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strategic management of jetblue
the Strategic Management Process”for jetblue
the Strategic Management Process”for jetblue
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JetBlue: Leadership with Wings "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. 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... ... middle of paper ... ...ient use of strategy. With this said, it is understandable when Neeleman says that "you can be efficient and effective and deliver a great experience at the same time." Bibliography 1- CIO Magazine. JetBlue Skies Ahead. 1 July 2002. 2- CBS News. JetBlue: Flying Higher? 18 June 2003. 3- Red Orbit News JetBlue Helps Customers Tell Their Story With the Launch of a Groundbreaking Brand Program. 30 March 2006. 4- Travel Weekly. Jet Blue Plans Dynamic Package. 21 March 2005. < http://www.travelweekly.com> 5- The New York Times Company. JetBlue to serve Dunkin Donuts Coffee. 24 January 2006. 6- WCBS TV. JetBlue Adds Cushy Comfort to Red-Eye Flights. 4 April 2006. < http://wcbstv.com/business/local_story_094062858.html> 7- CNN. JetBlue Founder Takes Low-Fare Airline to New Heights. 19 April 2004.
It’s the day before Valentine’s Day, you are eagerly waiting to get home to your significant other so you can celebrate the day of love, and you load your flight and hit the runway to take off. However, you sit on the runway for six hours waiting only to find out that you cannot leave. This was the tragic realization for many passengers who choose to fly with JetBlue on February 13, 2008 (Hanna). On that day, only 17 of the 156 flights scheduled left the airport (Hanna). More and more flights were canceled over the course of a week, leading to 1,096 flights in all and more than 130,000 angry customers (Smith). Finally, on February 20th flights resumed as usual but as you can imagine there were a lot of unhappy customers to deal with (Hanna).
Technology/Innovation: R & D essential in creating efficiencies and reducing expenses with turn-around times, fuel costs, reservations etc
Spirit addresses “price” by attempting to get the lowest possible fair for their potential customers. They have instituted their “unbundling” strategy that essentially removes all the conveniences that other airlines afford. Fees for checked bags, fees for flight changes, and no complementary in-flight beverages are just a few of the cost-trimming techniques employed. This strategy allows Spirit to come up with impossibly low fares. It also conforms to customers who just want to get from point A to point B without paying extra for services they don’t use. This strategy, coupled with an in-your-face “promotion” ploy, has made Spirit Airlines “the most profitable airline in the U.S.” (Nicas, 2012).
JetBlue needs to increase their liquidity to be closer to equal standing with Southwest. Operationally, JetBlue needs to decrease cost and increase asset turnover and utilization. Their focus would shift from profits and losses to improving liquidity while maintaining the current market share. Over the next five years, JetBlue can spend money on recruiting and training to help increase their efficiency and reduce the cost of operations. Measuring tools such as asset turnover and asset utilization can be used to determine if the company is being sufficiently efficient. Liquidity measuring tools such as the current ratio and the quick ratio can be used to determine how much ground they are making up on Southwest. JetBlue expects to increase their liquidity by paying off debt over the next five years to be closer in standing to Southwest. In addition, JetBlue expects to increase their efficiency and asset utilization to prepare for the increased capacity of flight upon merging with Southwest. Upon merging, both companies would expect results including benefit from economies of scale and scope, and reduction in operating costs or capital investments, thus
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
Having a low amount of cost in their operations is one of the contributing factors in 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. The airline does not serve meals on board, and there are no luxurious or first class seats offered. Services like these have been seen by the airline as unnecessary for an airline that provides a short-haul trip from city to city. By these, Southwest were able to offer low price tickets to customers, which was good for the company because most people would prefer to fly without those services mentioned if it meant for cheaper ticket price.
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.
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.
With regard to Product, JetBlue is cornering the marketplace with its productivity, in-flight features, and customer service. Due to the fact that the company only purchases new planes of a single type, maintenance downtime is reduced and it is able to keep its planes in the air. In fact, JetBlue maintains the highest in-air average in the industry. Additionally, JetBlue employs an "operational recovery tool" technology that allows planners to minimize flight cancellations and delays. On board, JetBlue prides itself on treating all customers as equals and providing more comfort than other airlines. Features that draw customers in include assigned seating (contrary to its competitor, Southwest Airlines), leather seats, more leg room, and superior on-board service. Furthermore, JetBlue is one only a few airlines that offers each passenger free Direct TV and XM satellite radio entertainment. Finally, with regard to customer service, JetBlue focuses intently on attracting and motivating a talented workforce. The company gives each employee a sense of ownership in the operations. This value and respect bestowed on each employee translates into a motivated, productive workforce that focuses on customer satisfaction and exceeds consumer expectations.
Advertising: As one of the largest domestic airlines, Southwest Airlines has an enormous advertising budget to sustain its presence and increase its market share through focusing on the benefits of flying Southwest over its competitors. Southwest recognizes that flying is no longer a pleasurable experience for many customers, even on Southwest, historically a budget airline. Even though Southwest is often regarded as a no-frills airline, it still attempts to build goodwill from its customers based on its advertising. Of the $249 million it spent on advertising in 2011, Southwest Airlines is unique in that it does not sell additional ad space on the exterior of its aircraft. Many domestic airlines have begun selling aircraft exterior space as a way to increase revenue, but Southwest Airlines insists that it wants to keep its product and advertisi...
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
Improvements that have been made since 1972 are foremost improvements to the product of "traveling": better in-flight entertainment, an upgrade to ground services, more flight destinations through the "Star Alliance" network and improved seats and space on board. There are however improvements in other areas than product improvements: 2 kinds of loyalty programs have been introduced, premium passengers' preferences are filed and the complaint management has been improved over the years. The differentiation of types of passengers and the expectation that they will fly SIA again, retaining clients through complaint management and loyalty programs all suggest a move into a customer intimacy value strategy. As service and CRM become more and more integrated at SIA, customer intimacy is strategically embedded in the organization.
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
To apply and the all ‘ rules of game‘of an business we taking an aviation company known as “Jet Airways” before we get into, here are some intro points about this company.
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.