1. Case Summary FrontrowProductions

2. Airline Industry Political Deregulation and who did not adjust strategies to compete. Braniff, Eastern, Pan Am, TWA did not survive United, American, Delta, NW, Continental did survive Expanded services instead of lowering costs were the fundamental mistakes. Established Airlines compete with new entrants to system in # of ways: Centralized Hubs Strategically Frequent flier plans Reservations systems favoring their own fares and flights International alliances Fundamental restructuring of the Airline industry today and three things airlines face: Shrinking demand in early 2000s & may replicate today in bad economy. Price sensitivity for business travelers Technological alternatives as of early 2000s Low cost carriers now large enough to attract fliers in established hubs. Internet brings greater transparency 3. Industry Five Forces Model Industry competitors = Many other airlines Potential entrants = Relatively lower barriers of entry than under deregulation, gate availability (?) Power of suppliers = low to high Power of buyers = high Substitutes = other forms of transportation; cars, buses, trains 4. SWOT: Strengths 1million passengers in under a year, 100 million in revenue by year end Frequency of flights, Point to point direct, Hub presence at JFK and desirable destinations for their original market New planes-more room, better service, Same equipment Aerobus, No labor unions 5. SWOT: Weaknesses High costs payroll, fuel costs Communication system from top mgt down to cockpit, flight attendants, as evidenced last February with planes on the runway for 9 hours in snow storm before cancel flights Integrating new aircraft types poses system complexities along the value chain Originally not many alliances if at all. This has changed 6. SWOT: Opportunities Competitors that fail Lufthansas 19% ownership stake Opens international gates to capture market share for JBLU Deep pockets Strategic Alliances and price sharing 7. SWOT: Threats High Fuel costs Traditional airlines out of bankruptcy Cleaner balance sheets lower operating costs after restructure Reputation, bad press, stakeholder discontent 8. STRATEGIES: Corporate Level Operate with a single business strategy Achieve growth in a single line of business But have multiple competitive strategies: Market Penetration Geographic expansion Product Development 9. STRATEGIES: Competitive Strategies Regain cost leadership (low cost) in line with expanded services versus competition Bought company that manufactures inboard entertainment system Place it in competitors aircrafts 10. STRATEGIES: Differentiation/Focus Differentiation: New Planes; Airbus over Boeing, TV each seat, Full Satellite Audio, Paperless cockpits Leverage technology Focus Compete in narrow market segment 11. Recommendation Compete in a narrow market segment again Entered as low cost competitor to Southwest but differentiated based on service Not attack on existing airlines as they attack others: Price wars Be the ELP of the airlines Customer perspective Continue with free snacks and checked bags Became the Businessmans airline and re-explore family orientation Stick to its point to point plan Reconsider integrating different planes back to one type Reduces turnaround time at gates keeps on time performance Payroll benefits, Training performance translates to revenue and profits