CASE 3:

JETBLUE AIRWAYS:
A CADRE OF NEW
MANAGERS TAKES
CONTROL
group members:
sharun dewi a/p moorthy ac081024
purvitha a/p raju gopal ac081345
vikneswari a/p krishnan ac081375

INTRODUCTION

 JetBlue

Airway is an airline industry.

Founder
The

is David Neeleman, a Salt Lake City entrepreneur.

eighth largest passenger carrier in United State.

Have

won many awards including Best Domestic Airline,

Best Domestic Airline Value and Best Overall Airline.

The

case study discuss on the Jetblue Corporation

emphasize on its founder, on its financial performance,
human resource management pratcices, organizational
culture and startegies.

QUESTION 1:
A.

What was David Neelemans

original strategic vision for
JetBlue?

B.

Should JetBlues strategic vision be

revised now that the company has
new executive leadership?

ORIGINAL VISION
START A COMPANY-COMBINED THE LOW FARES OF A
DISCOUNT AIRLINES
carrier with the comforts of a small cozy den in peoples homes.

CUSTOMER HAVE- CHEAP AND AFFORDABLE FLIGHTSUS AND ABROAD

aircraft that comfortable- equipped with modern entertainment
options
customer centric business model
make customer service no1 priority
MOTIVATION FACTORS DAVID USE LEATHER SEATSEASY TO CLEAN, MORE
comfortable than fabric seat (experience a flight fabric seats-was socked
with urine).

Should only revised- to further development- to incorporate

new technologies- to facilitate growth and profitability.

After David resign- the new management-instituted to help

rebuild JetBlues reputation & to develop innovative
strategies(to prevent incident like Valentines Day 2007
because failed to deliver excellent customer service.

Organization no need to change vision. To remain successful

the management, they can apply
Incorporated New technologies
Best practices
Provide training to all employees

QUESTION 2:
A.

What were the key elements of

JetBlues strategy in 2008?

B.

How has the company chosen to

attract customers in sufficient
volume to earn profits?

C.

How does JetBlue offer its

customers value?

KEY ELEMENTS OF JETBLUES NEW

STRATEGY:
REEVALUATE THE WAYS THE COMPANY WAS USING ITS
ASSETS.
REDUCE CAPACITY AND CUT COSTS.
RAISE FARES AND GROW IN SELECT MARKETS.
OFFER IMPROVED SERVICES FOR CORPORATIONS &
BUSINESS TRAVELERS.
FORM STRATEGIC PARTNERSHIPS.
INCREASE ANCILLARY REVENUES.

DEVELOP A NEW TERMINAL AT JFK AIRPORT TO

IMPROVE ITS ON-TIME DEPARTURE AND ARRIVAL
AVERAGES AT AIRPORTS.
SOLD A STAKE OF ITS SHARES TO GERMEN CARRIER
LUFTHANSA TO INCREASE REVENUE & ALLOW THE
CUSTOMERS TO BOOK CODE SHARE FLIGHTS ON
LUFTHANSA FLIGHTS TO GERMANY.
APPEALED TO BUSINESS TRAVELERS BY INTRODUCING
REFUNDABLE FARES & DISCOUNTS FOR CORPORATE
MEETING PLANNERS FOR EVERY 40 CUSTOMERS
BOOKED TO SAME DESTINATION. ALSO ENTERED INTO
5YEARS AGREEMENT WITH EXPEDIA INC FOR THE
MANAGED & UNMANAGED BUSINESS TRAVELERS.
INTERESTED IN PURSUING PARTNERSHIP WITH OTHER
AIRLINES. EXAMPLE FORM AN AGREEMENT WITH AER
LINGUS TO MAKE PASSENGER EASY TO BOOK TICKETS.

Attract customer by..

Proving

comfortable seats and entertainment

services on all of their flights.
Using newer, non propeller aircraft on all
flights, ease of ticketing, cancellation and
flight changes, multiple destinations and faster
service.

Offer customer value...

Creation

of the passenger bill of rightsstates the companies action regards to

flight changes, cancellation, service &
more.
This makes the customer to know what
to expect on each and every JetBlue flights
& from the company

QUESTION 3:
A.

Are JetBlues functional area

strategies consistent with its overall
strategic approach?

B.

What policies, practices and

procedures have been developed to
execute its business strategy and
functional area strategies with
proficiency?

FUNCTIONAL AREA STRATEGIES ARE

CONSISTENT WITH ITS OVERALL STRATEGIC
APPROACH.
VISION MAINLY FOCUS ON CUSTOMER SERVICE.
when ever vision challenged- they rebounded with
new strategies ,technologies and improve the customer
service.
EXAMPLE OF STRATEGIC APPROACH:
Utilization of 2 different type of aircraft (Airbus A-320
150 seats & Embraer E-190- 100 seats)
E-190 use for shorther distances & A-320 use for longer
distance
To save on fuel allocation & help to balance
flight/passenger load balances

ELIMINATE SERVICE AT CITIES WHERE

COMPETITION IS EITHER TOO STIFF OR
UNPROFITABLE - HELPS TO CATE ITS SERVICE
TO THE CUSTOMER MUCH MORE EFFICIENCY
INSTEAD OF BEING GENERAL AIRCRAFT WITH
LIMITED SERVICE COMPARE TO OTHER
AIRLINES.
USE EACH PLANE A LITTLE LESS A DAY- HELP
CUT BACK ON MAINTENANCE AND OTHER
SERVICES (CLEANING)- REDUCE COSTS.
AT 2010- JETBLUE PERFORMINGWELL
COMPARED WITH OTHER AIRLINES. ABLE TO
AVOID THE PLAGUES OF OTHER CARRIERS SUCH
AS BANKRUPTCY& MERGER BY ITS CORE
BELIEFS AND STAYING WITH MANAGEABLE SIZE.

QUESTION 4:
A.

What is your assessment of

JetBlues financial performance
during fiscal years 2003-2007?

B.

Does the companys recent

financial performance support
the boards decision to replace
top management?

FOR EXAMPLE:
DEBT TO ASSET RATIO= TOTAL DEBT / TOTAL ASSETS

2007

2006

2005

2004

2005

3048/5598 =
0.54

2840/4843 =
0.59

2326/3892 =
0.60

1545/2797 =
0.55

1109/2185 =
0.51

THE RECENT FINANCIAL PERFORMANCE SUPPORT

THE BOARDS DECISION TO REPLACE TOP
MANAGEMENT IT IS BECAUSE JETBLUES FINANCIAL
STATUS IS POSITIVE. THE DEBT RATIO WAS LOWER. IF
REPLACE TOP MANAGEMENT THE COMPANY BEGAN
TO GROW AGAIN AND DEVELOPED NEWER ROUTES,
MARKETS, TECHNOLOGICAL INNOVATIONS.

QUESTION 5:
A.

What are the factors driving

change in the airline industry?

B.

How are they likely to impact

the future attractiveness of the
industry?

Economic factor

All of these factors have and will

impact the attractiveness of the
industry. Individuals who wish to
establish their own airline
companies will have to take into
consideration the market share of
the cities they wish to serve, the
aircraft and their capabilities and
effectiveness, the economy both
national and global, and consumer
demands regarding air travel.

QUESTION 6:
A.

What are the key success

factors in the airline industry?

B.

How well do JetBlues resource

strengths and competitive
capabilities match these
industry success factors?

Attract customer
Manage its fleet
Manage it s human capital (employee)
Manage its finance
JETBLUE PROVIDING LOW FARES, NEW FLEET OF
MODERN JET AIRCRAFT EQUIPPED WITH
DIRECTTV/WIFI/XM RADIO SERVICE FOR TRAVEL
ENTERTAINING PURPOSE AND HAVE CUSTOMER
FRIENDLY EMPLOYEES IN ORDER TO ATTRACT
CUSTOMERS.
USING THE SMALLER AIRCRAFT FOR SHORT-HAUL
FLIGHTS AND THE LARGER AIRCRAFT FOR LONGER
DISTANCE FLIGHTS AND HAVING THE FLIGHT CREW
CLEAN UP THE AIRCRAFT AFTER EACH FLIGHT IN
MANAGING THEIR FLEET.

JETBLUE MANAGES ITS PEOPLE BY PROVIDING

TRAINING OPPORTUNITIES TO EACH MEMBER OF
THE TEAM AND EVEN JOB CROSS TRAINING TO
MAXIMIZE THE EFFECTIVENESS OF ITS PERSONNEL.
JET BLUE MANAGES ITS FINANCES BY SELLING
SHARES OF STOCK TO OTHER AIRLINES
JETBLUE ALSO DELAYED THE ACQUISITION OF
SEVERAL NEW AIRCRAFT AND REDUCED ITS FLEET
SIZE TO ACCOMMODATE FOR THE TURBULENT
ECONOMY
JETBLUE HAS NOW STARTED CHARGING FOR
SECOND CHECKED BAGS ON ALL OF THEIR FLIGHTS,
IN-FLIGHT MEALS AND OTHER SERVICES TO HELP
BOOST REVENUE.

QUESTION 7:
Do the strategy and changed to
operating practices initiated in 2008
seem well-matched to the industry
conditions and the companys
internal situation What
recommendations would you make to
help speed JetBlues turnaround and
revive its growth in revenues and
earnings?

 Strategies are well-matched to the industry conditions and its

internal situation.
Partnerships with Aer Lingus, Lufthansa and South African
Airways allow the company to grow its market share by allowing
its customers to fly on its code-share partners.
Gain revenue by sell the several A-320 aircraft.
Eliminating service at cities where competition is either too stiff
and or unprofitable allows the carrier to focus on a lean market.
And finally using each plane a little less in the day helps to cut
back on maintenance and other services (cleaning, replenishing
in-flight magazines, etc) which reduces costs
Refer page c-71

Recommendation

As the airline revenue growth is positive, JetBlue able to

avoid bankruptcy and mergers.

As a recommendation, the marketing team at JetBlue should

look into developing an application for the iPhone where
customers can check in for their flights, check flight statuses
and even track flights, purchase tickets and display boarding
passes (to cut back on paper tickets) as Southwest, American
and Delta airlines