Jet Blue Case Analsis

Jet Blue Business Analysis

Introduction

JetBlue Airways Corporation has established itself as a low-fare passenger airline with a differentiated product and a high-quality customer service. They focus on serving underserved markets and large metropolitan areas that have high average fares. They offer both short-haul and long-haul routes that are point-to-point rather than the 'hub and spoke" route system that has been adopted by most major U.S. airlines.

JetBlue was incorporated in Delaware in August 1998 and started operations in February 2000. On April 11, 2002 they announced their initial public offering of its common stock. Their base of operations is at New York John F. Kennedy International Airport (JFK). On February 14, 2003, JetBlue began their West Coast base of operations at Long Beach Municipal Airport, which serves the Los Angeles area. JetBlue currently operates 180 flights per day.

Profile and Mission

JetBlue's goal is to be the leading low-fare passenger airline by offering customers a differentiated product and high-quality customer service.

JetBlue can offer low-fares due to its low operating costs. Cost per available seat mile was 6.2 cents as compared to the reported average cost per available seat mile of 9.58 cents offered by other major U.S. airlines. JetBlue attributes the low unit costs to the high productivity of its assets and employees. Some of the factors that lead to the low unit costs are the efficient utilization of the aircraft, the operation of only one type of aircraft, which is the Airbus A320, with a single class of service, a productive workforce, and low distribution costs.

JetBlue has acquired an all-new fleet of aircraft, the Airbus A320. They currently operate 45 (53 by the end of 2003), with plans to order 100 more. These planes are expected to start arriving in mid-2005 with scheduled completion set for 2011. Each airplane has a single class layout with a wider cabin space than the competitor's airplanes. In addition, each airplane is equipped with 162 leather seats with free 24-channel satellite T.V. at each seat. The aircraft is fuel-efficient, very reliable, and versatile.

JetBlue has established a strong brand that differentiates itself from its competitors as a safe, reliable, low-fare airline. It does not sacrifice its customer service or an enjoyable flying experience to achieve those features. JetBlue has a strong company culture. It achieves this by hiring friendly, helpful, team-oriented, and customer-focused people.

JetBlue has positioned itself in New York, the nation's largest travel market. JetBlue flies out of lighter congested JFK airport, which has allowed it to provide reliable service. JetBlue has 75 exemption slots that would allow them to fly during the congested period, however two-thirds of the flights are scheduled outside of the peak period.

The management team at JetBlue has considerable experience in the airline industry. For example, the experience comes from successful-low-cost leaders such as Southwest Airlines and the extensive experience of managing airline operations in the New York area.

Finally, JetBlue has a competitive edge with their advanced technology. The use of laptop computers in the cockpit allows the pilot to calculate weight & balance and takeoff performance. Pilots also use the laptops to access manuals in electronic format. JetBlue features ticketless travel and 4 cabin security cameras on each plane. And for further protection, each airplane has a bulletproof cockpit.

Business Model

Low Cost

JetBlue's business model is an integrated low cost/differentiation business strategy. The low cost aspect of the business strategy includes many features, with the most obvious being its low fares. Using new fuel-efficient aircraft allows JetBlue to keep their airplanes in the air for 12.9 hours earning revenue. They utilize the use of secondary airports, offer point-to-point routes, and do not serve meals. JetBlue has low distribution costs, because they only offer ticketless travel. Sixty-three percent of the reservations are made over the Internet, while the remaining thirty-three percent were booked through a reservation agent.

Differentiation

The differentiated aspect of JetBlue's business strategy includes extra-wide leather seats with more legroom. It offers 24-channel live satellite T.V. free at every seat. Pre-assigned seating, superior customer service, and a customer loyalty program.

Financials

JetBlue

JetBlue