A strategic analysis of jetblue airways

A strategic analysis of jetblue airways The US airline industry trends have caused airline companies, including Jet Blue to struggle for survival. Retirement has caused a shortage of pilots and instructors. Flying schools experience less instructors and hours needed to train new pilots. In 2008, crude oil prices increased to a record $140 per barrel (Thompson, Strickland, federal employees were tasked to handle all airport security. Increased screening for baggage and passengers, size limits on fluids and x-ray inspections. With the additional security measures, came financial burdens to the airline industry. Jet Blue’s strategic intent When Jet Blue’s was founded, David Nelleman wanted air travel to compassionate and fun. The strategic intent was to offer customers a low discount airline carrier with the comforts of home. As the first airline to offer electronic ticketing, Jet Blue wanted to delay its flights instead of canceling them. Agents were allowed to work from home and customers enjoyed gourmet sna cks, coffees, in-seat televisions with satellite radio and movie channels. Jet Blue began to look into increasing the shareholder and customer values with the expansion of New York’s JFK Airport with 8 am and 9 am flights. This was hopeful to Jet Blue executives; they wanted to appeal to younger customers, affluent New Yorkers, and those traveling to New York City. Opening up this new terminal has saved $50 million in labor, fuel, and vouchers. Now, the company serves more than 53 destinations (Thompson et al., 2010). JetBlue’s financial objectives & success in achieving Although Jet Blue’s stock dropped by 50% in the five years, revenues grew 185% between 2003 and 2007, their operating expenses grew 222% during the same period. The loss in revenue was blamed on the cost of fuel (532% increase) and interest expense (658% increase). Jet Blue decided to take a conservative financial strategy in which they maintained high liquid ratios relative to the other major a irlines (Thompson et al., 2010). Jet Blue was millions behind the competitor but developed new equity capital and credit, which was needed to keep the company, and allow them to maintain strong liquidity. Assessment of competitive advantage Cost. JetBlue operates at a lower cost than its competitors. According to Thompson, Strickland & Gamble (2010), JetBlue’s total operating expenses were 12.17 per revenue passenger mile in 2008 versus $18.18 for American Airline, $18.18 for Continental, $20.95 for Delta, $13.85 for Southwest, $19.13 for United, and $21.45 for US Airways. Its planes, such as, the Airbus A320, tended to be newer than those of its competitors resulting in lower maintenance costs and no maintenance-related fines. The company increased flying time by minimizing turnaround time. Reservation agents worked at home resulting in cost savings as compared to a traditional call center. These measures paid off creating a major competitive advantages in the form of low op erating costs that other airlines did not achieve. Organizational culture. JetBlue’s organizational structure was created based on five steps. First, the company’s values were determined. Then, hiring managers selected employees who mirrored the company’s values. Next, the company ensured that the company exceeded employee expectations and to listen to customers. And, finally, the company created a plan to drive excellence. The values established by JetBlue were safety, caring, integrity, fun, and passion. As an example, George Forman grills were set up at the JFK terminal to allow employees to have fun. By only hiring employees that mirrored those values, the company could encourage hiring managers to be creative during the hiring process and to weed out those that would not be a fit. By making these steps an active part of getting work done, JetBlue developed a strong organizational culture.