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Jet airways management
Jetblue airways: starting from scratch
Jet airways management
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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.
JetBlue Airways Corporation was incorporated in Delaware in August 1998. David Neeleman founded the company in February 1999. Several of JetBlue's executives, including Neeleman, are former Southwest Airlines employees. JetBlue started by following Southwest's approach of offering low-cost travel, the airline was awarded 75 initial take off/landing slots at John F. Kennedy International Airport, received formal U.S. authorization and started operations with service to Buffalo and Ft. Lauderdale in February
Having a low cost of operations is one of the contributing factors to Southwest Airlines’ financial success. Such low cost model of the corporation is brought about by an effective strategy. Southwest uses only one type of aircraft – the fuel-efficient Boeing 737. This tactic keeps training and maintenance costs down. Moreover, the no-frills approach to customer service contributed to the low cost of operations for Southwest.
JetBlue has a great product but losses customers due to these two issues. JetBlue has a total of six Focus cities, better known as Hubs. These hubs are located in Boston, Long Beach, New York City, Orlando, Ft. Lauderdale, and San Juan. Each of the above-named cities are all subject to be hit by inclement weather during all seasons creating a negative impact on the company as a whole. Due to this, customers, employees and ultimately the company are the ones directly affected. In order to make JetBlue a more attractive company for consumers they need to diversify their focus cities, acquire underserviced areas, and partner with another
During the eighties many air express companies were formed and many were destroyed. However, three companies came out of this highly competitive period on top. They were FedEx, U.P.S. and Airborne Express. Airborne survived this highly competitive period by adapting to the external forces affecting the industry. One of the external forces affecting Airborne was the size of the competition. U.P.S. and FedEx were just swallowing up competitors. So Airborne decided the best way to compete was to be the low-cost provider of air express service. Robert Cline, CEO of Airborne explains their strategy “When you are up against UPS and Federal Express, those guys are so big and so well capitalized that you have to have a tool to fight with them. It wasn’t going to be size; it wasn’t going to be how well-known we were. So, we decided to be the low-cost operator.”(Washington CEO P 33). However, to become the low cost operator Airborne had to make many structural changes.
In addition, the airline has a strong network that is growing with time. This is mainly because of its presence in key markets, particularly in Boston and New York, that positions it favorably in the industry and, in turn, allows it to draw agreements with other airlines. As a matter of fact, it is the largest domestic carrier at New York’s JFK Airport and a top carrier in Boston. Therefore, partnering with Jetblue is an advantageous proposition for many internationa...
Jetblue was originally founded in 1998 on the principle of offering a low-cost travel experience to its customers. To differentiate JetBlue from its main competitors, such as Southwest Airlines, Delta Airlines, and United Airlines, JetBlue began offering amenities such as in-flight entertainment, TV screens on the back of every seat and in-flight satellite radio, wireless aircraft data link service, and cabin surveillance systems, and voice communication. As quoted by JetBlue’s founder, David Neeleman, JetBlue seeks to “bring humanity back to air travel.”
“To be the best airlines in whole world and providing excellent customer experience in our flights with full entertainment and loads of satisfaction.”
Jet Blue’s strategy to use a combination of cost leadership and differentiation strategies at the same time in an integrated way helps Jet Blue to overcome any major drawbacks and risks associated with any of the standalone individual strategies. The components and enablers for Jet Blue’s low cost strategy and differentiation strategies are complimentary to each other and they mutually reinforce Jet Blue’s overall integrated combined business level strategy. This combination of low cost and differentiation strategies enables Jet Blue to provide a high quality low cost differentiated customer service experience. This helps Jet Blue create a unique value and also provides a unique competitive advantage for Jet Blue to outperform its competition and achieve long term
JetBlue Airways is a corporation that mainly focuses on low-cost transportation service. It is one of the major airlines predominant in the domestic airline industry. The impact of September 2001 on aviation has drastically decreased and all the major airlines had lost in huge amounts. This made almost all the major airlines to increase their debts by tapping the credit lines or taking care by issuing bonds. Despite of all the vital actions made to survive the decline of passengers’ ratio and fares, most of the airlines strained with huge debts. JetBlue being a low-cost transportation service didn’t had much effects during 2001 and was making huge amount of profits even during 2001 and afterwards. With its exceptional service, not only it attracts customers but also has ability to change and evolve. Today, some of the major air travels face the bankruptcy and also lost some of their market for the low-cost airline industries.
Jet Airways indicates a negative growth in the BCG Matrix. Amongst its competition, Jet Airways owns a lesser market share. It is therefore recommended that Jet follows the strategy proposed for each category.
Low Prices - Domestic passengers are quite sensitive to price changes, and rarely select an airline based on loyalty. At any given day, most passengers are prone to book the lowest costing flight within their budget, so it is imperative to keep the airfares, and the costs low. The biggest cost for any airline is aircraft, which can be reduced by leasing instead of owning aircrafts. Operating as many daily flights as possible per aircraft also ensures that fixed and variable costs of aircrafts are recovered. The additional revenue generated ensures profitability, which can be passed on to customers through low prices, further increasing competitive advantage.
The hub-and-spoke system or network is a system that feeds air traffic from small communities through larger communities to the traveler’s destination via connections at the larger community (Wensveen, 2007). The airline will do most of its operations in the larger communities which the airline will call it its hub. The small communities are the spokes of the network and are connected to the hub by non-stop flights between the different spokes (Aguirregabiria & Ho, 2010). For example, a person wants to travel from Louis Armstrong New Orleans International Airport which is considered a “spoke” city to San Antonio International Airport on United Airlines will have to travel to Houston George Bush Intercontinental Airport and change planes as due to Houston being a hub for United Airlines. Many travelers would wonder why it would not be a direct flight to their destination...
In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.
The success of the low cost carriers had major competitive effects on the mainstream full cost airlines of whom many reacted to the new competitor by founding their own “low cost carrier”, namely Shuttle by United, Continental Lite, Delta Express, Germanwings and so on.
The Southwest Airlines strategy is best explained by its co-founder Herb Kelleher during a talk at Wharton: “It’s an obsession with keeping costs low and treating employees well and a commitment to managing the company during booms with an eye to the busts that will inevitable follow. Do that and most of the rest takes care of itself.”