Jetblue Airways: Managing Growth

rave blue Air substances Managing maturement 1. Jet blue air? s Business- level system value and address drivers Jet Blue uses to create and maintain ist competitive position Founded by the discount airline veteran David Neeleman in 2000, JetBlue Airways has quickly become superstar of the largest discount airlines in the United States. Starting primarily by suffice the East Coast, the airline has since expanded throughout the country and entered the international market.The reasons for its previous(predicate) success be many JetBlue entered the market with bingle of the largest levels of liquidity of any(prenominal) start-up airline it met the needs of clients whose primary commercial enterprises are price and route and it successfully defined its brand and differentiated itself from competitors by offering an above add up customer experience and amenities for a discounted price. They are offering fares with the spot to point system. JetBlue? s business-level strat egy is therefore a mix of cost-leadership and differentiation.David Neelemans idea behind JetBlue was to start a troupe that combined the low-down fares of a discount airline carrier with the comforts of a piddling cozy den in peoples homes. His vision elusive both business and leisure customers to have cheap and affordable flights throughout the United States and abroad on newfounder aircraft that are non al hotshot comfortable, solely are equipped with modern entertainment natural selections, and a customer central business model which makes customer service a number star anteriority.In contrast to its competitors, for example, JetBlue offers fares up to 65% scorn simply added comfort features such(prenominal) as assigned seating, leather upholstery and satellite TV on various(prenominal) screens in every seat. Moreover, they are practicing a nonice-to-the-destinations-at- only-cost culture, which makes it their declared aim neer to faecescel a flight. JetBlue Ai rways does not operate to a traditional commissioning statement rather, it operates to a set of core values Safety, Caring, Integrity, Fun, and Passion. 2. Strategic root word map of the airline industry positioning to create a strategic competitive vantage ompany Routes serviced Prices size Continental 292 1,586 44939 Delta 587 1,009 118856 southwestward 97 0,775 77693 JetBlue 71 1,371 14729 American 336 0,186 745700 United 180 1,706 67000 The biggest and simultaneously oldest airline companies are United, American, Delta and Continental Airline. This is why they are referred to as legacy carriers. Their strategic competitive advantage is the hub and spoke system. In this system, airlines created hubs at specific airports where thousands of passengers were shuttled to their connecting flights, the so called spokes.In doing so, these airlines can examine to keep costs low and protect market share. An an different(prenominal) reason strengthen this strategy is that passengers c an travel between numerous destinations without changing airlines. Delta uses this strategy to dominate geographical segments of the market, for example Atlanta. Southwest Airlines on the other hand established a completely different strategy. They take passengers instantly between cities, which is referred to as point to point. Additionally, Southwest is using secondary airports service of process major metropolitan areas.With their different strategic advantage, they are able to eviscerate another target market. Because they offer fares between cities that are often little than 500 miles apart, they targeted customers that would have otherwise traveled by car. In this way Southwest maintains lofty levels of plane utilization magical spell keeping its operating(a) costs low enough to support its discounted fares. Another part of their strategy is their reliance on a single type of plane, the Boing 737. This allowed them to standardize make and flight personnel training whi ch decreased the airline? average turnround time between landing and starting again. Moreover, Southwest focuses on customers whose priority is low-cost, on-time performance. There are no complications for customers, like seat assignments. Therefore, Southwest as headspring as Jet Blue are considered as low cost carriers (LCC). Jet Blue offers fares up to 65 per cent lower than legacy competitors. Jet Blue Airways positions itself by connecting large, characteristicly northeastern, US cities with warmed cities in the southeast. Jet Blue? s emphasis is like Southwest? s on low fares and point to point transportation.Jet Blue entered the market like Southwest with only matchless machine, the A320. In this way they could visit serving a variety of medium- and long-haul routes and numerous overnight flights. Jet Blue could as well as standardize its training and servicing processes around the aircraft. This allowed them to gain flexibleness in scheduling and capacity management. A nother feature for customers to make locomotion with this airline to a greater extent attractive are added comfort features such as assigned seating, leather upholstery and satellite TV on individual screens in every seat.Their key principle was that flight cancellation should be avoided at all costs. In 2005, Jet Blue broadened their portfolio in entering the market of medium-sized cities, which was served only by regional airlines. They entered this market using a new midsized aircraft called Excl. In launching this new machine, they were able to use synergy of combining the A320 and the E190 productively while serving now smaller and bigger airports. This portfolio mix gives Jet Blue a yet matchless, strategic competitive advantage compared to the other airlines.Their goal now should be to improve the synergy between the deuce machines and the profitably run their fleet with the optimum amount of aircrafts. 3. Strategy/ coordinate needed to support the A320 versus the E190 reco ncilable differences? opportunities for synergy The new developed strategy of Jet Blue was to acquire enough E190 aircrafts to serve medium- sized cities to contribute a steady flow of passengers to fill the seats on the longer-haul routes of their A320 aircrafts. A big advantage of this system was that it also worked the other way around.Jet Blue off-key out to have an enormous advantage in simile to the regional airlines, because the E190 had more seats than the traditional RJ. They could use the best option for efficiently serving medium-sized markets while offering passengers more comfort, because they did not had to construction limitations on the size of the planes as RJ did. Therefore, Jet Blue has to overcome close to essential problems caused by significant differences between these two aircrafts. On the one hand, the E 190 is operated at 12 per cent greater costs than the A320, therefore 34 per cent less costs than for a typical RJ.The E 190 was a great innovation be cause it could target a wider range of profitable destinations with a greater seating capacity to fertilize into A320 flights. This results in higher stretch alongs and improved economics for Jet Blue. The breakeven load for the E190 of 75-80 per cent was much lower than for the A320, which made is easier to introduce service into new markets. One of the problems is that it takes up to 40 to 50 airplanes before a company benefits from economies of scale. And while taking delivery of the new E190, Jet Blue proceed its purchases of A320 aircrafts.Reasons therefore are that this machine had proven to be an extremely certain machine, and Jet Blue had standardized its operations around this plane. Another concern is the dual certification for buffer zones . It was simply not feasible for a pilot to simultaneously obtain enough flights as an E190 captain and as an A320 captain. This message pilots could only fly one of the two machines. This brought up another produce An A320 capta in received higher hourly wage rate than an E190 captain.This is why they had to keep pace with the A320 deliveries. The short-haul routes served by the E190 increase revenues but they also increased costs. The reason therefore is as more frequent flights required E190 aircrafts to exit more time on the run aground than the A320 for taxiing, shipment, and unloading between flights because the processes were not standardized yet. This resulted in a disadvantage in accumulating flying hours for pilots, because they get only credit for time conk in the air.Any time spend on the ground was not included. This unnatural their whole seniority and income availability, which is level(p) to the number of airplanes they take. Additionally, the E190 has non-skid flooring on the cargo bins as a sanctuary feature to prevent baggage handlers from slipping on the floor while loading and unloading. Although it was intended to be a good thing, it increased loading time and also increased the po tential for strains and back sprains as handlers had to uprise bags they previously have slid.Also flight attendants had to make significant adjustments. The E 190 had smaller galleys from which to serve customers. The shorter duration of E190 flights provided less time for the attendants to provide the high level of service to which jet Blue passengers had become accustomed. The work of the employees in charge of servicing and maintaining Jet Blue? s fleet also increased considerably. They had now two completely different machines to take solicitude of manufactured by different companies. This created additional operating complexity.This is why they inflexible to invest in maintenance capabilities. The last and most important conference affected by the differences between the two machines is customers. Changes in their behavior and expectations are required. E exceptionally concerning to the carry- on baggage, because the storage bins are from different sizes. This means passen gers can take the same baggage in one machine as hand luggage, on the other machine they need to check it at the gate. There are enough opportunities for synergy effects.The system of the two machines running(a) together is still in its introductory phase. Once these difficulties and maintenance and special level of service for the customers are overcome, the synergy should run pretty well as it was intended to be. 4. Efforts of JetBlue to repair damage to its reputation successful efforts? essential/ successful alternate in CEO? The Valentine ? s Day crisis that would afterwards be referred to as the worst operational week in JetBlue? s seven-year history, began on February 14, 2007 when flights from JFK were heavily booked.Although the snow lingered longer than expected, JetBlue boarded its flights. As the snow turned to freezing rain the FAA prohibited domestic flights from taking off. This winter coerce that enveloped the New York metropolitan region and JetBlues hub at John F. Kennedy internationalistic Airport left hundreds of the companys passengers stranded aboard planes on the tarmac, some for as many as ten hours. Hundreds more waited in vain in the terminal for flights that the airline would eventually cancel.The flight disruptions at JFK plunged JetBlues entire operation into chaos, forcing the carrier to cancel more than one thousand flights over a six day period. In the morning time of this Wednesday, JetBlue? s executives and employees had no idea that an operational catastrophe was about to happen, one that would threaten the companys financial stability and tarnish its otherwise sterling public image. David Neeleman stepped down after the Valentines Day consequent in 2007 only because his organization failed to deliver on its principles of excellent customer service.To restore its reputation, JetBlue embarked on a bold and unconventional image regaining campaign that included issuing disarmingly candid public apologies and a innate ne w covenant between the company and its customers called the JetBlue Airways Customer Bill of Rights. The change of management was instituted to help rebuild JetBlues tarnished reputation and to develop groundbreaking strategies which would prevent situations like that from ever happening again. The CEO described the tool of rights as a written covenant between the company and its customers.The wit of rights specified in no uncertain terms the monetary stipend customers would receive if JetBlue failed to meet certain performance benchmarks, such as ground delays after landing. The Bill of Rights, allowed JetBlue to strengthen its brand among loyal customers and even those who were affected in the airlines operational difficulties at JFK and other airports crossways the country. Additionally, the announcement of the Bill of Rights served as a brawny introduction to immeasurable other air travelers who had yet to fly with the airline.In addition, the Valentines Day crisis taugh t the bodied Communications group valuable lessons about using the Web and loving media. For example, the corporate communication team arranged for Neeleman to appear on more than a dozen television news and talk show programs on February 20, including The Today Show and The Late Show with David Letterman. Neeleman had already starred in videos posted to JetBlues Web site and YouTube in which he utter he was humiliated and mortified by the companys failures.Through numerous written and spoken mea culpas, Neeleman begged JetBlues customers for forgiveness. I feel that JetBlue? s powerful brand, corporate structure, and agility as a smaller airline should change it to rebound from the Valentine? s Day crisis in 2007 and beyond. Of course, the events that began at JFK will not soon be forgotten by the public or the organization, but the issuance of the JetBlue Airways Customer Bill of Rights and the apologies demonstrated the airlines commitment to its patrons over the long term, n ot just in the days and weeks next the onset of the crisis.