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