JetBlue Airlines Business Strategy

This assignment examines the effective business strategies employed by JetBlue Airlines. It delves into the airline's hybrid business model, a combination of low-cost efficiency and diverse route offerings. The analysis highlights key success factors such as high PRASM from domestic operations, customer satisfaction, efficient aircraft utilization, and the expansion into premium service markets like Los Angeles and San Francisco.

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BUSINESS STRATEGY AND PLANNING: JETBLUE AIRLINES
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Business Strategy and Planning: JetBlue Airlines
JetBlue’s success has been developed on low cost and customer friendly business strategies.
JetBlue presents itself as a cost-sensitive and the no-nonsense airline which is dedicated to
providing convenient and quality services to the customers at a lower cost. Through its hybrid
business model, JetBlue successes rebuilt itself after the 2007 snowstorm crisis that paralyzed its
operations (Wei, et al., 2013, p. 88).
In the intense competitive airline industry, customers enjoy a high bargaining power because of
numerous choices. Customers only choose services at a lower price. Likewise, airlines use price
as a competitive strategy (Brown, et al., 2007, p. 123). Hybrid business model is defined as a mix
of several models with an aim of creating a competitive strategy. In the airline industry, the
model is a combination of low-cost effectiveness and broader and diversified routes and services
that were traditionally offered by the legacy carriers. The legacy carriers use low-cost strategies,
point to point routes, and franchised regional routes to increase their load factors as well as
gaining passenger traffic (Sekhar, 2009, p. 67). To compete with the legacy carriers, JetBlue, a
low-cost carrier, combine both long haul and short-haul routes. Conversely, the airline has also
ventured into inter-regional and international routes. Although the model is short-lived and needs
to be reviewed from time to time, it has helped JetBlue to enter the markets that were previously
controlled by the legacy carriers (Mazzucato, 2002, p. 55).
There are several success factors associated with the JetBlue’s hybrid business strategy,
First, there is a rise of PRASM resulting from Domestic Operations. PRASM refers to Passenger
revenue per available seat mile. PRASM is a fundamental metric in the industry. During the
2015/16 period, legacy carriers such as Delta, American, and United faced the adverse decline of

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their unit revenue after the dollar’s strengthening against other currencies. Travelling from other
countries to the US was expensive which led to revenue reduction by 8% compared to the
previous year. However, JetBlue remained immune to the fluctuation of the foreign currency as a
result of its huge presence in the domestic market. JetBlue’s unit revenue rose during the period
while its stock grew by 56% to a high of $27.4 per share. This was an achievement considering
that the shares of legacy carriers decline by approximately 10%. Therefore, JetBlue’s domestic
presence played a major role in outperforming its competitors (Crowther & Seifi , 2015, p. 55).
The second factor is a low cost advantage. Considering that JetBlue relies on low-cost strategy
and its dominance in the domestic market, it enjoyed a cost advantage over other competitors.
Cost advantage was used by JetBlue to penetrate into territories previously controlled by larger
airlines hence generating a high revenue margin. Actually, JetBlue’s profit margin grew by 14%
as compared to 7% of the industry (Osterwalder & Pigneur, 2010, p. 137). Realizing that the oil
prices were likely to be non-sustainable in the long term, JetBlue invested in fuel-efficient
aircraft as a strategy to keep its operations expenses low. With lower unit costs combined with
low-cost advantage, there is a higher probability of JetBlue extending its margin in the future.
Third, JetBlue’s entry into the high-value market was another advantage to its competitiveness.
With its ‘Mint’ premium services, JetBlue now serves the high-value San Francisco and Los
Angeles markets. The services targeted towards corporate and elite passengers has enhanced the
airline’s passenger traffic. The popularity of the Mint premium service is associated with
affordable high-quality services. With the services of the services in the two markets, JetBlue
decided to venture into the Boston-Los Angeles and Boston-San Francisco routes (Crowther &
Seifi , 2015, p. 66).

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Fourth, JetBlue enjoys customer satisfaction. Customer satisfaction is a major driver of business
success. When customers are satisfied, they remain loyal to the company as well as attracting
new customers through the word of mouth. Loyalty and expansion of customer base translate
into an increase in revenue. JetBlue enjoys highest customer satisfaction score in the industry
compared to its competitors (Viardot, 2017, p. 65).
Fifth, JetBlue enjoys higher aircraft utilization rate in the industry. Compared to the legacy
carriers, domestic carrier airlines like JetBlue utilizes its aircraft better which results in low
operating costs. Short distance trips allow a high number of trips covered in a year. High
utilization of aircraft increases revenue and profit margin (Raghunath & Rose, 2017, p. 39).
It is believed that JetBlue’s domestic presence and low-cost advantage gives it the ability to
outdo its closest competitors. With the hybrid business model in place, the airline has an upper
hand of outperforming larger competitors in the future as well. With the Mint service and the
ability to penetrate into high-value market, JetBlue’s sustainability in the long term is
predictable.

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References List
Brown, J., Schiling, C. & Wuerffel, D., 2007. The Competitive Edge: How to Win Every Time
You Compete. New York: Tyndale House Publishers, Inc.
Crowther, D. & Seifi , S., 2015. Corporate Governance and International Business. 1 ed.
London,UK: Bookboon.com.
Mazzucato, M., 2002. Strategy for Business. 1 ed. London: SAGE Publications Ltd .
Osterwalder, A. & Pigneur, Y., 2010. Business Model Generation: A Handbook for Visionaries,
Game Changers, and Challengers. 1st edition ed. New York: John Wiley and Sons.
Raghunath, S. & Rose, E. L. L., 2017. International Business Strategy. 1 ed. London,UK:
Palgrave Macmillan.
Sekhar, G. V. S., 2009. Business Policy and Strategic Management. 1 ed. New Delhi: I. K.
International Pvt Ltd.
Viardot, E., 2017. The Timeless Principles of Successful Business Strategy. 2 ed. Berlin
Heidelberg: Springer-Verlag Berlin Heidelberg.
Wei, W., Zhu, W. & Lin, G., 2013. Approaching Business Models from an Economic
Perspective. 1 ed. Berlin Heidelberg: Springer-Verlag Berlin Heidelberg.