February 20, 2013 JetBlue Airways Organization Case Study Statement Situation Analysis History JetBlue Airways Corporation was created my own David Neeleman. His vision was to make an inexpensive, convenient way going by plane. He was cited saying he wants to “bring humanity back in air travel.
David Neeleman was already a seasoned entrepreneur. Couple of years after losing out of the College or university of Ut he founded his own business by simply renting away condominiums in Hawaii. Right after he established his individual travel agency and began chartering flights via Salt Lake City to the islands for growing more prospective clients to rent his condo’s.
In 1984 Neeleman became a member of forces with June Morris, who held a large corporate travel agency in Utah, to bring to the universe a company called “Morris Air. (JetBlue Breathing passages Corporation, 2011) Success used and the company was bought by Southwest Airlines pertaining to $129 , 000, 000. Soon after the sale of “Morris Air Neeleman pioneered the use of “at home reservation agents. By using all their homes since offices the reservation agents were lowering costs by lowering overhead expenses. He as well developed the first electronic ticketing program in the aircarrier industry. JetBlue Airways Organization, 2011) Neeleman became the executive vp for Southwest but understood it had not been a good suit. He signed a five year noncompete agreement and was in the way. During his five year arrangement he created the electronic digital ticketing system he had initiated at Morris Air into one of the sides easiest flight reservation systems. He referred to as it Open up Skies. Then he sold this innovation to Hewlett-Packard it happened in 1999. Finally in 1999 the noncompete agreement got reached their expiration and Neeleman introduced his own airline.
This individual raised the needed capital with ease and JetBlue started to be the highest-funded start up aircarrier in modern aviation history. JetBlue commenced operations in August 2150. For a start up base JetBlue chose John F. Kennedy International Airport (JFK). (JetBlue Airways Corporation, 2011)The company depended on electric reservation and ticketing to hold costs down. JetBlue was of the first airline firms to concern laptop computers rather than manuals for their pilots. One of their top selling details aside from price was the in-flight entertainment. The airbus A320’s ere complete with 24 live satellite broadcasts (including A&E, Animal Entire world, CNBC, ESPN, the Food Network, Home & Garden, and the Weather Channel) at every chair. This kind of entertainment was with the first among airlines. Airlines typically aired taped shows or videos. To help keep costs down the air travel provided not any meals nevertheless did offer gourmet green potato chips and soda. The seats were equipped with more leg room and were most leather with larger expense storage compartments. Business grew rapidly in JetBlue’s first yr of businesses.
Reservation brokers were acquiring calls of up to 12, 000 a day and still the company was booking 40% online. In 2001 JetBlue opened a second base in California in Long Beach Airport. JetBlue grew through the years to serve more than 52 destinations in 21 claims, Puerto Potentado, Columbia, South america and the Carribbean. In 08 they added services to Puerto Parné and St Marteen. Last year they started serving Bogota, Columbia, San Jose, Costa Rica, Montego Gulf and Discovery bay, jamaica. In 3 years ago JetBlue announced that they were entering into an agreement with Aer Lingus, and Irish flag jar, to help easy exchanges for equally airlines’ consumers.
Unlike traditional code-share alliances, customers cannot make a single reservation intended for both flight companies if need be. They will have to generate two concerns instead. Then only 8 days later, JetBlue announced a code-share agreement with Shawl Air. Customers would be able to buy seats in both airlines under one reservation. The fit to get convenience. JetBlue’s growth was becoming harder to fund because of competitive pricing and excessive fuel prices amongst other growing costs. On March 14, 3 years ago an event occurred that would tremble the stable, well funded company to its legs.
Not only priced at Neeleman his position in a company that he made, it damaged the companies standing for good consumer relations. There were a terrible tornado headed for the East coastline and while all other airlines required the proper safeguards and terminated their routes JetBlue in all their resistance did not. If the storm struck it was even worse than predicted and JetBlue’s customers were left trapped planes intended for 7 several hours or more. David Neeleman the moment interviewed regarding this horrible turn of events explained “Things spiraled out of control. We did a horrible job, we have ourselves right into a ituation exactly where we were carrying out rolling cancelling instead of a large cancellation. Communications broke down, we weren’t capable to reach out to passengers and they continued to arrive at the airports¦ it had a cascading down effect. It took the corporation more than a week to get the condition under control. This is when The Customer Invoice of Privileges came in. It basically defined self-imposed charges for JetBlue and significant rewards due to its passengers if the airline experienced operational complications and could not really adjust to weather-related conditions in a “reasonable length of time.
In 2007 the company reported a $76 Million loss with a primary reason staying rising gas costs. JetBlue remains lucrative, posting a net income of $128 Million for 2012. JetBlue’s CEO and President, Dork Barger explained “2012 was obviously a very good year. (Corporation, 2013) Quest JetBlue Airways does not work under a traditional mission statement. Instead each uses a set of core values. These core values are the following: * SAFETY * QUALIFIED * INTEGRITY * FUN * INTEREST These five things are best described as “the JetBlue experience. (John W.
Kelly intended for KR Asking, 2008) (JetBlue Airways Firm, 2012) Company Strategy You will find two fresh strategies which have been developed to get JetBlue Airways, a growth strategy and a productivity strategy. Both equally strategies have been created away of external and internal analysis. The expansion strategy’s main goal is to take advantage of new mergers and failures inside the airline sector. When companies merge it takes away some of the competition. Failures in other corporations create opportunities for JetBlue to part of and generate new business.
You read ‘Case Study , Jetblue Airlines’ in category ‘Free Example samples’ (John W.
Kelly for KR Consulting, 2008) (Corporation, 2013) The productivity strategy is definitely developed depending on the businesses position in the low-cost segment of the airline industry. To achieve this target an extensive interior analysis is conducted with a careful look at the labor force as well as a great analysis from the jet energy prices/purchasing. (John W. Kelly for KR Consulting, 2008) Strengths and Weaknesses of JetBlue Air passage Strengths Solid brand recognition and their providers are competitive. If you consider revenue voyager miles JetBlue is the 6th largest voyager carrier in the United States and is a widely recognized global brand.
The organization has received several awards just like “Top Affordable Airline for Consumer Satisfaction seven years in a line and also “Best Coach School Experience, “Most Customer Friendly Airline and “Best Benefit Airline Domestic for 2011. JetBlue is likewise known for their roomy seating and live satellite television. The Customer Invoice of Legal rights is also a key player inside the companies advantages. It was created with meaning and specific compensation for consumer inconvenienced simply by service interruptions within JetBlue’s control.
Another service provided only by simply JetBlue is definitely an fast security experience in above 30 towns and they call it up “Even More Speed. JetBlue utilizes their aircraft many efficiently to have the ability to spread its set costs more than a greater volume of flights and available chair miles and they do this by making use of Airbus A320 planes in most of their organization. (JetBlue Airways Corporation, 2012) Weaknesses JetBlue has an intense amount of high fixed requirements. In 2011 JetBlue had a personal debt of $3. 14 billion dollars and it accounted for 64% of the total capitalization.
As the years go on as well as the company develops its debt will only develop as well. Ultimately their high level of debt could make hard to develop the business additional because of lack of funding. That in turn will put the organization below their particular competitors who have could find it easier to get necessary money. (JetBlue Breathing passages Corporation, 2012) Opportunities An evident opportunity for JetBlue is growth in the travel industry. This kind of industry offers always fluctuated in the past however it is likely to grow strongly in the years to come.
According to The Federal Aviation Administration (FAA), airline travel is said to double over the subsequent 20 years. In 2011 about 815 billion persons or seating sold is expected to maximize of the subsequent two decades to numbers close to 1 . 57 trillion. That is certainly an average expansion rate of around 3. 2% per year. Getting the sixth largest traveling carrier in america, JetBlue is a good location to expect a rise like that as well. JetBlue in addition has put hard work in to producing business interactions with Asia. The tempo of the economic system as a whole can be slowing yet Asian economies have continued to be strong domestically.
Cathay Pacific cycles is the home carrier of Hk. In 2012 JetBlue announced a great interline arrangement with this business. This agreement will website link each other’s network between Asia Pacific cycles and the America’s. JetBlue likewise announced a codeshare agreement with Japan Airlines to offer nonstop service to Tokyo’s Narita Airport terminal. For this reason JetBlue’s expanded relationships with key Asain flight companies will help further more strengthen it is network and expand their services. (JetBlue Airways Company, 2012) (Corporation, 2013) Dangers The absolute biggest threat to JetBlue is a rising costs of aircraft fuel.
Through history gas costs possess fluctuated out of the control of firms such as JetBlue. The costs change widely and they are unpredictable at best. In 2011 gasoline costs represented nearly 40% of JetBlue’s total working costs. One more threat is usually stringent governmental regulation. In the airline market companies are subject to extensive regulating and legal compliance requirements that lead to significant costs. It is also expensive for the company to keep their particular current certificates. Lastly there always exists intense competition in this market.
As a custom the industry is typically dominated by the titans such as: United Air Lines, Delta Surroundings Lines, American Airlines, South west Airlines and US Airways. Because of their size and electrical power, some of these companies may be better suited for required funding. They could also receive more favorable energy prices due to volume of sales. Intense competition could lead to price wars which could negatively impact the company. (JetBlue Airways Corporation, 2012) Id of Problem(s) and Their Key Elements The first issue with JetBlue would be that the company grew too big too quickly.
The organization was incapable of sustaining this development both financially and bodily with staff, equipment and services. The other problem was/is bad marketing. The aircarrier was well known for extraordinary customer service and relations although lately they are really ranked among the list of lowest in customer satisfaction. JetBlue grew too quickly. In the 1990’s there were many small start-up airlines. Many failed when ever faced with competition from the major airlines because they were unable to withstand the wage wars. The smaller firms were also for a disadvantage in regards to start up capital and supervision talent.
Due to David Neelemans talent and charisma having been able to acquire an abundance of start-up capital which carried the airline throughout the toughest element of a business, the beginning. Once JetBlue took off the organization had a hard time keeping up with its popularity and growth. Technology for one was lacking and it all caught up with the company on Valentine Day in 2007. The corporation made a few bad decisions and that escalated quickly and their booking system cannot handle the capability of the circumstance. Their technology also failed them when ever trying to remedy the problem.
These were not well prepared or looking forward to something on this magnitude. (Damaraju, 2009) While using growth curve from the company’s original program was needs to take place. That they started off procedure only one kind of aircraft, a great Airbus A320. The technique behind this was to lower schooling cost and provides a very experienced staff with flexibility in manpower. The airline then included an additional type of planes, the Embraer 190 that this staff was not prepared to get. Furthermore the organization was embarking on even more pathways where this did not have needed knowledge. (Damaraju, 2009) JetBlue started out as an airline for the New York leisure traveller.
The concern using their expansion is they don’t have the route structure to compete with the majors to get the business category travelers. (Farzad & Bachman, 2012) The 2nd problem is poor publicity. The first unlucky event was the Valentines Working day ice storm that kept passengers trapped and the company without the proper tools to repair the problem in a timely manner. Customers had been outraged as it should have been. The 2nd very general public mishap arrived August 2010 when a discouraged flight worker exited the plane using the unexpected emergency slide following becoming irate with travellers.
And last but certainly not least, when ever one of their particular pilots needed to be subdued simply by passengers and forcibly removed from the plane in March of 2012. (Farzad & Bachman, 2012) Due to these unfortunate situations JetBlue at this point ranks previous among 15 airlines in on-time performance and ninth in customer complaints to the Department of Transportation. (Farzad & Bachman, 2012) Those numbers happen to be three times Southwest’s complaint rate. Having began as an airline that wanted to “bring humanity to air travel they are most often coming up brief in the customer service area.
That was their particular biggest client attraction. Evaluation of Alternative Methods of Action The situation of developing too big too fast can easily be evaluated as a hind sight. The corporation had superb aspirations and fell short only automatically. Had the business foreseen the actions of the doj that were to come with the failure within their choice of technology or the mental breakdown with their staff, I think they would did things in another way. The costs of their technological errors were anywhere close to $30 million. The expenses they endured over their particular lack of client satisfaction are immeasurable.
For these concerns, the alternatives courses of action could be to revamp their technology and better train personnel and let all of them know the actual pressures with their positions. JetBlue already provides a comprehensive training curriculum for their personnel known as “JetBlue University. (JetBlue Airways Firm, 2012) Suggested Solutions Advised solutions intended for JetBlue’s growth from this point continue would be initial, to screen and maintain a practical operation-revenue to operating-expense percentage. As with any kind of successful organization the operating revenue must be greater than the operating expenses.
This ratio will determine the future of JetBlue. (John T. Kelly pertaining to KR Talking to, 2008) Inside JetBlue should think about how to decrease expenses. The 2 key players in this particular situation are labor and fuel bills. Although JetBlue has remained un-unionized, which is very important in keeping labor costs down, there could be more place for improvement in the budget regarding this kind of matter. I would recommend a closer check out Management and Airport Procedures. These two positions are the furthest from the buyer and have the many employees.
The real reason for choosing these specific positions is that change in these kinds of areas will never directly affect customer satisfaction. These positions need to be reviewed and see in which, if any kind of, the process inefficiencies lie. Using this method the company just might cut some unnecessary positions. Recommendations for best efforts for capping gas costs invariably is an evaluation of the fuel getting agent’s functionality. (John Watts. Kelly for KR Asking, 2008) The second recommendation is to take a more aggressive strategy like South west has and practice more hedging.
Recommended solutions for JetBlue’s failure to provide exceptional customer service would be 1st to continue to practice and put to work with The Customer Invoice of Rights and to have a few prospects from their rivals. Other airlines do not charge their customers for any pillow and blanket set. At all costs they have to continue while using perks they offer their customers. They could not provide meals but the snacks and sodas are free. A big selling point for consumers can be baggage costs. JetBlue allows their passengers to have two free luggage per trip.
That is another than Southwest. The fact that JetBlue is usually “low cost airline the consumers anticipate less, we. e. dishes and points of the this sort of, so hawaii of the artwork entertainment is a welcome shock for people. Implementation Intend to take action on the operation income to expenditure ratio is always to start quickly reviewing the labor functions and initiate an additional review every two years. Starting instantly with employee performance opinions, having properly trained workers is a must. Failure or success in this area will be measured in dollars kept.
Immediate actions considering gasoline costs in order to hire a congressional lobbyist to help counteract the market by opening up national strategic reserves as well as stimulating increased home-based petroleum pursuit and fly fuel development. Success or failure in this field will also be tested in us dollars saved. Functions Cited Company, J. A. (2013). JetBlue Reports Record Fourth Quarter and Total Year Revenues. New York: PR Newswire. Damaraju, N. L. (2009). JetBlue Airlines: Does it Remain Blue? In McGraw-Timmons, Capstone Bus 250s (pp. 13-220). Based in dallas: University of Texas. Farzad, R., & Bachman, T. (2012). When High-Flying, JetBlue Returns to Earth. Bloomberg Businessweek, 27-29. JetBlue Air passage Corporation. (2012). Company Profile JetBlue Airways Corporation. marketline. com. JetBlue Airways Firm. (2011). Reference for Business. Nyc: referenceforbusiness. com. John W. Kelly pertaining to KR Consulting, L. (2008). Shaping Tomorrow’s Solutions intended for JetBlue Airways- A Strategic Evaluation. San Fernando Valley: School of La Verne.