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 Airways was well on its way to become the premier low fare airline in early 2002. “Despite the fact that the US airline industry had witnessed 87 new airline failures over the previous 20 years” JetBlue had an innovative business model that focused on reducing cost while eliminating “everything that sucked about airline travel.” JetBlue airlines were put together by David Neeleman who “launched a new airline that would bring humanity back to air travel. Neeleman had a lot of prior experience in the airline industry having spent time at Morris air, later acquired by Southwest. Neeleman also used his experience to help launch a startup low fare airline company in Canada known as West Jet. One of JetBlue’s major assets was its commitment to technology. By maintaining a fleet of newer more technologically Airbus A320s “JetBlue’s fleet was not only more reliable and fuel efficient than other airline fleets but also afforded greater economies of scale because the airline had only one model of aircraft.”
However, the choice of using a different plane for the new routes reduced cost advantage of standardized processes, especially since the unique plane required JetBlue to build the plane service capability themselves and it also limited the options to outsource any the operations. In addition, the new plane adds to the complexity of inflight processes and procedures which increases the cost of training. All of this adds to the overall cost and can potentially present a challenge for JetBlue to maintain low cost offering.
According to our chapter, the Service Value Model has six components that focus on customer value. The quality of JetBlue flights is a perception based on the expectation that the customers have before they actually try out the service. The comfortable leather seats along with the discount price, for example, are a perception that the customer has towards this airline, but value is created when the customer expectation is exceeded. Another component adding value to JetBlue is Intrinsic Attributes. This airline chooses its supplementary service very carefully; as mentioned earlier the full service meals are eliminated, how...
The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.
Ryanair has the lowest unit costs of any European airline and one of the lowest of any airline in the world. Whether measured cost per seat, Ryanair's production of capacity and traffic costs it less than that of any of its competitors.Low costs enable low fares on a profitable basis. Ryanair's average fares are lower than those of any of its competitors in Europe. They have a partnership with Boeing in order to guarantee low maintenance costs.
Since the widespread indoctrination of the airplane into practical commercial travel in the mid-1900s, the airline industry has become a major economic powerhouse, especially in the United States. Over one-third of the world’s total air traffic is attributed to U.S. Markets and commercial aviation as an industry was responsible for 8 percent of U.S. Gross Domestic Product in 2006. There are an astonishingly high number of different airlines in the business; over 2000 airlines operate in nearly 4000 airports with a total of 23,000 aircraft. Despite the massive competition, several airline companies have managed to maintain profitability and assert their dominance as major players. One of these major players, JetBlue, is
Air travel is no longer just an idea that was developed to get people from point A to point B in a shorter amount of time or give a military force air superiority. Today, flying on an airplane is as common as driving a car or riding a bicycle. In fact, some airlines have made air travel an extravagant event and others have made it affordable to those who never dreamed they’d be able to see the skies. These different types of airlines open all over the world to provide services to different regions, countries and even classes. One such airlines, Ryanair, has a brief but exciting history in Europe. The purpose of this paper is to discuss Ryanair’s history.
The first initiative that they were able to gain in competitive advantage was the reduction of costs. They have been able to use an online system where consumers can reserve tickets avoiding which avoids using travel agents. Having this systems reduces costs for the company as well because they do not have to hire nearly as many as employees. Along with buying tickets, JetBlue has been able to use other systems to reduce costs which helps them with the maintenance of their planes and organizing information that involves every aspect of their business ranging from their planes to their employees and consumers. The second initiative that JetBlue uses is the creating of new services. By creating their new online services and systems they are able to gain competitive advantage because it allows easier and less expensive accessibility to their services. Not only have they created new services but they are able to differentiate these services from their competitors because of the easiness and quality of the services that they do provide. They not only focus on making their services the best but also the highest level of customer service that they can offer which other airlines struggle to do. Other competitors have realized that JetBlue is beating them in many aspects in the business that they have needed to adjust what they are doing to catch up. Even with the jumps in technology use with the other companies, JetBlue has still been able to enhance their services to continue to gain competitive
“Excellence in flight.” Three words. One mission. This is the reality of Korean Air, a Seoul-based, world class airline. Guided by their mantra of perseverance, Korean Air journeyed far from its founding and initial failure in the 1960’s. Today, it commands the skies with a fleet of over 140 modern planes servicing 122 destinations in over 40 countries (“Korea Air”). Yet, its beginning differs greatly from the status quo.
Use of technology and automated processes to reduce reservation, ticketing and customer services costs. Paperless cockpits, use of e-manuals, electronic ticketing, owning its own in-flight entertainment provider, automated baggage handling are some of the examples where Jet Blue’s use of technology has lowered operating costs.
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B. Because the reasons can differ greatly in the motivations for a customer wanting to fly, it can be difficult to divide the market into discrete segments, that is, there is always going to be overlap in the preferences and characteristics of any given segment. With that in mind, the commonalities that are shared between the clientele that make up the respective classes can easily withstand analysis.
JetBlue's management has numerous years of airline industry experience. The team members have catered to customers, they've been customers, and they have extensive backgrounds on what it takes to be successful in the industry.
The target market of JetBlue airlines is customers who along with low cost seek services. The services provided by JetBlue included in-flight entertainment, TV on every seat, satellite radio, extra leg room, free unlimited snacks, and leather seats. The target market of JetBlue is also the leisure traveler, the low cost ticket seeking traveler, and the cost conscious business traveler. JetBlue has actually, posed a threat to the other low cost airlines like the Southwest Airlines.
An alternate strategy for JetBlue to return to profitability is to expand the market it services. A large part of JetBlue’s business is transporting cust...