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Outdated air traffic control (planes idle on tarmac, inefficient routes)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