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.”
Since the Jet Age, airlines have been entering and existing the airline industry. Some have been in business since the very beginning. For example, United airlines was founded almost twenty-five years before the jet age took off, and due to an incredible amount of money that the airline had by being one of the first airlines predating the Jet Age, was able to buy new jets and assert itself as one of THE giants of air travel by the late 1950’s. But the introduction of new technology paved the way for issues regarding externalities, and production of these new technologies. ("Assessing the external environment - Responding to a changing external business environment - United Airlines | United Airlines case studies and information | The Times 100", n.d., p. 1) The beginning of the Jet Age offered an intense opportunity for new firms to open or expand, producing new products from jet engines to structural parts, from radar technology, to reclining seats. According to research done by the Air Transportation Action Group, “It has been estimated the airline industry supports a grand total of 29 million jobs” (Hanlon, 2007, p. 1). This statistic proves how dependent the world is on the airline industry, for jobs and travel, as well as r...
"To continue to bring humanity back to air travel." This is the promise JetBlue Airways Corporation has made to its shareholders, customers, and "crew members" in order to build a strong, solid and rapidly growing company. JetBlue uses two significant tools that drive its success: low fares and superb customer service. This growing discount airline works to keep its costs down and implies this goal by offering one-class service and eliminating airport lounges and full meal services. JetBlue relies completely on technology with an operation strategy of choosing less crowded airports located near large cities to keep its turnaround down. In addition, JetBlue offers leather seats, LiveTV (a satellite service with programming provided by DirectTV), and began adding XM Satellite Radio to its fleet in 2005 to stress customer value.
Based in United States, United Airlines is among the biggest airlines in the country with over 48,000 employees. The company has continued to offer good services to customers therefore it is expanding day by day. However, according to Chicago Business (2011), the company’s revenue growth is slowing every year which is an indication that the company is likely to incur some losses in the years to come. The company increased the fare during the second quarter of the year 2011 by 9.9% due to the 11.5% increase in revenue. The company’s shares have also decreased by 10% therefore trading at $22.65. This is a clear indication that the company’s financial health is declining. In 2008, the United Airlines decided to lay off 950 pilots from their positions in an effort to maximize profits. This comes as a result of the slow growing economy and the increasing jet fuel prices. At the same time the management also announced a reduction in the number of flights and also grounded about 100 jets. In the process 1,600 people lost their jobs (Fre...
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
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
In 1999, David Neeleman, announced to launch a new airline. He had received strong support for his business plan from the venture capital community. He had quickly raised $130 million in funding from such high profile firms such as Weston Presidio Capital, Chase Capital Partners, and George Soros’s priv...
The civil aviation world consists of two categories according to the Federal Aviation Administration (FAA): scheduled airline service and general aviation (FAA, n.d.). The Aviation industry as we know it today was born from General Aviation (GA), and both their histories are inextricably linked. People’s ambition to fly stretches back to ancient times, of tales and legends passed down from Greek civilizations, and a passionate drive to master the sky. It is in this same spirit that GA currently resides. The enthusiasm people have for aviation is arguably, unrivalled. There’s a strong sense of camaraderie within the GA industry, a sense of bravado that lends itself to any such death defying occupation. The current GA industry is comprised of two parts: Private operators, described as those who fly without compensation and Charter operators, describes as those who operator for compensation (FAA, n.d.). As of today, general aviation makes up more than 1 percent of the U.S. Gross Domestic Product and supports almost 1.3 million high-skilled jobs in professional services and manufacturing and hence is an important component of the aviation industry and the economy as a whole (AOPA, n.d.).
Examine the causes of the problem: The problem is that JetBlue focused on expansion during its’ initial success. Profits realized at this time were used to acquire a larger fleet, expand routes, enlarge staff and increase terminal space. Seemingly, the primary focus was rapid growth, with an assumption that it would be rewarded with future profits. When profits began to decline, JetBlue chose to focus on competition making changes that would allow them to compete more directly with larger airlines. JetBlue became vulnerable to its competition when management made the choice to shift focus from customer service to expansion.
The global economic crisis of 2008 has been a terrible blowback to the airline, reducing the purchasing power of the people and shrinking the customer base.