Case Analysis On Jet Blue Airlines Management Essay

JetBlue is a low-cost domestic airline in the United States following a rather interesting combination of ‘low-cost and differentiation’ as its strategy. From its inception in 1998, the airline grew to become the 11th largest player in the airline industry in a short span of 6 years. It had been the only other airline apart from Southwest airlines, to have been profitable during the aftermath of the September 11, 2001 attacks on World Trade Center, and at a time when the entire airline industry was experiencing losses.

JetBlue believe they were much stronger, more competitive airline today than they were a year ago. JetBlue made significant operational improvements after the severe ice storm in New York February 2007, including strengthening their operations team and making important changes to the way airline respond to weather and other operational irregularities. These changes quickly produced results, and by the second half of 2007, JetBlue improved their Department of Transportation rankings across all applicable operational metrics. JetBlue also became America’s first and only airline to offer its own Customer Bill of Rights, with meaningful and specific compensation for customers inconvenienced by service disruptions within JetBlue’s control.

2007 was a year of change for JetBlue, as David Neeleman stepped down as chief executive officer in May. David founded JetBlue in 1998 with the goal of bringing humanity back to air travel. His vision has helped transform the airline industry, and we thank him for his great achievements for the company.

1 David Barger, who had been President of JetBlue, is now CEO of JetBlue, replacing David Neelman who will focus on more strategic long-term initiatives for JetBlue as chairman of the board. What advice would you give Mr. Barger about management practices that should be implemented to help improve JetBlue and avoid future situations such as those that occurred in February 2007. Identify various best practices in support of your recommendations. Explain.

To survive a business, an adequate amount of customers are required. Businesses need to sell their products and services and satisfy their customers to the utmost. JetBlue has been practicing this since it started to operate in February 2000.

To an airline which has been promoting their slogan as “bring humanity back to air travel”, suffered an unforeseen incident in February 2007, and had to struggle to regain their customer’s trust and retain them.

To the current CEO and the former President of JetBlue, Mr. David Barger, it could be suggested to follow the success path of the JetBlue’s history, which has been the one of the most successful budget airline in the industry.

Some of the important factors that Mr. Barger should bear in mind and could implement are:

Formulating a contingency plan for crisis situations.

The plan needs to have all possible solutions for different natural disasters and crisis situations.

Formulate a comprehensive crisis and emergency response department.

The department has to work in coordinating the JetBlue’s operations in situations like the February 2007 event.

An Emergency Command Center has to be established in a central location where all aspects of the airline could be coordinated.

The command centre needs to establish a network of communication and provide support for all members including the crewmembers, wherever they are and whatever their role is.

Provide basic training to all the staff members on multitasking, to act upon on special assignments.

On a crisis situation the staff member (from those in the airport operations department right down to those in marketing, benefits, and corporate real estate, all crewmembers in all areas) should have a specific and valuable role to play in handling crisis situations.

They also should be able to handle the work of other departments and also be able to do multiple tasks to make sure that the flight leaves on its scheduled time.

Regular practice sessions of drill exercises and tabletop exercises need to be carried though out the year to keep the emergency teams at their toes.

Maintain a better communication between the port authority, specially at a crisis situation.

As E-ticketing is introduced, a notification option of flight schedules and delays could be informed to the passengers, hours prior to the scheduled departure time.

The passengers are required to provide their personal details to obtain the e-ticket. JetBlue could use this information to notify the passengers via jetblue.com, via telephone, flight information display system, airport announcement, onboard announcement, email or text message

“People see through it when the typical CEO hides behind the podium or the press release,” said Bernstein Crisis Management president Jonathan Bernstein. “(Neeleman) gave the public ample face time and did so with passion in his voice. He talks the talk of everyman, which is exactly what he needed to do.”

If a crisis situation is met by Mr. Barger and if the situation was unfortunately not handles as it was planned, and if the situation goes out of the hand, he needs to try his best keep calm as Mr. David Neelman did on the 14 February 2007 incident. Mr. Barger needs to follow the steps of Mr. Neelman apologizing to the public work hard to regain the trust of the public.

Initial Crisis Response Best Practices

1.  Be quick and try to have initial response within the first hour.

2.  Be accurate by carefully checking all facts.

3.  Be consistent by keeping spokespeople informed of crisis events and key message points.

4.  Make public safety the number one priority.

5.  Use all of the available communication channels including the Internet, Intranet, and mass notification systems.

6.  Provide some expression of concern/sympathy for victims

7.  Remember to include employees in the initial response.

8.  Be ready to provide stress and trauma counseling to victims of the crisis and their families, including employees.

Source: http://www.instituteforpr.com/essential_knowledge/detail/crisis_management_and_communications/

2. Search the internet for magazine articles and stories about JetBlue prior to February 14, 2007. Based on your research (a) identify JetBlue’s business strategy and (b) discuss whether their business practices support its business strategy. Critique specific practices that you believe support its business strategy.

JetBlue’s business strategy

As according to the JetBlue’s Annual report of year 2006, the business strategies and the goal of that they have formulated include to establish as a high quality, low-fare, low-cost passenger airline. They intend to maintain a growth plan that takes advantage of their competitive strengths. The key elements of their strategy are:

Stimulate Demand with Low Fares. JetBlue’s low fares are designed to stimulate demand, particularly from fare-conscious leisure and business travelers who might otherwise have used alternative forms of transportation or would not have traveled at all. By introducing new aircrafts, JetBlue targeted to the mid-sized markets and to further increase the frequency of flights of their existing routes.

Commitment to Low Costs. JetBlue’s low costs have allowed them to offer fares low enough to stimulate new demand and to attract customers away from higher-priced competitors. JetBlue expected to continue to aggressively control costs and maintain their focus on low-cost carrier spending habits.

Offer High Quality Service and Product. JetBlue believes that a key element of their success is that, in addition to offering low fares, the offer to customers a better alternative for air travel. Onboard JetBlue, customers enjoys a distinctive flying experience, which is refer to as the ”JetBlue Experience”, that includes friendly, customer service-oriented employees, new aircraft, roomy leather seats with multiple channels of free LiveTV, many channels of free XM satellite radio and movie channels. The onboard offering includes generous brand name snacks, premium beverages and specially designed products for the overnight flights.

JetBlue makes it a must to communicate openly and honestly with customers about delays, especially when weather or mechanical problems disrupt service. We do not cancel flights, unless absolutely necessary, in order to fulfill our commitment of getting customers to their destination even if it means getting them there late.

Grow JetBlue’s presence in New York City and expand the network. Since the inception of the airline, the focused JetBlue’s primary operations were in New York City. JetBlue is the largest airline at New York’s John F. Kennedy International Airport, as measured by passengers and, by the end of 2006; the domestic operations at JFK were almost equal to those of all the other airlines combined. JetBlue believes that by building the operations in the nation’s largest travel market, more market opportunities would become available to them than if they focused their operations elsewhere.

Operate new and efficient aircraft. By the end of 2006, JetBlue maintains a fleet consisting of only two types of aircraft (Airbus A320 and EMBRAER 190). JetBlue believes in operating with newer fleet, with the latest technologies, which proves to be more efficient and dependable than older aircraft.

JetBlue business practices and its business strategy.

As according to the JetBlue’s website, to date, they have archived 162 awards. This proves their success and that their strategy works for them.

It could be believed that the experience the passengers (except of the victims of the February 2007 incident) had in the journey in JetBlue could be one of the most important reasons why the passengers choose JetBlue over and over again.

In 2006, JetBlue completed 99.6% of their scheduled flights and it was the highest percentage of any major airline that year. Unlike most other airlines, as policy, JetBlue does not overbooking their flights.

Right after the 14 February 2007 incident, JetBlue announced the “Customer Bill of Rights” which has compensated the doubts in hearts of the public. On July 2007, JetBlue announced that its second-quarter revenue increased to $730 million, compared to $612 million in 2006. Second quarter net income grew to $21 million for the quarter, from $14 million the previous year. This shows that right after a crisis situation, the airline made tremendous recovery and gained customers trust.

3. What are the social, political and economic forces influencing JetBlue’s performance and what challenges would you foresee in JetBlue’s strive to reposition its’ brand identity.

In order to identify the Political, Economical, Social and Technological challenges, a PEST analysis could be obtained. The combined factors in the PEST analysis provide a summary of driving forces in the macro environment. The goal of the following analysis will be to display how they will interfere with the organization.

Political issue

September11, terrorists attack: after the terror attack on US certain travel rules and security factors were imposed.

Competitive Airline industry: other airlines such as Virgin America has come in to the market as competitors.

Regulatory factors: US Government imposed a ceiling and a floor pricing, and as a result the competition among the airline becomes very low.

Political stability: US is one of the most politically stable nation. But the country has a high treat by the terrorist groups.

Economic issue

Global recession: during the global recessions, the purchasing power is low and the number of passengers travelling gets reduced.

Rise in Inflation: Due to inflation the number passengers travelling would be less. Considering the on a more positive fact, due to inflation the public chooses budget airlines over the airlines.

Rise in oil prices: Affects the expenses of the airline. Being a low budget airline, JetBlue is obliged to sell the ticket in a very low cost. who tends to

Social issue

Greater customer awareness: Airline has to make the customers aware of their services, and what they save in travelling on JetBlue. Also savings that they would be able to make by travelling on JetBlue.

Security level of customers: It is vital for JetBlue to ensure the safety of their customers and the customer would appreciate the steps taken for their safety by travelling on JetBlue.

Bad services & lost baggage: JetBlue’s one of the priorities are their excellent service and baggage handling.

4. In aid of your proposed recommendations, what cultural dimensions you reckon would augment well towards JetBlue’s business result.

JetBlue believe that they have created a strong and vibrant service-oriented company culture, which is built around their five key values: safety, caring, integrity, fun and passion.

These values are the foundation for the culture of JetBlue, and crewmembers live them every day and use them to make all decisions, in work as well as in life.

Safety is JetBlue’s number one value and it always comes first

Caring, in the form of respect and understanding, are the hallmarks of who JetBlue is. It brings the “JetBlue Experience” to life.

Integrity means doing the right thing, and JetBlue believes it’s the only way to do business.

Fun translates to a friendly work environment where people like to be and when everyone enjoys their jobs, the customers enjoy the “JetBlue Experience”.

Passion for what JetBlue does is what makes their product the best in the industry.

These five values not only differentiate JetBlue’s product; they result in a superior customer and crewmember experience.

The chief executive reinforces those values by being closely involved in the operations setting up examples to the staff in dealing with the customers. The company invests in training its employees on safety procedures. An extensive orientation program is conducted for new employees and are told about the value of customer service as well as the need to be productive and committed to keep costs as low as possible. The friendly and motivating work environment offsets some of the monetary component of pay and thus helps in reducing costs. The culture thus supports the strategy of the company.

5. Identify JetBlue’s obligations to its customers and employees.

Obligations to customers

Information: JetBlue has to notify customers of delays, cancellations and diversions.

Cancellation: All customers, whose flights are cancelled, shall receive a full refund or recommendation on the next available JetBlue flight at no additional charge or fare. If JetBlue cancels a flight within 4 hours of scheduled departure and the cancellation is due to a Controllable Irregularity, JetBlue has reward the passenger with a compensation package.

Departure delays: Due to a Controllable Irregularity if a flight is delayed, the passengers has to be rewarded with a compensation package.

Overbooking:   (As defined in JetBlue’s Contract of Carriage) Customers who are involuntarily denied boarding shall receive $1,000.

In-flight-entertainment: JetBlue offers 36 channels of DIRECTV®. If the LiveTVâ„¢ system is inoperable on flights in the Continental U.S, customers are entitled to a compensation package.

Obligation employees

JetBlue’s great company culture provides a benefit packages for their staff

More culture: the values aren’t just words on a plaque, the company lives by them.

More benefits: benefits are organized for now and for the future.

More traveling: provides benefits for staff and family on special packages.

More diversity – JetBlue is a mix of many nationalities and walks of life.

More style – JetBlue like to make a statement with their innovative product, state-of-the-art facilities and fashionable uniforms

Employ benefits: The rewards of joining the JetBlue crew include access to a superior package of benefits. The highlights of benefits are:

Maximize your health

Medical insurance

Full-time prescription coverage

Dental insurance

Vision insurance

Life insurance

Health risk assessment

Disease management programs

Maximize your wealth

Airline credit union

Voluntary discount programs

Free and reduced rate standby travel on JetBlue flights

Discounted standby travel on other airlines

6. Conclusion

JetBlue Airways is an American low-cost airline owned by JetBlue Airways Corporation. Since its first operation in 2000, the airline has been successfully achieving customers praising and also multiple awards for its services. On 14 February 2007, a JetBlue flight from John F. Kennedy International Airport to Cancún, Mexico was delayed on the ramp in a snowstorm, keeping passengers on the plane for nearly nine hours. Throughout that day, at least nine other JetBlue aircraft were also stranded on the tarmac, keeping the passengers on board. With massive public relation tactics and public apologies then, CEO, Mr. David Neelmen managed to get the public on their side. On 10 May 2007, JetBlue announced Barger’s appointment as CEO, who also retains the position of President. Neeleman, who was named non-executive Chairman of the Board, Mr. Burger needs to reflect his success on the experience that the airline had in the past. By reviewing the “Customer Bill of Rights” and adopting it to the present, Mr. Burger would not find it hard to fly the company in to the high sky. With its strategic plan and customer relation tactics, the success of the airline is not in a far distance.