Jetblue Airlines

JetBlue Airlines [Success Story]Efforts by:October 1, 2009

Meenakshi Bisht Tushank

Agenda 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

JetBlue story • 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

Innovative strategies used by 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…… • 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

SWOT Analysis • Strength  Low Operating cost  Strong brand  Efficient employee  Single fleet  Consumer satisfaction  Effective use of technology  Advertisement

• 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 High

United Airlines American Airlines

Low

Quality Delta

JetBlue Southwest AirTran Frontier Low

Position Map

PEST ANALYSIS • Political issue  September11, terrorists attack  Political stability  Competitive Airline industry  Regulatory factors

PEST ANALYSIS • Economic issue  Improved purchasing power  Rise in Inflation  Rise in oil prices

PEST ANALYSIS • Social issue  Greater customer awareness  Increased entertainment level  Security level of customers  Bad services & lost baggage

PEST ANALYSIS • Technological issue  Beginning of e-ticketing  Automated systems (cockpits)  Advertisements (newly introduced animated)

Porter’s five force analysis • Bargaining Power of Buyer – High • Threat from Substitute – High • Bargaining Power of Suppliers – High • Threat of New Entrance – Low • Competitive Rivalry – High

• 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

• 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

•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 • 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 Values Safety Caring Integrity Fun Passion

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 You