Strategic Management Report: An Analysis of JetBlue Airways' Strategy

This report provides a comprehensive strategic analysis of JetBlue Airways. It begins with an overview of the company, including its history, vision, mission, and strategic objectives. The report then delves into a SWOT analysis, identifying the airline's strengths, weaknesses, opportunities, and threats. Furthermore, it utilizes Porter's Five Forces model to assess the competitive environment and analyzes strategic alternatives. The report also includes recommendations for improvement and a brief financial analysis. The conclusion summarizes the key findings and insights from the case study, offering a thorough examination of JetBlue Airways' strategic positioning and performance within the airline industry.

Strategic Management
(Jet Blue Airways)
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TABLE OF CONTENTS
INTRODUCTION........................................................................................................................3
1) Company Overview..............................................................................................................3
2) Company History..................................................................................................................4
3) Company Vision and Mission..............................................................................................4
4) Strategic Objectives..............................................................................................................5
5) Strategic Analysis.................................................................................................................6
6) SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)................................7
7) Discover the real problem.....................................................................................................9
8) Find the reasonable assumptions or Solutions......................................................................9
9) Strategic Alternatives.........................................................................................................10
10) Recommendations............................................................................................................10
11) Financial Analysis............................................................................................................11
CONCLUSIONS.........................................................................................................................11
REFERENCES...........................................................................................................................13
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Illustration Index
Illustration 1: Porter's 5 force model.............................................................................................8
Illustration 2: Swot analysis........................................................................................................10
Index of Tables
Table 1: Performance of the Jet Blue Airways...........................................................................13
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INTRODUCTION
Strategic management provides direction to the enterprise for achieving the objectives.
It involves the formulation and implementation of actions plans taken by the top level
management to achieve better performance, goals and objectives of the company (Slack,
2015). Manager undertakes bundle of decisions and decides the best result for the firm
performance through strategic management. It is a continuous process that controls the
business and its activities in which the organisation is involved. The present report is based on
the case study of Jet Blue Airways which is a leading airline in the North-east United States.
Furthermore, this report explains the vision, mission and strategic objectives of the mentioned
company. In addition to this, SWOT analysis is done to understand the strengths, weaknesses,
threats and opportunities. Strategic alternatives, other analysis and recommendations to solve
the problems are also covered in this report.
1) Company Overview.
Jet Blue Airways Corporation is stylised as Jet Blue. It is the 5th largest airline in the
UK and a low-cost airline of the America. The mentioned company headquartered in Long
Island City which is the neighbourhood of the New York City. Presently, the number of
employees working in the company is 18,000. Jet Blue was founded by David Neeleman, along
with the lawyer Tom Kelly in 1998. The top investors in the cited industry are Weston Presidio
capital, J. P. Morgan Partners and Soros Private Equity partners (About us, 2016). The airline
was founded in February 1999. In May 2007, Jet Blue airways offered low cost travelling and
also announced a new leadership structure for the company. Along with this, David Neeleman
was replaced from the post of President in 2007. David Barger (Barger) was the new president
and Chief Operating Officer (COO) of the cited airline. Neeleman was designated as the non
executive Chairman of the board under the new leadership structure and David Barger retained
his position as the President of the aforementioned company. The business of Jet Blue was
guided by the five key values which are safety, caring, integrity, fun and passion. Jet Blue was
positioned as a colourful and fun airline from the beginning, since the airline was developed.
The mentioned airline provides several value added services with low fare facilities to the
customers (Atari, 2016).
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In Jet Blue, all the planes are fitted with leather seats instead of cloth fabric. They
allowed passengers to choose their seat in the plane and also provide free personal satellite
television to all the passengers. Jet Blue Airline industry operates a fleet of Air Bus A-320
planes aircraft for transportation.
2) Company History.
David Neeleman was also included in the several of Jet Blue's executives as a formal
Southwest Airlines employees. In February 2007, Jet Blue had experienced the service
breakdown. Due to the adverse whether, result in airline slow reaction had left thousands of
passengers stranded at airports. From this, the service breakdown had a serious financial
repercussion on the cited company along with this, there image as a Customer friendly airline
is also harmed. From last several years, Jet Blue had been one of the most successful airlines in
the United States in tern of profitability and growth. But in, 2005 – 06, the cited company
faced many problems. Due to the changes in the business environment, things started to
undone at the airlines (Kawaura, 2015).
In September 1999, the Jet blue airline was awarded at John F. Kennedy international
Airport because 75 initial take off/landing slots were taken them. On February 2000, the cited
company started commercial operations with an inaugural flight from JFK to Fort Lauder-dale
airport in Florida. After the terrorist attacks in the September 2001, many of the airline industry
faced sharp downturn and gone into bankruptcy protection, but Jet blue was one of only few
US airlines that made a profit in that downturn. In December 2006, to lighten the aircraft by
904 the mentioned company removed a row of seats from their A320s and also reduced the in-
fight crew size from four to three (Bilotkach, Gaggero and Piga, 2015). In 2007, the financial
performance started showing sign of the improvement. At last in 2013, the Jet Blue airline
industry introduced Mint, it is a premium cabin service on transcontinental and select
Caribbean flight.
3) Company Vision and Mission
Jet Blue offers low cost air travel services to the customers, but sought to distinguish
itself by their services. The services they provided are in-flight entertainment, TV on every
seat, satellite radio etc.
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Vision: The vision of Jet Blue airline is to bring humanity back to air travel. Along with this,
to make flying more enjoyable, so that more and more customers will attract ( About us, 2016).
In a line with achieving the above cited vision is, Jet Blue airline provides the best and
affordable services to the customers and also give flight experience to them by providing
superior services to people. It offers competitive fare to the customers for all the destinations.
Mission: The mission of the Jet Blue airline company is to lead the airline market as low cost
and fare passenger airlines. Along with this, to offers high quality customers services to the
passengers with a motive to understand the market and earn profits. The company is committed
to use the newest and the most advanced planes for transporting (Mission Statement, 2016).
Those planes are reliable, fuel efficient, utilises paperless cockpit technology and also have
security cameras. The cited company provides the best price value for their tickets to the
customers. In addition to this, they want to offer those things that their competitors do not
offer. To provide the best services, their mission is to hire the educated employees who are
highly motivated in their work. Training and development programs are conducted so that they
can directly deal with the customers. Their mission is to provide the high value and quality
services to the customers so that the cited company can become the number one in the industry
of airlines.
4) Strategic Objectives
The Jet airline has different strategic objectives. The main objective of the mentioned
company is to position itself differently from the other airlines and also distinguish itself by
their services (Hambrick, Humphrey and Gupta, 2015). To provide personal television to
individual customers on their respected seats. The other objective is to use of more fuel
efficient and less maintenance cost air bus, so that the Jet Blue Airways does not invest much
money on the fuel and earn profits.
Jet Blue offers low cost air travel to the customers so that they do not bear much cost
and provide best services to the customer. The services they provide are in flight entertainment
are TV on every seat, satellite radio etc. The another strategic objective is to use of the
electronic ticketing, so that customers don't have to stand in the queue. This will save the time
of the customers and will also attract them (Smart, Saydalikhodjayav and Craig, 2007). There
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aim is to create fun in the airline, by providing extra services to the people like, free personal
satellite television to all the passengers. The main and the foremost objective is to offer the low
prices fare so to achieve competitive advantage over its competitors. Furthermore, to hired the
best suitable candidate for the post of employees in the industry is the aim of the Jet Blue
airways and also to provide training and development programs to them so they the employees
can easily attract the customers.
5) Strategic Analysis
Porter's five force model
The threat of new entrants (Low)- The threat of enter of new entrant is low for the Jet Blue
airways this is because of the entry level barriers. It requires high cost and high capital required
to enter in the market (Kawaura, 2015). For the new entrant, the profit margin is low and the
new industry are dominated by he cited company.
Bargaining power of buyers (High)- Bargaining power of buyer for the Jet Blue airways is
high, this is because buyers continue to seek the lowest price available while purchasing the
airline tickets. Customers have several options to choose the lowest price tickets for the
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Illustration 1: Porter's 5 force model
(Source: Jurevicius, 2013)

airlines. As the customers are not charged by any switching cost. They are free to switch to
another airline industry (Bilotkach, Gaggero and Piga, 2015).
Bargaining power of suppliers (High)- This is because there are very few numbers of
suppliers are existing in the market. The only two suppliers of Airlines industry are Airbus and
Boeing. As the company have no option to switch from one supplier another. Along with this
the fuel supplier are also limited in the airline industry. As the company requires certain
amount of fuel and it is one of the important cost factor which the company have to bear. The
supplier's product is an important input for the Jet Blue airways, hence can have no option to
stick to another suppliers (Holland, Jacobs and Klein, 2015).
Threat of substitute products and services (Moderate)- The threat for substitute goods and
services for the Jet Blue Airways is Moderate because this company provides low fare to the
customers (Mellat-Parast and et.al., 2015). Due to the terrorist attack and hit by a severe
snowstorm, many of the airlines close their business. Cited company was also affect, as
customers switch to train, car, bus etc.
Rivalry competitors (High)- There are number of competitors that are existing in the market
like Delta, AMR corporation, Southwest airlines, Sky West Inc etc. the competition between
the other airline industries increases, in order to keep their capacity utilization at acceptable
levels. If one airline industry fall there prices, then it results in price war with the other
companies. Furthermore, due to high exit barriers, the rivalry competitors is high because it is
difficult to dispose off grounded planes as there would be very few buyers.
6) SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats).
A Swot analysis is undertaken by the company, so that they can identify their business
internal strength and weaknesses (Frow and et.al., 2015). Along with this their external
opportunities and threats so that they can easily assess the internal and external positioning of
the company.
Strength
 The operating cost of the Jet airways is low. In addition to this, it provides various
services to the customer like in flight entertainment, satellite radio and TV on every
seat at a low fare. This is a strength of the cited company (Atari, 2016).
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 This is the only country, which earn profit after the terrorist attacks in the September
2001.
 It is the strong brand among the people. Also, having efficient number of employees.
All employees are highly educated and highly motivated towards their job.
 Jet Blue Airways have higher customer satisfaction, this is because of providing various
facilities like low fare compare to the other airline industry and serving of light snacks
such as chips, cookies, and crackers, and coffee and canned
to the customers.
Weaknesses
 Compared to the other airline industry, the Jet Blue airlines has less international
destinations. They do not have presence in unsaturated market.
 The other weakness is the industry mostly concentrate on the middle class of people
rather than high class people (Smart, Saydalikhodjayav and Craig, 2007).
 Low fares, high fuel prices, extra services etc. are contributed in bringing economic
performance of Jet blue down. Hence, this are the weaknesses of the mentioned
company.
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Illustration 2: Swot analysis
(Source: SWOT Analysis, 2016)

Opportunities
 The financial position of the Jet Blue airways is strong. They can expand their business
nationally and internationally. Therefore, this is an opportunity for the cited company.
 Adding up of more services for the passengers is an opportunity, as this will increase
the sales and profit of the company (About us, 2016).
 Increase the number of plane will increase the opportunity for additional route.
Threats
 Continue increase in the price of the fuel and also the unavailability of the fuel is the
threat of the company.
 Due to Terrorist attack 9/11 there were reduced in the number of customers to transport.
 Continuously increasing of the competitors, is the other threat for the Jet Blue Airways.
7) Discover the real problem.
The major real problem, the Jet Blue airways is facing the competition with the
competitors. Delta had launched a big sale of discounted tickets
for their customers during the Thanksgiving weekend in 2006, in order to attract the customer
and increase the sales of the company (West and Dellana, 2016). This result in triggering a
price war in the airline industry. With an offering of the discounted tickets, cited company face
any more challenges. In addition to this, the Jet Blue airways also face competition from other
LCCs such as Air Tran and Frontier. Due to the entry of the new airline industry like Virgin
America, the competition was also expected. It was launched in August 2007 and start trying to
provide better services like satellite TV, mood lighting, on board services, meal on demand etc.
compared to the Jet Blue Airways. The Virgin America was positioned as a Value carrier and
announced that it expected to expand to 10 cities within a year of operation (Austin and
Pinkleton, 2015).
In addition to this, rising fuel cost were also the real problem, which the mentioned
company was facing. As, this were potentially
increasing operational expenses as the airline’s fleet aged and operations expanded. Hence,
The price war between the airline industry and the rising of the fuel cost are the major
problems which the Jet Blue Airways is facing.
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8) Find the reasonable assumptions or Solutions
Mentioned company adopted different solutions to reduce the problems. To cut down
the competition with the Virgin America, Jet Blue Airways, combined low fares with several
value added services to the customers. The cited company start improving customer services
without adding to operating cost. Company providing additional services at a nominal fares. As
to remove the competition, Jet Blue all the planes which are operated by them were fitted with
leather seats instead of cloths one (Ki, Kim and Ledingham, 2015). Fitted of leather seats will
attract the customers and feel more relaxed. In addition, to this, they also start providing
assigned seating and allowed the passengers to choose their seat in the plane according to their
convenience. The another solution is they start serving the light snacks to the passengers which
is complimentary for those who are traveling in their flight. To reduce the problem of
continuously increasing of the fuel price, Jet Blue Airways choose Airbus A-320s because, this
plane is easy to maintain and also more fuel efficient. Therefore, operating a uniform fleet of
planes for transporting is economical along with this, it also reduced the cost in the areas of
pilot training, maintenance and spare parts. Hence, these are solution which will help the cited
company in solving the problems (Rosenbaum-Elliott, Percy and Pervan, 2015).
9) Strategic Alternatives
There are several strategic alternatives which can be taken by the cited company to
reduce the problems (Rothaermel, 2015). Some of them are using of electronic ticketing, start
offering travel packages, spread out more terminals etc. They can start offering business and
vacation packages to the people. This offering to the people would be easy for the Jet Blue
airways to incorporate into the existing company. They can include airline tickets, hotels and
car rental in the packages. As this will help the cited company in making expansion of the
company. As this will take time as well as money, but their expenses would be worth in the
future. They can also spread out the more terminals internationally. As this will increase the
number of destinations existing by their current terminals. By using of the electronic ticketing,
the queue problem within the people will reduce (Bettis and et.al., 2015). Customers can easily
buy the tickets without standing in the queue which result convenience for the customer.
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10) Recommendations
The best option which the Jet Blue Airways can choose to beat the competitors is they
can start offering the business packages as well as vacation packages. They can advertise about
the packages to the people through the media. They can advertise on TV, Radio and also on
online. By this the cited company can boost revenues and popularity of the packages and
airlines (Hambrick, Humphrey and Gupta, 2015). The offering of the packages to the people
would be easy for them to incorporate into the competitors like Delta, Virgin America etc. As,
this will improve the performance, sales and profit of the company. Along with this, it helps in
reducing the problem which the Jet Blue Airline industry is facing.
11) Financial Analysis
Table 1: Performance of the Jet Blue Airways
Period Ending on March 31, 2006
($ millions)
September 30,
2006 ($ millions)
March 31, 2007
($ millions)
Operating Revenues 490 628 608
Operating Expenses 515 587 621
Operating Income (loss) -25 41 -13
Income Tax Expense (benefit) -15 1 -23
Net Income -10 40 10
The Half yearly performance of the Jet Blue Airways is assessed. In the year of March
2006, Jet Blue posted a loss of $17 million on revenue of $490 million. This is due to increase
in the operating expenses of the company (Annual Reports, 2007). On September 2006, cited
company earned net profit of $40 million on the revenue of $628 million, compared to the loss
of $10 million in March 2006. Due to increase in the operating expenses, the net income of the
mentioned company decrease to $10 million on March 2007.
CONCLUSIONS
The aforementioned report is based on the Jet Blue Airways and this explains the
history of the company. It concludes that, Jet blue was one of only few US airlines that made a
profit in that downturn, after the terrorist attacks in the September 2001. Furthermore, the
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