CASE 3:JETBLUE AIRWAYS: A CADRE OF NEW MANAGERS TAKES

CONTROL

group members:

sharun dewi a/p moorthy ac081024purvitha a/p raju gopal ac081345vikneswari a/p krishnanac081375

INTRODUCTION…

JetBlue Airway is an airline industry.

Founder is David Neeleman, a Salt Lake City entrepreneur.

The eighth largest passenger carrier in United State.

Have won many awards including “Best Domestic Airline”, “Best Domestic Airline Value” and “ Best Overall Airline”.

The case study discuss on the Jetblue Corporation emphasize on its founder, on its financial performance, human resource management pratcices, organizational culture and startegies.

QUESTION 1:

A. What was David Neeleman’s original strategic vision for JetBlue?

B. Should JetBlue’s strategic vision be revised now that the company has new executive leadership?

Original vision…

Start a company-combined the low fares of a discount airlines carrier with the comforts of a small cozy den in people’s homes.

Customer have- cheap and affordable flights-US and abroad • aircraft that comfortable- equipped with modern

entertainment options• customer centric business model • make customer service no1 priority

Motivation factors– David use leather seats- easy to clean, more comfortable than fabric seat (experience –a flight – fabric seats-was

socked with urine).

Should only revised- to further development- to incorporate new technologies- to facilitate growth and profitability.

After David resign- the new management-instituted to help rebuild – JetBlue’s reputation & to develop innovative strategies(to prevent incident like Valentine’s Day 2007 – because failed to deliver excellent customer service.

Organization no need to change vision. To remain successful the management, they can apply Incorporated New technologies Best practices Provide training to all employees

QUESTION 2:A. What were the key elements of

JetBlue’s strategy in 2008?

B. How has the company chosen to attract customers in sufficient volume to earn profits?

C. How does JetBlue offer its customers value?

Key elements of JetBlue’s new strategy:

Reevaluate the ways the company was using its assets.

Reduce capacity and cut costs.

Raise fares and grow in select markets.

Offer improved services for corporations & business travelers.

Form strategic partnerships.

Increase ancillary revenues.

Develop a new terminal at JFK airport – to improve its on-time departure and arrival averages at airports.

Sold a stake of its shares to Germen carrier Lufthansa – to increase revenue & allow the customers to book code share flights on Lufthansa flights to Germany.

Appealed to business travelers by introducing refundable fares & discounts for corporate meeting planners –for every 40 customers booked to –same destination. Also entered into 5years agreement with Expedia Inc – for the managed & unmanaged business travelers.

Interested in pursuing partnership with other airlines. Example form an agreement with Aer Lingus – to make passenger easy to book tickets.

Attract customer by..

Proving comfortable seats and entertainment services on all of their flights.

Using newer, non propeller aircraft on all flights, ease of ticketing, cancellation and flight changes, multiple destinations and faster service.

Offer customer value...

Creation of the passenger bill of rights- states the companies action regards to flight changes, cancellation, service & more.

This makes the customer to know what to expect on each and every JetBlue flights & from the company

QUESTION 3:A. Are JetBlue’s functional area

strategies consistent with its overall strategic approach?

B. What policies, practices and procedures have been developed to execute its business strategy and functional area strategies with proficiency?

Functional area strategies are consistent with its overall strategic approach.

Vision mainly focus on customer service. when ever vision –challenged- they rebounded with

new strategies ,technologies and improve the customer service.

Example of strategic approach:• Utilization of 2 different type of aircraft (Airbus A-320

– 150 seats & Embraer E-190- 100 seats)• E-190 use for shorther distances & A-320 use for longer

distance• To save on fuel allocation & help to balance

flight/passenger load balances

Eliminate service at cities where competition is either too stiff or unprofitable - helps to cate its service to the customer much more efficiency – instead of being general aircraft with limited service compare – to other airlines.

Use each plane a little less a day- help cut back on maintenance and other services (cleaning)- reduce costs.

At 2010- JetBlue performingwell compared with other airlines. Able to avoid the plagues of other carriers such as bankruptcy& merger – by its core beliefs and staying with manageable size.

QUESTION 4:

A. What is your assessment of JetBlue’s financial performance during fiscal years 2003-2007?

B. Does the company’s recent financial performance support the board’s decision to replace top management?

FOR EXAMPLE:

DEBT TO ASSET RATIO= TOTAL DEBT / TOTAL ASSETS

  THE RECENT FINANCIAL PERFORMANCE SUPPORT

THE BOARD’S DECISION TO REPLACE TOP MANAGEMENT IT IS BECAUSE JETBLUE’S FINANCIAL STATUS IS POSITIVE. THE DEBT RATIO WAS LOWER. IF REPLACE TOP MANAGEMENT THE COMPANY BEGAN TO GROW AGAIN AND DEVELOPED NEWER ROUTES, MARKETS, TECHNOLOGICAL INNOVATIONS.

2007 2006 2005 2004 2005

3048/5598 = 0.54

2840/4843 = 0.59

2326/3892 = 0.60

1545/2797 = 0.55

1109/2185 = 0.51

QUESTION 5:

A. What are the factors driving change in the airline industry?

B. How are they likely to impact the future attractiveness of the industry?

Economic factor:-

Fuel prices

Start –up cost,Buying plans & Employees

All of these factors have and will impact the attractiveness of the industry. Individuals who wish to establish their own airline companies will have to take into consideration the market share of the cities they wish to serve, the aircraft and their capabilities and effectiveness, the economy both national and global, and consumer demands regarding air travel.

QUESTION 6:A. What are the key success

factors in the airline industry?

B. How well do JetBlue’s resource strengths and competitive capabilities match these industry success factors?

THE KEY SUCCESS FACTORS ARE…Attract customerManage its fleetManage it s human capital (employee)Manage its finance

JETBLUE PROVIDING LOW FARES, NEW FLEET OF MODERN JET AIRCRAFT EQUIPPED WITH DIRECTTV/WIFI/XM RADIO SERVICE FOR TRAVEL ENTERTAINING PURPOSE AND HAVE CUSTOMER FRIENDLY EMPLOYEES IN ORDER TO ATTRACT CUSTOMERS.

USING THE SMALLER AIRCRAFT FOR SHORT-HAUL FLIGHTS AND THE LARGER AIRCRAFT FOR LONGER DISTANCE FLIGHTS AND HAVING THE FLIGHT CREW CLEAN UP THE AIRCRAFT AFTER EACH FLIGHT IN MANAGING THEIR FLEET.

JETBLUE MANAGES ITS PEOPLE BY PROVIDING TRAINING OPPORTUNITIES TO EACH MEMBER OF THE TEAM AND EVEN JOB CROSS TRAINING TO MAXIMIZE THE EFFECTIVENESS OF ITS PERSONNEL.

JET BLUE MANAGES ITS FINANCES BY SELLING SHARES OF STOCK TO OTHER AIRLINES

JETBLUE ALSO DELAYED THE ACQUISITION OF SEVERAL NEW AIRCRAFT AND REDUCED ITS FLEET SIZE TO ACCOMMODATE FOR THE TURBULENT ECONOMY

JETBLUE HAS NOW STARTED CHARGING FOR SECOND CHECKED BAGS ON ALL OF THEIR FLIGHTS, IN-FLIGHT MEALS AND OTHER SERVICES TO HELP BOOST REVENUE.

QUESTION 7:Do the strategy and changed to operating practices initiated in 2008 seem well-matched to the industry conditions and the company’s internal situation” What recommendations would you make to help speed JetBlue’s turnaround and revive its growth in revenues and earnings?

Strategies are well-matched to the industry conditions and its internal situation.

Partnerships with Aer Lingus, Lufthansa and South African Airways allow the company to grow its market share by allowing its customers to fly on its code-share partners.

Gain revenue by sell the several A-320 aircraft.

Eliminating service at cities where competition is either too stiff and or unprofitable allows the carrier to focus on a lean market.

And finally using each plane a little less in the day helps to cut back on maintenance and other services (cleaning, replenishing in-flight magazines, etc…) which reduces costs

Refer page c-71

Recommendation…

As the airline revenue growth is positive, JetBlue able to avoid bankruptcy and mergers.

As a recommendation, the marketing team at JetBlue should look into developing an application for the iPhone where customers can check in for their flights, check flight statuses and even track flights, purchase tickets and display boarding passes (to cut back on paper tickets) as Southwest, American and Delta airlines