JetBlue Airlines

[Success Story]

October 1, 2009

Efforts by:- Meenakshi Bisht Tushank Neeraj Garg

1. JetBlue Story

2. JetBlue Innovative Strategies

3. JetBlue SWOT Analysis

4. JetBlue PEST Analysis

5. JetBlue Market Positioning

6. JetBlue Porter’s five forces

7. JetBlue Mission Statement

8. Recommendations

AgendaAgenda

• JetBlue is the brainchild of David Neeleman

• Concentrating on New york, Florida and California

• Started with an initial capital of $160 million

• Operations began on February 11,2000

• The inaugural flight was between New York’s JFK International airport and Fort Lauderdale

• April 11, 2002 announcement of initial public offering

• Serving 46 destinations with over 400 flights daily

JetBlue storyJetBlue story

Innovative strategies Innovative strategies used used

by JetBlueby JetBlue• Not to serve meals• Providing personal television• Leather seats instead of cloths• Did not use old & cheap planes• Use more fuel-efficient and less maintenance cost Airbus• Did not fly too many routes• Choose point-to-point flight

Continue……Continue……

• Use secondary airport which did not handle too much traffic • Reduce the Turnaround time• Use electronic ticketing• Paperless cockpit• Customer-oriented approach• Picking the right people• Create fun

• Strength

Low Operating cost

Strong brand

Efficient employee

Single fleet

Consumer satisfaction

Effective use of technology

Advertisement

SWOT AnalysisSWOT Analysis

• Weakness

Relative new company

Single fleet

Concentration on middle class

Shifting customer’s need

• Opportunity

Industry

Route & fleet expansion

Creation of Airlines Alliances

Technological Improvements in Airplane design, operation and maintenance

Deregulation of international air travel

• Threat

September 11th attack/Accidents

Security

Increase in fuel price

Strong Competition

Global crisis

New regulations by FAA

union

Market Positioning

Price

Low

High

QualityLow

Southwest

American Airlines

United Airlines

Delta

Frontier

AirTran

JetBlue

Position Map

PEST ANALYSISPEST ANALYSIS

• Political issue

September11, terrorists attack

Political stability

Competitive Airline industry

Regulatory factors

PEST ANALYSISPEST ANALYSIS

• Economic issue

Improved purchasing power

Rise in Inflation

Rise in oil prices

PEST ANALYSISPEST ANALYSIS

• Social issue

Greater customer awareness

Increased entertainment level

Security level of customers

Bad services & lost baggage

PEST ANALYSISPEST ANALYSIS

• Technological issue

Beginning of e-ticketing

Automated systems (cockpits)

Advertisements (newly introduced animated)

• Bargaining Power of Buyer – High

• Threat from Substitute – – High

• Bargaining Power of Suppliers – High

• Threat of New Entrance – Low

• Competitive Rivalry – High

Porter’s five force Porter’s five force analysisanalysis

• Bargaining power of Buyer - High

Standard product and services

Several options available to customers with what airline they choose to fly.

No switching cost – customer need a reason to stay

Customer can research easily using the internet

Customer incentives such as True blue which allow customers to earn rewards, book flight in an easier/faster manner, and stay on top of the upcoming event/sales

Customer loyalty : flying round trip across the US two times will earn you a free reward

• Threat from substitute – – High

Threat is high : numerous other airlines

Switching costs among other airlines are low

Switching costs among other transportation option are high for everything but short distance (Train, boat, car etc)

High existing barriers – bankruptcy laws allow loss maker to continue operating

• Bargaining power of suppliers – High

Only two suppliers – Airbus & Boeing

Little/No chance to bargain with suppliers

Fuel suppliers have a considerable amount of power because they control how much money is spent on the fuel used to fly the planes.

The volume of fuel supplied to the airlines is extremely important because JetBlue has prescheduled flights that require a certain amount of fuel. 

•Threat of new entrance - Low

Deregulation made it possible for new entrance

Very high cost or capital required for entry

Low profit margin

Difficult to differentiate product & services

Brand image and loyalty is important

New airlines must be seen as safe and reliable

Hundreds of gone defunct trying to compete against the large airlines

•Competitive rivalry – High

Numerous competitors like Delta, United and American

In times of low or moderate industry growth, the competition gets fiercer as each one tries to nab customers from the other in order to keep their capacity utilizations at acceptable levels

The industry is extremely sensitive to economic cycles

Mission Mission • Bring Humanity Back to Air Travel

•Jet blue airways exists to provide superior services at low cost in every aspects of our customer’s air travel experience

• Core ValuesSafety CaringIntegrityFunPassion

Recommendations

•JetBlue needs to pursue a Cost Leadership Strategy

•Improve Fuel Hedge opportunities

•Initiate international Alliance

•Introduce point to point service in west coast markets

Thank YouThank You