Case background
JetBlue Airways Company is a low cost airline company, incorporated in the United States of America in August 1998; its founder is David Neelaman. The company has the same business approach like Southwest Airlines’ approach of low cost freights; it operates in domestic and regional markets.
Its main airport is John F. Kennedy International airport, for the last five consecutive years the company has been voted as the best domestic carrier in the United States (JetBlue official website, 2010). This paper discusses changes in the United States Airline industry and the effects of the changes on JetBlue Airways Company.
United States Airline industry developments
Scientific Invention and innovation in the transport industry has lead to low cost airline; international trade increased globalization has necessitated the growth of airline companies. In United States, there has been an increased demand for effective and less costly transport.
The United States airline industry is generally divided into four categories; each category has its changes, while some changes can be felt across the board. The categories and changes are:
International
International planes carry a capacity of 130 seats and over; they have licenses to do business in other places other than the United States, they have annual revenue of over $1 billion.
National
They have a capacity of less than 130 in capacity; their main business is with the United States cities, their revenues base is between $100million and $1 billion.
Regional
They specialize in regional short freights and revenue less than $100 million; most of these planes have no license of other countries other than United States
Cargo: they transport goods.
The greatest change in airline industry that has had an impact on JetBlue is the change to Low cost airlines; the company has been forced to change its operations to low cost planes business. Low cost airlines service providers are able to offer services at a reduced rate by eliminating some traditional favors given on planes; the reduction of favors in a plane makes the costs lower, thus the planes can afford to charge cheaply.
Competition in this sector has lead to innovations an increased customer service and reduced cost of operation. Some of the airlines operating as low cost in United States are Southwest airlines, Virgin Atlantic and Sun Country Airline.
JetBlue airline strategies
JetBlue management recognizes the use of information available in the market and internal information to develop competitive strategies to operate effectively. To analyze the market and derive a competitive advantage, the company undertakes regular S.W.O.T and P.E.S.T.L.E analysis to assist the management made sound decision.
Understanding what its competitors are offering and then offering better services is a strategy adopted by the company; it aims to be a bench mark through service and products innovation, for example is one of the few low-cost company that offers snacks and food to passengers aboard a plane, it also has music system and yet operates at minimal cost.
The company is taking advantages brought about by globalization and diversity in business; other than focusing on domestic industry alone, the company has extended its services to Caribbean countries. It also flies to Central and South American routes. The reason behind diversification is to tap a large market and enjoy economies of scale one of attributes used by low cost airlines.
The company has invested largely on good customer service and technological development; when an airline company offers quality customer service, it leads to customer loyalty.
The approach to creation of quality customer service has made the company be awarded the best customer service provider in airline industry in America in 2010. Another notable move by the company was on February 14th 2007, when freights were cancelling due to falling snow, the companies director wrote an apology message to all affected people (Ricky, 2004)..
Financial obligation of the company
The financial section of the company has the responsible of meeting its short term, medium term and long term financial obligations to Investors, creditors and the government. The company employs a just in time supply management systems where it ensures that it has an adequate supply of goods and services; it then pays for the supplies and related costs as expected.
According to financial statements, 2009, the company though tough economic times experienced in 2009 recorded a profits in all four quarters of the years. It generated over $58million. Its operating margin was 8.5%. This money can be used to pay dividends and taxes to the government.
In the same year the report said that it hand over $1billion in cash and short term securities. This working capital is used to meet short-term financial obligations. The company thus has a strong financial strength to meet short term and long term financial obligations (JetBlue official website, 2010).
Strategic elements
Operating Costs
The airline has put on measures that ensure that there is increased efficiency in its operations. It employs a total quality management (TQM) procedure where it aims at creating efficiency in its processes. It detects defects in various areas and addresses them before they paralyze the entire company.
In freight industry fuel, cost takes the highest proportion of costs; the company has bought fuel-efficient jets with an average of four years. Staff has also been taught how to multitask and still maintain a high customer service.
Creating a positive organizational behavior
The company has created a positive organizational culture that facilitates quality decisions and good customer service. It also takes into consideration staffs inputs in different areas, for example idea players in their planes and XM radio was installed after staff intervention. This increased customer service. Managers and subordinates interact freely.
Human resources
The company employs high competent staffs; they are over 12000 dedicated staff. Human resource management is well structured to offer a career path to these staff; salaries paid to employees are slightly higher than normal industry rate average and a number of motivational measures put in place (Wynbrandt, 2004).
Jet Blue’s strategies for 2008 and their effectiveness
Year 2007 and 2008 were challenging to the airline industry because of world economic crisis; in response to these crisis and development of policies to see the company into the future, the company has embarked on management strategies to remain competitive. The following are some of the policies:
Customer service
To create a strong brand name and enhance development of customer loyalty, the company has embarked on improvement of customer service. The company has implemented measures that ensure more satisfied customers. Customers are offered online help in case there is an issue, booking and checking in can also be done online. Customers are also entertained when aboard a plane.
Efficiency
The company has embarked on massive efficiency creation policies. These policies include adopting a six sigma management processes. This is on plane expenses, goods and services provision. Total quality management (T.Q.M.) policies are put in place to ensure that all departments maintain high standards. An efficient supply chain management ensures that there is quality good to the company at one time.
Research and development
To come up with responsive decisions, the company should use scientific decision-making strategy and involve staffs in decision-making. To make decisions the company first interpolates its strengths, weaknesses analysis, and the prevailing external conditions (Thompson, Strickland & Gamble, 2010).
Conclusion
Jet blue is facing intense competition from players in the low cost industry; however, the management has focused on policies to improve continually its services. When the company offers quality service, then it will attain customer loyalty. To enhance improvement of service, the company has embarked on creating positive organizational culture.
References
JetBlue official website. JetBlue. (2010). Retrieved from https://www.jetblue.com/
Ricky W. (2004). Fundamentals of Management. New York: Cengage Publishing Company
Thompson, A.., Strickland, A.J., & Gamble, J.E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York, NY: McGraw-Hill-Irwin.
Wynbrandt, J. (2004). Flying High. New York: John Wiley & Sons Inc (ISBN 0-47165-544-9)