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JETBLUE AIRLINES
TEAM C Jason Gardner Matt Torba Luigi Napolitano
JETBLUE
Above all else, JetBlueAirways is dedicated tobringing humanity backto air travel. We striveto make every part ofyour experience assimple and as pleasantas possible.
Jet Blue Strategies
JETBLUE HISTORY
Feb-1999: Founder David Neeleman announces plan for his new airline.
Jul-1999: JetBlue announces that all seats will have live satellite TV.
11-Feb-2000: First inaugural flight from JFK to Ft. Lauderdale, FL.
21-Dec-2000: Flies its one millionth customer & reports $100 million in flown revenue for 2000.
09-Nov-2001: Installation of bullet-proof, dead-bolted cockpit doors across its fleet
11-Apr-2002: Announcement of initial public offering of its common stock.
JETBLUE HISTORY
13-Jun-2002: Launch of the TrueBlue customer appreciation program.
13-Nov-2003: JetBlue adds two inches more legroom for most customers on all aircraft
16-Mar-2004: JetBlue launches online flight check-in 4-Mar-2005: JetBlue receives FAA's highly coveted
Diamond Certificate of Excellence Award
6-Jun-2005: JetBlue opens state-of-the-art training and support campus at Orlando International Airport
24-Jan-2006: JetBlue begins offering Dunkin' Donuts coffee onboard all flights
JETBLUE HISTORY
23-March-2007: JetBlue celebrates the arrival of its 100th Airbus A320 aircraft
11-December-2007: Complimentary in-flight e-mail and instant messaging
services are introduced on aircraft BetaBlue, a first among U.S. domestic airlines
28-January-2008: Refundable fares are introduced
8-April-2008: Goodbye flying…hello jetting!
20-May-2008: Jetting to Green introduces carbon offsetting and an alternative fuel partnership
8-September-2008: Flights and vacation packages are successfully auctioned on eBay – an airline first
JETBLUE HISTORY
2008:JetBlue becomes the official airline of the Red Sox
2009:JetBlue Airways Announces Plans to Serve Punta Cana, Dominican Republic
2010:JetBlue Airways unveils specially painted Airbus A320 aircraft paying homage to the New York Jets
2011: JetBlue and Virgin Atlantic team up on transatlantic travel
Political Economic Social Technological
POLITICAL
1993 : As a response to the current recession of 1991, President
Regulatory factors
Clinton appointed the National Commission to Ensure a Strong Competitive Airline Industry
(Because in 1978 : Deregulation of the airline industry) 1994: NAFTA is implemented to increase trade to Mexico and Canada
Political stability
1999 : President Clinton’s Impeachment Trial
2000 : George W. Bush is elected to the President of the United States
2001 : September 11 terrorist attacks Hundreds of new flying rules and regulations are enacted.
ECONOMIC
1991: The Persian Gulf War and rising inflation combined to cause a
Recession
Economy began to boom due to low levels of inflation
1999: Led to record low levels of unemployment - 4.2%
Increase in minimum wage from $3.80 in 1990 to $5.15 an hour in 1997
Use of the internet helped lead to all-time high for stock market
2001: Tech bubble burst and Sept. 11 terror attacks lead to 2001 recession.
2007 recession
Rise in Inflation
Rise in oil prices
SOCIAL
1998: Television graced 98% of the households in the US
The average home had 2.4 television sets
The average viewer watched 7 hours a day
74% of US households had cable
1999: 83 1/2% of population had completed 4
years of high school (compared to only 41% in 1960) U.S.
Greater customer awareness
Security level of customers
Bad services & lost baggage
TECHNOLOGICAL 1992: Invention of the World Wide Web
Adoption of standardized software – Windows
Huge increase in available memory for computer systems
Rapid proliferation of internet to homes, schools, offices, etc.
1994 : Beginning of e-ticketing
Summer 1999: Over half the airlines tickets
purchased are e-tickets
Providing personal television
Paperless cockpit
OPPORTUNITIES AND THREATS Since Jet Blue only operates using a single fleet,
they can expand their number of fleets while increasing their number of flights and destinations
Jet Blue can also look into working with other Airlines to provide joint flights
Terrorism is one threat that scares people from boarding airplanes
With the current economic state in recession people may not travel simply because of lack of funds
Creation of Airlines Alliances
STRENGTH
Low Operating cost
Strong brand
Efficient employee
Single fleet
Consumer satisfaction
Effective use of technology
Advertisement
WEAKNESS
Relative new company
Single fleet
Concentration on middle class
Shifting customer’s need
AIRLINE INDUSTRY
NAICS Code: 481111
Scheduled Passenger Air Transportation
This U.S. industry comprises establishments
primarily engaged in providing air transportation of passengers or passengers and freight over regularroutes and on regular schedules.
Establishments in this industry operate flights even if partially loaded.
Scheduled air passenger carriers including commuter and helicopter carriers (except scenic and sightseeing) are included in this industry.
THE AIRLINE INDUSTRYTotal Revenue ($ Billions) % Market Share
American Airlines 23.8 19.14 Delta Airlines 22.7 18.26 United Airlines 20.2 16.25 Continental 15.2 12.22 US Airways 12.1 9.73 Southwest 11 8.85 Lan Airlines 4.5 3.62 TAM S.A. (Brazilian Airlines) 4.2 3.79 Alaska Air Group 3.7 2.98 Skywest 3.5 2.82 JetBlue 3.4 2.74
COMPETITION
LIFE CYCLE CHART
THE AIRLINE INDUSTRY IS IN A LATE MATURITY/EARLY DECLINE STAGE, DUE TO: •DECLINING PROFITS •STANDARDIZED FEATURES •SMALL SCALE PLAYERS AREN’T SURVIVING (ALOHA, SKYBUS AIRLINES,
SOUTHEAST AIRLINES, ETC.) •CUSTOMER LOYALTY IS KEY (FREQUENT FLYER PROGRAMS, CREDIT CARDS
WITH MILEAGE REWARDS)
VALUE CHAIN Inbound Logistics Strong internet presence (jetblue.com,
TrueBlue, Facebook, Twitter) Web-based ticketing Operations Crew-scheduling software Automated baggage handling No meals : efficient turnaround time and
reduced costs Outbound Logistics Airports are chosen carefully Less congested airports
JETBLUE PERCEPTUAL MAP & ACTIVITY SYSTEM
Price
Low
High
Quality
Low
Southwest
American Airlines
United Airlines
Delta
Frontier
AirTran
JetBlue
ACTIVITY SYSTEM
JETBLUE DESTINATIONS & WEBSITE
SOURCES OF VALUE (COMPETITIVE ADVANTAGE)
Positioning (JetBlue looks "to bring humanity back to air
travel.") Brand: Jetting Happy (and the color Blue) Not “flying”, but “Jetting” - a new experience Green and socially conscious Geography: Looking for markets with fewer competitors - not at all the large airports Point-to-point operations, not a hub airport Purchased smaller jets to facilitate smaller
airports Covers domestic flights and is moving
international
SOURCES OF VALUE (COMPETITIVE ADVANTAGE) Capabilities Products/services: Extra amenities Sleep kit, leather seats, TV’s at each seat,
additional leg room Low cost airfare Technology: High on technology TrueBlue rewards service is all online Facebook and Twitter accounts DirectTV and Satellite television/radio on all seats
on all flights
SOURCES OF VALUE (COMPETITIVE ADVANTAGE)Capabilities Processes: majority of ticketing and paperwork is done
online - streamlines the processBusiness Model: Low Price flights No airport hub - avoiding areas with lots of competition Point to point destinations Keep the employees happy - no-layoff policy No unions have been formed - during one attempt, only 35% of machinists wanted to join a union Profit sharing Highly regarded training process
ADDING VALUE WHILE DIFFERENTIATING
and Reducing Costs Removed 6 seats from the A320 fleet Net savings of $30 million over five years Additionally plan to reduce the inflight
crew to 3 Reduces the weight of the aircraft by 904 pounds Marketed to customers “more inches of
legroom than any other U.S. airlines' coach cabin”
PORTERS FIVE FORCES ANALYSIS
BARGAINING POWER OF CUSTOMERS
To reduce the bargaining power of consumers: Customer incentives such as TrueBlue, which allows customers to earn rewards, book flights in an
easier/faster manner, and stay on top of upcoming events/sales. Partnered with AmEx for a jetBlue a credit card Reward miles are used only on jetBlue Customer Loyalty: Flying round trip across the US
two times will earn you a free reward Points are earned relatively quickly Customers can research easily using the internet No switching costs - customers need a reason to
stay
THREAT FROM SUBSTITUTES
Threat is high : numerous other airlines Switching costs among airlines are low Switching costs among other transportation
options are high for everything but short distances Trains, boat and car travel are time intensive Additional partnership with Aer Lingus,
Lufthansa, and Cape Air to keep customers flying within the
partnership High exit barriers - bankruptcy laws allow loss
makers to continue operating
BARGAINING POWER OF
Suppliers Very little threat from suppliers Only two suppliers: Boeing and Airbus Little/no chance of cooperation between suppliers
THREAT OF NEW ENTRANTS
Deregulation made it possible for new entrants
Very high cost of entry Hundreds have gone defunct trying to
compete against the larger airlines Competition among airlines at airports :
must get a certain amount of “slots” at an airport Brand image and loyalty is important New airline must be seen as safe and
reliable
COMPETITIVE RIVALRY
Keeping Employees: No-layoff policy with their employees Led to pilots deciding not to form a union in
2008 Very friendly and nurturing training process Keeping Consumers: Product is differentiated through free food,
tv, extra leg room, rewards system, etc. Focus on different customer segments:
those looking for more than just a low price
VRIO Value: Does a resource enable a firm to exploit an
environmental opportunity, and/or neutralize an environmental threat? YES
Rarity: Is a resource currently controlled by only a small number of competing firms? Are the resources used to make the products/services or the products/services themselves rare? YES
Imitability: do firms without a resource face a cost disadvantage in obtaining or developing it?, Is what a firm is doing difficult to imitate? NO
Organization: Are a firm’s other policies and procedures
organized to support the exploitation of its valuable, rare, and costly-to-imitate resources? YES
RESOURCE EVALUATION
JFK Hub The JFK Airport hub in New York City is a tangible physical resource of JetBlue
Airline Fleet JetBlue’s airline fleet is another tangible physical resource of the firm.
I.T./Operations The information technology and
operations structure of JetBlue is an intangible technology resource. JetBlue is proud of their nearly “paper-less” operations.