Jetblue Final

EMG166 ( Strategic Planning and Management)
Section T, 3rd Quarter SY2014-2015

GROUP 2 (FABIAN, Germaine T.; PINEDA, Krizcynia S.; VILLAFLOR, Michaela
Kim B.)
DATE: March 13, 2015
Case No. 3 : Jetblue Airways Corporation - 2009
Company Overview
JetBlue was incorporated in Delaware in 1998 and commenced service in 2000

with primary base of operations at New Yorks John F. Kennedy International Airport.
The companys goal has been to establish itself as a leading low-fare, low-cost
passenger airline by offering its customers high-quality customer service and a
differentiated product. The airline focused on serving underserved markets and large
metropolitan areas that have high average fares with a diversified geographic flight
schedules that includes both shortand long-haul routes.
From its first day of operation, JetBlue differentiated itself from other airlines by:
Starting the business with a lot of moneythe only carrier with over $100 million
startup capital
Flying new planes that are more reliable and certainly more efficient. Seats are
covered in leather with individual monitors for viewing programs from DirecTV.
Hiring the best people by screening the employees rigorously, offering exceptional
training, and equipping them with best tools. The employees are highly motivated and
are trained to be service oriented.
Focusing on service by listening to customers and ensuring their flight is joyful and
friendly.
Industry Overview
Airline profitability is influenced by the state of the economy, international events,
industry capacity, and offerings by other airlines in the forms of bundling and packaging
(with hotels, cruise lines, etc.). The airlines also compete through flight scheduling,
availability, fares, routes served, safety records, on-time arrival, and customer service
reputation. Passengers are increasingly interested low price as well as comfort and
amenities of the aircraft. Therefore, airlines are designing more living space into new
planes and retrofitting old ones. For example, Delta Air Lines and American Airlines are
rewiring their planes to provide Wi-Fi access and enhanced in-flight entertainment
options, including live TV

Kim B.)
Company Highlights
In 2006, JetBlue published its first corporate sustainability report, the 1st Annual
Environmental and Social Report 2006, addressing its environmental efforts
concerning greenhouse gas emissions, conservation efforts, and social
responsibility initiatives. In regard to community services, the company also is
committed and has aligned itself with not-for-profit organizations that focus on
children, education, communities, and the environment
In 2007, JetBlue introduced the JetBlue Airways Customer Bill of Rights, which
provides compensation to customers who experience avoidable inconveniences
(and some unavoidable circumstances). The Bill of Rights commits JetBlue to
perform at high service standards by holding it accountable if it does not. The
company is the first and currently the only major airline to provide such a
fundamental benefit for its customers
In 2008, JetBlue introduced refundable fares and new payment options for
customers, and it also launched jetblue.com en espaol, a Spanish version of
their Web site, http://hola.jetblue.com/enes/.JetBlue has high aircraft utilization as
it spreads fixed costs over many flights and available seat miles.
In 2009, the companies began battling each other in the same airports, such as
New York, Baltimore, Washington, D.C., and most recently Boston. These two
lost-cost carriers use to cross each other only in a few cities.
Issues
In April 2009, the fear of a swine flu outbreak shocked the airline industry and airline
stocks dropped by almost 16 percent. JetBlues stock slipped by 7 percent to $4.91. A
bad outbreak could be disastrous for this industry because most airlines already are
suffering from high unemployment, slow economic growth, and significant drops in
business and leisure travel.
JetBlue enters into crude oil option contracts and swap agreements to partially
protect itself against significant increases in fuel prices

Kim B.)
Transport-related expenses, principally payments from mainline carriers to their
regional airline partners, constituted the industrys second-largest cost at 16.9
percent, up 4.3 percent to a total of $27.6 billion.
Rapid increasing number of level of obesity in the United States. It is one of the
reasons for increasing the amount of fuel cost. One study reported that in 2000,
obese passengers cost airlines an extra $275 million in fuel costs by forcing
aircraft to burn 350 more gallons of fuel due to extra weight.
Rising break-even load factor is also threatening airline finances. Since 2000,
most passenger airlines have been suffering in a sharp increase in their breakeven load factor, measured by the number of seats they have to sell to cover
operating expenses. The breakeven load factor is determined by passenger
yield, which has been fallen due to recently bankrupt carriers and unit costs that
have been rising due to many factors such as labor wages and fuel costs.
Company Mission
The mission of Jetblue Airways is to become a down-to-earth company with
friendly, hard-working and good-humored crewmembers. JetBlues culture was founded
and built on five simple company values- Safety, Caring, Integrity, Fun and Passion
which we use as the basos for all decisions, in work and life. These five value not only
differentiate JetBlue from the rest; they ensure a superior customer and crewmember
experience.
Safety is our number one value and it always cones first. Caring, in the form of respect
and understanding, is the hallmark of who we are. It brings the JetBlue experience to
life. Integrity means doing the right thing; we believe its the only way to do business.
Fun translates to a friendly work environment where people like to be when we enjoy
our jobs, our customers enjoy the JetBlue experience. Passion for what we do is what
makes our product the best in the industry.
Jetblue Airways services offered includes:

Kim B.)
Roomy leather seats with lots of leg room
36 channels of free DirecTv
100 channels of free XM satelite radio
Free and unlimited brand-name snacks and bevarages
Low-fare,low cost offering high quality customer service and a distinguish

product. Their focus is on serving underserved markets and large metropolitan areas
that have high average fares with a diversified geographic flight schedules that includes
both short- and long- haul routes.
Internal/External Analysis
Swot analysis

Kim B.)
JetBlue airways has the strength on providing lower fares compare to their competitors.
Weakness on the fuel expenses like other airline company.
5 Forces Analysis
Threat of New Entrants. The growing number of Low Costs Carriers in the
aviation industry had led to a fall in the average fares.
Rivalry among Existing Firms. Many airlines that were operating began to
recapture the market share. These airlines were able to undercut competition by
offering very low fares, taking advantage of the protection of the bankruptcy laws.
Bargaining Power of Suppliers. Aircraft manufacturers tend to sell aircraft at

higher interest rate because of a limited number of substitute goods. Aircraft
would also arrive to airlines later than agreed, causing delays and loss of revenue
and image.
Power of Other Stakeholders. Increasing Quality, safety, and environmental

regulations.
Bargaining Power of Buyers. Price is going to dictate with whom buyers spend
their money. The more buyers a company and more source of potential revenue
there is.

Kim B.)
Internal Factor Evaluation Matrix (IFE)

Kim B.)
External Factor Evaluation (EFE)
Competitive Profile Matrix (CPM)

Kim B.)
The
above
analysis
reveals that
company scores lowest in advertising and that it needs to be improved. JetBlue Airways
performs or responds better when it comes to customer service as compared to
Southwest Airlines. They know how to use their strengths to neutralize threats and to
exploit opportunities.
Strategic Position and Action Evaluation Matrix (SPACE)

Kim B.)
The above analysis reveals that company scores lowest in advertising and that it needs
improvement.
When it comes to Customer Service, JetBlue Airways performs or responds
better as compared to Southwest Airways They know how to use their strengths to
neutralize threats and to exploit opportunities.
IE Matrix
Based on the result, JetBlue Airways has the IFE score of 2.81 and EFE score of
2.86 which fall under the cell V which is to hold and maintain strategies. Market
penetration and product development are two commonly employed strategies for these
types of divisions. JetBlue airways in the future should hold and maintain their position
using Market Penetration and Product Development Strategies.
Strategic Implications

Kim B.)
The resultant strategy is Aggressive which implies that JetBlue should:
Continue to invest in innovation to sustain and build the competitive advantage

which exists.
Cover any moves made by competitors to develop alternative competitive

advantages.
Close off the opportunities to build a differentiated value proposition that may
prove attractive to segments of the market.
Raise the stakes for other competitors to play the game.
Move into related markets which complement the existing position.
Goals and Long-term Objectives

JetBlues goals and long term objectives include:
1. The number one goal of JetBlue is to provide the best, most affordable flight
experience of any air carrier while providing superior service.
2. Put more effort in raising awareness about JetBlue Airways and what we stand for.
3. Continue giving customers the best price value for their ticket, offering things our
competitors don't offer.
4. Expansion Continued.
5. Should only revised- to further development-to incorporate new technoclogies-to
facilitate growth and profitability.

Kim B.)
Recommendations
International Operations
JetBlue should introduce new flights for the international travel destinations with
differentiated services and maximize management flexibility to adapt its growth
strategy.
Increase advertisement and expand to other media
Market penetration by advertising on TV, Radio, and Online to boost revenues
and popularity of the airline. Social media also greatly reduces the cost associated
with marketing.
Effective use of Reward Policy
The reward policy of the JetBlue can be made more effective by offering
true blue rewards giving massive discounts on passenger seats left empty on the last
moments.
Build partnership Travel Website.
In this website, users can look up information about different travel
destinations; find hotels, restaurants, and hot spots and book a fight through JetBlue.
References
http://www.jetblue.com/about/pressroom/
http://southwest.investorroom.com/company-reports
David.Fred R. Strategic Management Concepts and Cases, Prentice Hall (13 th Edition)
En.wikipedia.org/wiki/JetBlue

Jetblue Final

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EMG166 ( Strategic Planning and Management)

Section T, 3rd Quarter SY2014-2015

JetBlue was incorporated in Delaware in 1998 and commenced service in 2000

EMG166 ( Strategic Planning and Management)

EMG166 ( Strategic Planning and Management)

EMG166 ( Strategic Planning and Management)

36 channels of free DirecTv

100 channels of free XM satelite radio

Free and unlimited brand-name snacks and bevarages

Low-fare,low cost offering high quality customer service and a distinguish

EMG166 ( Strategic Planning and Management)

Bargaining Power of Suppliers. Aircraft manufacturers tend to sell aircraft at

Power of Other Stakeholders. Increasing Quality, safety, and environmental

EMG166 ( Strategic Planning and Management)

Internal Factor Evaluation Matrix (IFE)

EMG166 ( Strategic Planning and Management)

External Factor Evaluation (EFE)

Competitive Profile Matrix (CPM)

EMG166 ( Strategic Planning and Management)

EMG166 ( Strategic Planning and Management)

EMG166 ( Strategic Planning and Management)

Continue to invest in innovation to sustain and build the competitive advantage

Cover any moves made by competitors to develop alternative competitive

Raise the stakes for other competitors to play the game.

Move into related markets which complement the existing position.

Goals and Long-term Objectives

EMG166 ( Strategic Planning and Management)

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