JetBlue

Emily SinnottSamwan RobRoss EvancoeMike Waxman

jetBlue

Founded in February 1999 by David Neeleman “Bringing humanity back to the air travel”

Awarded 75 take off/landing sites at JFK International in September 1999

Formal US authorization in February 2000

Began operations on February 11, 2000

Went public in 2002

Arenas

Low-cost, one-class air carrier

US, Mexico, Columbia, and the Caribbean

Fleet of approximately 150 planes Airbus A320 Embraer 190

Vehicles

Codeshare agreements with Aer Lingus, Lufthansa, Cape Air and American Airlines

LiveTV DirecTV satellite television

FoxTV

20th Century Fox The Simpsons Movie

“The official airline of Springfield”

Yahoo!, Research in Motion

XM Radio

Differentiators

Emphasis on unique in-flight amenities Leather seats, satellite TV, satellite radio, movies

Exceptional Customer Service “Best Airline Service Award” -Associated Press 2004-2009 “Highest in Customer Satisfaction Among

Low Cost Carriers in North America” –JD Power and Associates

Customer Bill of Rights

Economic Logic

Provide low cost flights by eliminating extras No in-flight meals Removing seats

Decrease fuel costs Lower staffing costs

Staging

February 2000 Two aircrafts, flying to one destination

December 2009 151 aircrafts, flying to 60 destinations, 20 states,

Puerto Rico, 11 countries in Caribbean and Latin America

External Analysis

Macro Analysis: PESTEL

Political

US Foreign Relations and 9/11(revenue drop of 38% in transport industry)

Aviation and Transport Security Act 2001 (unreimbursed security costs)

Economic

Global Recession (decreased purchasing power)

Rapid decline in IT industry (25% airline revenue is from cargo)

Fuel price (15% of operation costs)

Macro Analysis: PESTEL

Sociocultural

Greater customer knowledge

Need to be bilingual and culturally sensitive

Increased ancillary services (baggage, catering)

Technological

E-ticketing & kiosks (elimination of agents)

Faster reservations and purchasing

Increased competition (biggest purchase factor is price incentive)

Macro Analysis: PESTEL

Environmental

Unfavorable weather (causes 70% of delays)

Outdated air traffic control (planes idle on tarmac, inefficient routes)

IATA’s plan to cap emissions by 2020

Legal

Regulatory factors (1978 deregulation win)

Federal Aviation Administration (safety measures)

Key Success Factors

Attracting customers Attractiveness of services, effectiveness of

promotions

Capacity utilization Effective scheduling, effective fleet management

Managing People High employee morale = high customer satisfaction

Competitive Structure: Porter’s Five Forces

Primary competitors: United, American, Southwest

Threat of new entrants LOW Massive capital requirements, low margins, difficult to

differentiate, history of failures, need for strong brand identity

Power of Suppliers HIGH Boeing & Airbus domination, price of jetfuel is subject to

political, economic, and market factors outside airlines' control.

Competitive Structure: Porter’s Five Forces

Power of Buyers HIGH standardized products, availability of substitutes, no switching

costs,

Threat of Substitute products HIGH Road and rail transport methods are threats for short

distances, also consider recession and lower disposable income

Rivalry among Competitors HIGH Imperfect oligopoly, sensitivity to economic cycles, need to

keep capacity utilization at acceptable levels, frequent flyer programs

Opportunities

Route & fleet expansion

Diversification in ancillary services

Monopoly in routes can offer pricing power

Creation of alliances

Technological improvements in airplane design, operation and maintenance

Deregulation of international air travel

Threats

Security

Increase in fuel price

Strong competition

Global crisis

New regulations by FAA

Internal Analysis

Strengths

Low cost ticket prices to high market cities

High customer satisfaction rating

In-flight entertainment system

Advertising Dear jetBlue

Weaknesses

Newer company, not as many destinations.

Weaker brand recognition

Smaller planes and fleet

Single Class

Distinctive Competencies

Free in flight entertainment system

Terminal 5 at JFK Airport

True Blue rewards program

Income Statement

Financial Condition

2010 Qtr 1 Financial Position vs. Primary Competitors

Basic Issues

Basic Issues

1. Can jetBlue continue to keep their prices so low in such a volatile environment?

2. As jetBlue is expanding can they maintain their high customer satisfaction ratings?

3. Do third party travel services present a problem for jetBlue?

4. Can jetBlue offset the debt they have accumulated from recent large expenditures?

Alternative Strategies

Alternative Strategies

1. Develop innovative, ancillary services to extend jetBlue’s brand name into related industries.

2. Expand domestically by adding additional focus cities.

Strategy 1

Arenas- penetrate the additional travel industries

Vehicles- joint ventures, acquisitions

Staging- Within 3-5 years be partnered with taxi service and begin transportation program to and from airports. In ten years create hotel chain. In 15-20 years develop programs that include cruise and vacation packages.

Differentiators- Increase brand name recognition to all facets of travel. Superior customer service will be prevalent throughout more than one travel industry.

Economic Logic- Not the most cost effective, but will increase customer base in the long-run.

Strategy 2

Arenas- major cities such as Denver, Chicago, and Phoenix.

Vehicles- We will assess each major city with current corresponding routes and pick three that will have the greatest possible impact on the direct flight ratio.

Staging- 2011 Chicago, 2013 Denver, 2015 Phoenix (five year plan)

Differentiators- Will allow for more direct flights which will increase convenience and satisfaction for customers, while simultaneously increasing operating efficiency and reducing carbon footprint.

Economic Logic- By reducing the amount of connecting flights, jetBlue will decrease fuel, staff, and miscellaneous operating costs.

Visual Destination Breakdown

Strategy Defense

Strategy 2 Defense

Strategy cohesive with environment?

Exploiting key resources?

Sustainable?

Are elements internally consistent?

Resources to pursue strategy?

Implementable?

Thank you!