Case Study on "Jet Blue"

Case Study 12 pages (3688 words) Sources: 1+

[EXCERPT] . . . .

Opportunities

The rebounding of the American economy has created prospects for the company to expand

Neelaman's vision of expansion can be further manifested by looking for opportunities in new and emerging economies and markets.

Threats

Neeleman's policy of stabilization of fare structure, such as raising the lowest fares might be threatened by new airlines that are engaged in price war.

Possibility of return of global economic depression can hurt the company badly following Neeleman's strategy of inducting new aircrafts instead of old aircrafts (George & Regani, 2015, p 20-02).

The above analysis shows that as the CEO of the company Neeleman performed well and provided a vision for the company that created a solid foundation for operations.

4. What was David Neeleman's original strategic vision for JetBlue? Has JetBlue's strategy evolved since it was originally conceived?

The vision of David Neeleman behind the starting of JetBlue airways was to provide to the passengers a low cost airline that charged the same fare as other low cost airlines but provided better services. The idea was to provide the travelers a cozy home-like feeling to while in transit. Neeleman's vision was to provide the customers, whether business or leisure travelers, low cost airline options to popular destinations in the United States using new aircrafts that provided not only comfort but also modern on-flight amenities and options for entertainment like satellite television and radio. The business model of Neeleman kept the customer at the center (George & Regani, 2015, p 20-08). An example of Neeleman's vision for the airline in terms of the comfort and service was the use of leather seats covers instead of fabrics which were more comfortable for the customers and were easier to maintain and clean and lasted longer than the generally used fabric seats even though such seats cost more. Neelem's vision was also to reduce costs of operation as much as possible through use of new aircrafts, better fuel efficiency and reducing delays and cancellations.

JetBlue's strategic vision has more or less remained the same since the initial days. The only change that evolved from Neeleman's original strategy was seen in the crisis period of 2005 and 2007 (George & Regani, 2015, p 20-10). After the initial crisis following the terrorist attacks, the company managed to continue with the expansion efforts. But the company faced a setback when other competitors started to strike back with fare wars. The company which already ran on sustainable strategies could not lower prices much. Therefore, Neeleman had to change the business strategy by initiating the program of 'Return to Profit' initiative. The company changed its route plans and introduced new comfort measures for passengers to achieve more financial sustainability. Neeleman's policy of no cancellation of flights and offering refunds in case of a cancellation, though held in high esteem by the customers, resulted in the company experiencing financial losses. This vision was changed and evolved somewhat (George & Regani, 2015, p 20-09). The original vision of Neeleman was not changed but it evolved to the extent of redesigning a couple of factors consistent with the changes in the external business environment.

5. How has it changed?

The major change that has occurred in the vision of the company has been to create a more sustainable strategy overall. The company reduced and cancelled unprofitable routes. The vision of the company to carry as many passengers as possible in every flight changed during 2007 when it was identified reduced seating would also reduce weight of the plane resulting in better fuel economy. The company also changed the vision of last minute boarding to better its load factor and yield per passenger mile. This was change from the initial vision and strategy of Neeleman. The vision to reach out to every corner of America and abroad was shunted and the company reduced flights on the less demanding routes and the routes that attracted fewer passengers (George & Regani, 2015, p 20-11). For example in 2006, the routes New York-Florida and New York-Las Angeles were restructured and the number of flights was reduced. The company sold away it older fleet of aircrafts for newer aircrafts that had better efficiency and offered operational cost reductions. The company's human resource strategy and maintaining a dedicated workforce also evolved and the organization decided to hire fewer full-time employees per aircraft. The company also changed its policy for refund and cancellation by creating charges for both which were a clear deviation from the original vision of full refund of fares to passengers (George & Regani, 2015, p 20-10). These changes in the original vision and the strategy as formulated by Neeleman were to create greater efficiency and cost effectiveness of the operations of the airways due to increased financial restraints.

6. What are the key functional strategies that have enabled JetBlue's management to implement its chosen strategy?

The key functional strategy that the company employs which has enabled the company to implement the strategy to service as many passengers as possible is its efforts towards complete customer satisfaction. This is evident from the company being chosen as the best in terms of passenger satisfaction. This functional strategy was in line with the strategic approach of the company (George & Regani, 2015, p 20-03). JetBlue focused on complete customer satisfaction. The company has always been committed to the strategy and has made changes whenever there has been a challenge posed to them. To start off, the company introduced leather seat covers to ensure passenger comfort while placing TV screens with satellite televisions o the seat backs for entertainment of passengers. These were a hit with the passengers which were evident in the growth of the company in the initial years. Later on when the company was faced with competition and financial crisis, the company maintaining its functional strategy of customer satisfaction, increased the leg space for passengers by removing a row of seats (George & Regani, 2015, p 20-04). Though this measure helped the company reduce flight weight and increase operational profits, it was largely viewed by customers as a step to increase the comfort of the customers.

The company also upgraded their IT systems after the debacle of February 2007, when a very large number of flights had to be cancelled due to constant snowfall in America. Again, though this was for the purpose of streamlining the operational procedure of the company, it was seen as a step that helped passengers to handle reservations and cancellations of flights and refund and rescheduling of flights (George & Regani, 2015, p 20-04).

Another strategic approach of the company was to create a single class for the passengers. While this was done to create a standard service code for the entire fleet, this was seen as giving equal service to all customers. The company strategy to use two types of aircrafts, smaller ones for short routes and larger ones for long distances thus making the trips fuel efficient and saving on costs was aimed at providing better service to the passengers. Another strategic approach that capacity helped the company financially and allowed JetBlue to create customer satisfaction in the smaller and secondary airports that other airlines avoided in general. This strategy was focused on operating in routes that had fewer competitors and to cater to passengers for routes where there were not many flights in place (George & Regani, 2015, p 20-05).

7. What factors are driving changes in the airline industry?

Several factors are driving change in the airline industry. The major factor among them is the opening up of the skies through the deregulation of the airline industry. The boom in the airline industry came in the late 1970s and the early 1980s. Many countries opened up the market to foreign airline companies. This increased the number of airline companies that were positioned to enter new markets. The U.S. And the European Union both announced several packages for the airlines industries during the late 1980s until early 1993 (Cento, 2009, p 12-25). The complete deregulation of the industry did not happened until the late 1990s. The EU allowed airlines to operate between two countries through the home country as well as operate domestic flights in countries that are members of the EU. Similar policies were also introduced in the U.S. The deregulation of the industry was an instrumental factor in the forging the present state of the airline industry and these conditions are still evolving with more and more countries deregulating their domestic airspace to foreign airlines.

This trend has also increased competition in the industry by allowing companies to freely decide and select their routes, frequencies, and price levels. This rise in competition among the airlines has forced individual airlines to innovate and create sustainable models to create profitability. The increased level of competition is also the driving force for the airlines in the present scenario. The companies now face fewer regulations and have more freedom and access to markets and customers (Cento, 2009, p 12-25).

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