Jetblue Airways Growing Pains Case Study 17

JETBLUE AIRWAYS: GROWING PAINS I. Introduction A. Executive Summary 1. Summary statement of the problem: JetBlue Airways was a fairly new airline that was going up against such airlines like Southwest, AirTran, and Delta. Started in 1999, JetBlue Airway was able to turn profits fairly quickly; in 2001 the company had profits of $38.5 million (George & Regani, 2008, 20-4). From there on it seemed that the company would continue to be profitable especially with expansions in the works; moving into areas that competitors ignored, ordering more planes, expanding to the west coast, and building a new terminal at JFK. However, due to various external and internal factors the company once again posted losses in 2005 and 2006. 2. Summary statement of the recommended solution: The problem is that JetBlue is expanding too fast and too soon to keep up. The company needs to slow their growth so that the company can keep up with the pace. Furthermore, the company needs to continue to do what the company does best; superior customer service, low fares, short-to-medium routes instead of offering what the competitors are doing. This is lessening JetBlue’s differentiation from other companies creating just another option for customers. Finally, JetBlue needs to continue to make cuts as outlined in the Return to Profit plan so that the company reduces expenses. B. The Situation JetBlue Airways was a low-cost carrier that was founded in 1999 by David Neeleman. JetBlue was able to become competitive by offering passengers low fares and several value-added services such as leather seats, snacks instead of full meals, and free personal satellite television. JetBlue’s success was due to a variety of reasons. For one thing, JetBlue mainly used secondary airports targeting a market that other airlines missed. Furthermore, JetBlue used Airbus A-320 airplanes instead of Boeing 737s which ended up saving money because of maintenance and they were more fuel-efficient. Also, JetBlue created a family-like work culture that helped their workforce to have a positive attitude thus giving customers superior customer service.


Case Details:

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Case Code:BSTR277For delivery in electronic format: Rs. 400;
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Themes

Business Strategy
Case Length:18 Pages
Period:2000-2007
Pub Date:2008
Teaching Note:Available
Organization:JetBlue
Industry:Aviation
Countries :USA

Abstract:

This case examines JetBlue's business model and studies the factors behind the airline's initial rapid growth and early success.

It raises the question of whether JetBlue's growth in its early years may be considered unsustainable as argued by some analysts.

It also discusses some of the factors that were responsible for JetBlue's later troubles and the airline's Return to Profitability plan that aimed at helping it streamline its operations.

The case ends with a commentary on the challenges that JetBlue might face in the future.


Issues:

» The growth of a startup in a turbulent and highly competitive industry, and the challenges it faces.

» The difficulties in sustaining the initial momentum of growth for a company operating in a volatile business environment.

» The effect of a dynamic business environment on a company's performance and the importance of strong strategic planning in sustaining long term growth.

Contents:

Keywords:

JetBlue Airways Inc, US Airline Industry, Low cost carriers, Value Player, Full Service Airlines, Budget airlines, Return to Profitability Plan, Growth Strategies

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