JetBlue Airways

INTRODUCTION

JetBlue Airways entered the market in 2000 from a position of financial strength, leadership capability and several rare advantage points uncommon to others in the industry: 1) David Neeleman, the founder, had several years of industry experience as a result of having successfully launched and sold an airline (Morris Air), bringing both explicit and tacit knowledge into the his new venture; 2) Neeleman was afforded the opportunity to work directly with his idol, Herb Kelleher, at Southwest Airlines (the king of the low-cost leaders) after Southwest purchased Morris Air from Neeleman; and 3) Substantial financial support from venture capitalists who had funded Neeleman's previous ventures and were more than willing to support and capitalize on his idea for a new low-cost passenger airline.

With a clear mission and vision, he implemented a low-cost, differentiation business-level strategy, that set out to position JetBlue as the leading low-cost passenger airline in the industry, differentiating on high-quality customer service, providing customers with a geographically diversified flight schedule of both short and long hauls, along with efficient and reliable service.

JetBlue's mission is "to bring humanity back to air travel". Its low-cost strategy is second-to-none, not even to Southwest. Utilizing Southwest as a model and benchmark early in Neeleman's career in the industry, he's managed to copy the Southwest model and expand upon it with his ability to find more innovative ways to cut costs along the organization's value-chain, while utilizing technology to increase productivity and further add to operational efficiencies. JetBlue's value chain demonstrates its ability to successfully compete in several key areas relative to the bases of competition within the industry and creates processes that focus on reducing costs, for the specific purpose of continuously creating value for its customers, i.e. fare pricing, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, in-flight entertainment systems and frequent flyer programs.

JetBlue's Value Chain – Primary Activities

Inbound Logistics/Outbound Logistics:

Focus on underserved markets and large metropolitan areas, utilizing underutilized airports with less congestion adding to the ability to remain on the ground in less time.

Point-to-Point routing system, unlike low-cost competitors that utilize hub-and-spoke system, partnering with larger airlines to provide connecting flights.

Operations:

Use of a single-type aircraft fleet. The A320 Airbus has an increased seating capacity of 30 seats (24 after additional seating reconfigurations), is cheaper to maintain, fuel efficient and reduces training costs, relative to other aircraft models used in the industry.