as an airline for the New York leisure traveler.
The affair with their amplification is that they don’t accept the avenue anatomy to attempt with the majors for the business chic travelers. (Farzad & Bachman, 2012) The added botheration is bad publicity. The aboriginal adverse accident was the Valentines Day ice storm that larboard cartage abandoned and the aggregation afterwards the able accoutrement to fix the botheration in a appropriate manner. Barter were affronted as they should accept been. The added actual accessible blow came in August 2010 aback a balked flight accessory exited the alike application the emergency accelerate afterwards acceptable angered with passengers.
And aftermost but absolutely not least, aback one of their pilots had to be chastened by cartage and forcibly removed from the alike in March of 2012. (Farzad & Bachman, 2012) Because of these adverse contest JetBlue now ranks aftermost amid 15 airlines in on-time achievement and ninth in chump complaints to the Department of Transportation. (Farzad & Bachman, 2012) Those numbers are three times Southwest’s complaint ratio. Accepting started out as an airline that capital to “bring altruism aback to air travel” they assume to be advancing up abbreviate in the chump account area.
That was their bigger applicant attraction. Appraisal of Alternative Courses of Activity The botheration of growing too big too fast can calmly be evaluated as a afterwards sight. The aggregation had abundant aspirations and fell abbreviate alone by default. Had the aggregation advancing the contest that were to appear with the abortion in their best of technology or the brainy breakdown of their staff, I’m abiding they would accept done things differently. The costs of their abstruse errors were about abutting to $30 million. The costs they endured over their abridgement of chump achievement are immeasurable.
For these problems, the alternatives courses of activity could alone be to adapt their technology and bigger alternation agents and let them apperceive the absolute pressures of their positions. JetBlue already has a absolute training affairs for their advisers accepted as “JetBlue University”. (JetBlue Airways Corporation, 2012) Recommended Solutions Recommended solutions for JetBlue’s advance from this point affective advanced would be first, to adviser and advance a anatomic operation-revenue to operating-expense ratio. As with any acknowledged business the operating acquirement allegation be greater than the operating expenses.
This arrangement will actuate the approaching of JetBlue. (John W. Kelly for KR Consulting, 2008) Internally JetBlue should accede how to abate expenses. The two key players in this accurate bearings are activity and ammunition expenses. Although JetBlue has remained un-unionized, which is acute in befitting activity costs down; there may be added allowance for advance in the account apropos this matter. I advance a afterpiece attending at Administration and Airport Operations. These two positions are the extreme from the chump and accept the best employees.
The acumen abaft allotment these accurate positions is that change in these areas will not anon affect chump service. These positions allegation to be advised and see where, if any, the activity inefficiencies lie. By accomplishing this the aggregation may be able to cut a few accidental positions. Recommendations for best efforts for capping ammunition costs are an appraisal of the ammunition purchasing agent’s performance. (John W. Kelly for KR Consulting, 2008) The added advocacy is to booty a added advancing access like Southwest has and convenance added hedging.
Recommended solutions for JetBlue’s abortion to accommodate aberrant chump account would be aboriginal to abide to convenance and put to use The Chump Bill of Rights and to booty a few leads from their competitors. Alternative airlines do not allegation their barter for a pillow and absolute set. At all costs they should abide with the allowances they accommodate their customers. They may not serve commons but the candy and sodas are consistently free. A big affairs point for consumers is accoutrements fees. JetBlue allows their cartage to accept two chargeless accoutrements per flight.
That is one added than Southwest. The actuality that JetBlue is “low cost” airline the consumers apprehend less, i. e. commons and things of the such, so their accompaniment of the art ball is a acceptable abruptness for passengers. Implementation Plan To booty activity on the operation acquirement to amount arrangement is to alpha anon reviewing the activity functions and admit an added analysis every two years. Starting anon with agent achievement reviews, accepting appropriately accomplished advisers is a must. Success or abortion in this breadth will be abstinent in dollars saved.
Immediate activity because ammunition costs are to appoint a aldermanic lobbyist to advice abrogate the bazaar by aperture up civic cardinal affluence as able-bodied as auspicious added calm petroleum analysis and jet ammunition production. Success or abortion in this breadth will additionally be abstinent in dollars saved. Works Cited Corporation, J. A. (2013). JetBlue Reports Record Fourth Quarter and Full Year Revenues. New York: PR Newswire. Damaraju, N. L. (2009). JetBlue Airlines: Will it Remain Blue? In McGraw-Timmons, Capstone Bus 250s (pp. 13-220). Dallas: University of Texas. Farzad, R. , & Bachman, J. (2012). Once High-Flying, JetBlue Returns to Earth. Bloomberg Businessweek , 27-29. JetBlue Airways Corporation. (2012). Aggregation Profile JetBlue Airways Corporation. marketline. com. JetBlue Airways Corporation. (2011). Reference for Business. New York: referenceforbusiness. com. John W. Kelly for KR Consulting, L. (2008). Shaping Tomorrow's Solutions for JetBlue Airways- A Cardinal Analysis. San Fernando Valley: University of La Verne.
Order a unique copy of this paper