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JetBlue Airways Corporation Report


Introduction

JetBlue founder David Neeleman announced his plans for a new airline in early 1999. After acquisition of 75 Airbus A320 and allocation of slots at JFK, the airline’s maiden flight took off in early 2000 destined for Fort Lauderdale in Florida.

The company would later fly other routes to Tampa and Orlando, among others, in the same year. During the 2011 final year results, the company announced that it flies more than 70 states and 12 countries.

Additionally, it announced that it flies into New Mexico, Puerto Rico and the Caribbean and Latin America (JetBlue 2012). The company recorded good results in the early years of its operation until 2005 when it acquired a new Brazilian jet.

This slowed progress for the two consecutive years. JetBlue prides itself for providing cheap flights that offer in-flight additions such as television, which was a first in the industry.

In early 2012, the company was operating more than 700 flights in a day with a fleet of over 120 A320 Airbuses and slightly more than 50 EMBRAER 190 aircrafts (New York Times 2012).

Mission, Policy and Vision

JetBlue strives to offer its customers value, style, service and low costs. This is part of its policy and mission that includes offering customers hosts of other in-flight entertainment options.

This propels its brand image to the customers. For example, it offers branded popcorns, a JetBlue spa among others (JetBlue 2012). As part of its policy, the company offers only one-way tickets and flies short destinations.

It has a policy of assigning all seats and having ticketless travels. Additionally, the company has documented ‘customer-protection bill of rights’, which details a host of many options as pertains customer needs and complaints.

The company’s vision is to offer safety at all times, care for its customers, propel its integrity and guarantee all customers fun and low costs (JetBlue 2012).

Objectives and Strategies

Founder David Neeleman had the idea that humanity had been forgotten by the available airlines. From that, he decided to bring humanity back to air travel. This formed part his innermost objective.

He would do this by focusing on short travels and offering the best services and entertainment on-board. He wanted to do this while offering value for the shareholders. Hence, in the early years (2000 up to 2005), he recorded commendable results.

As part of the company strategy, Airbus A320 was the main aircraft. However, the company made a strategic error in 2005 when it contracted a Brazilian aircraft manufacturer for acquisition of EMBRAER aircrafts that would carry 100 passengers (JetBlue 2012).

This enabled it to travel international destinations. However, it created an operational problem at airports both in New York and in other destinations.

The company strengthens its brand by offering branded products in the aircrafts. This includes foodstuff and pleasure products. As part of its strategy, the company has plans to add 35 aircrafts to its fleet every year.

This was hatched in 2010 by the board as part of the company’s expansion plans (New York Times 2012).

The 2007 Fiasco

Prior to 2007, the company had been recording excellent returns raking in millions of dollars. This was up to 2005. That year, the company obtained new jets that would carry more passengers.

However, the company ignored the operational realignment that was needed to ensure continued smooth runs in airports (JetBlue 2012). Most of the airports would not offer new slots. As a result, in 2005 and 2006 the company recorded sharp declines in profits.

This was largely blamed on the CEO and founder David Neeleman. JetBlue’s problems spilled over into 2007. In February 2007, the national weatherman had issued a warning to airlines regarding a possible snowstorm in the western coast.

This was JetBlue’s main operating route and it was a busy season owing to the fact that it was a favorite Valentine’s destination. Consequently, the company would offer a late and inconsequential warning to customers. The airlines had severely been overbooked leading to large numbers of stranded passengers at various airports.

Additionally, most of its operations had grinded to a shameful halt. The company was forced to make refunds and compensations amounting to over $30 Million. Its leadership was criticized and pilloried in mainstream media, which led to resignation of David Neeleman as CEO mid that year (New York Times 2012).

Another notable situation that JetBlue grappled with in 2007 was a sudden surge in the cost of fuel world over. In the previous five years in operations, its business model had allowed price-cuts for its passengers because of the manageable fuel costs.

However, this was bound to change (JetBlue 2012). The company had to increase its average travel rates from $100 by over $10 to remain afloat. This was coupled by tightening spending habits from Americans because of the beginning of the economic crisis, which was more pronounced in 2008.

Hence, the unmatched success the company had recorded would stumble in 2005, 2006 and 2007 as the company tried to grapple with the above factors (New York Times 2012).

Current Situation

Currently, the entry advantage the company enjoyed has been greatly reduced. During entry, majority of the airlines were making loses while it instantly enjoyed tremendous success raking in billions of profits for the first five years.

However, it has had to increase its travel rates by an average of $10 which has almost stripped it of the low-fare status it had acquired (JetBlue 2012). However, the popularity it had acquired still remains the main competition point.

Although it continues to spread its operations wide through acquisition of 35 aircrafts every year and new international destinations, its profits have not changed much. Strategically, it continues to differentiate itself from other low-fare carriers such as South West Airlines, Delta and United by offering unique in-flight services.

This includes comfortable chairs, entertainments systems (with live multi-channel television) and branded blue corn chips (JetBlue 2012).

Recently, it has collaborated with Korean Air to allow combination of legs on a single ticket on both airlines. This will make booking seamless and hence improve operations and customer service.

Other partnerships announced in 2011 include the Qatar Airways and Virgin Atlantic agreements. This shows that the company has suffered a major autonomy crisis, which may be harmful to its original brand.

It indicates that management is trying hard to satisfy shareholders who constantly demand more. Lastly, it is a pointer to the hard economic times, which has greatly reduced overall American and world spending habits. These agreements were meant to enhance more profitability and share resources for mutual benefits.

JetBlue’s customer treatment is one of the best in the industry with a policy guideline called ‘customer bill of rights’ that gives customer so much leeway (JetBlue 2012).

References

JetBlue. (2012). Company History. Web.

JetBlue. (2012). About Us: Customer Protection. Web.

New York Times. (2012). JetBlue Airways Corporation. Retrieved from

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IvyPanda. "JetBlue Airways Corporation." July 3, 2020. https://ivypanda.com/essays/case-study-jetblue-airways-corporation/.

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IvyPanda. 2020. "JetBlue Airways Corporation." July 3, 2020. https://ivypanda.com/essays/case-study-jetblue-airways-corporation/.

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IvyPanda. (2020) 'JetBlue Airways Corporation'. 3 July.

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