EMG166 ( Strategic Planning and Management)

Section T, 3rd Quarter SY2014-2015

GROUP 2 (FABIAN, Germaine T.; PINEDA, Krizcynia S.; VILLAFLOR, Michaela Kim B.)

DATE: March 13, 2015

Case No. 3 : Jetblue Airways Corporation - 2009EMG166 ( Strategic Planning and Management)

Section T, 3rd Quarter SY2014-2015

GROUP 2 (FABIAN, Germaine T.; PINEDA, Krizcynia S.; VILLAFLOR, Michaela Kim B.)

DATE: March 13, 2015

Case No. 3 : Jetblue Airways Corporation - 2009

Company Overview

JetBlue was incorporated in Delaware in 1998 and commenced service in 2000 with primary base of operations at New Yorks John F. Kennedy International Airport. The companys goal has been to establish itself as a leading low-fare, low-cost passenger airline by offering its customers high-quality customer service and a differentiated product. The airline focused on serving underserved markets and large metropolitan areas that have high average fares with a diversified geographic flight schedules that includes both shortand long-haul routes.

From its first day of operation, JetBlue differentiated itself from other airlines by:

Starting the business with a lot of moneythe only carrier with over $100 million startup capital

Flying new planes that are more reliable and certainly more efficient. Seats are covered in leather with individual monitors for viewing programs from DirecTV.

Hiring the best people by screening the employees rigorously, offering exceptional training, and equipping them with best tools. The employees are highly motivated and are trained to be service oriented.

Focusing on service by listening to customers and ensuring their flight is joyful and friendly.

Industry Overview

Airline profitability is influenced by the state of the economy, international events, industry capacity, and offerings by other airlines in the forms of bundling and packaging (with hotels, cruise lines, etc.). The airlines also compete through flight scheduling, availability, fares, routes served, safety records, on-time arrival, and customer service reputation. Passengers are increasingly interested low price as well as comfort and amenities of the aircraft. Therefore, airlines are designing more living space into new planes and retrofitting old ones. For example, Delta Air Lines and American Airlines are rewiring their planes to provide Wi-Fi access and enhanced in-flight entertainment options, including live TV

Company Highlights

In 2006, JetBlue published its first corporate sustainability report, the 1st Annual Environmental and Social Report 2006, addressing its environmental efforts concerning greenhouse gas emissions, conservation efforts, and social responsibility initiatives. In regard to community services, the company also is committed and has aligned itself with not-for-profit organizations that focus on children, education, communities, and the environment

In 2007, JetBlue introduced the JetBlue Airways Customer Bill of Rights, which provides compensation to customers who experience avoidable inconveniences (and some unavoidable circumstances). The Bill of Rights commits JetBlue to perform at high service standards by holding it accountable if it does not. The company is the first and currently the only major airline to provide such a fundamental benefit for its customers

In 2008, JetBlue introduced refundable fares and new payment options for customers, and it also launched jetblue.com en espaol, a Spanish version of their Web site, http://hola.jetblue.com/enes/.JetBlue has high aircraft utilization as it spreads fixed costs over many flights and available seat miles.

In 2009, the companies began battling each other in the same airports, such as New York, Baltimore, Washington, D.C., and most recently Boston. These two lost-cost carriers use to cross each other only in a few cities.

Issues

In April 2009, the fear of a swine flu outbreak shocked the airline industry and airline stocks dropped by almost 16 percent. JetBlues stock slipped by 7 percent to $4.91. A bad outbreak could be disastrous for this industry because most airlines already are suffering from high unemployment, slow economic growth, and significant drops in business and leisure travel.

JetBlue enters into crude oil option contracts and swap agreements to partially protect itself against significant increases in fuel prices

Transport-related expenses, principally payments from mainline carriers to their regional airline partners, constituted the industrys second-largest cost at 16.9 percent, up 4.3 percent to a total of $27.6 billion.

Rapid increasing number of level of obesity in the United States. It is one of the reasons for increasing the amount of fuel cost. One study reported that in 2000, obese passengers cost airlines an extra $275 million in fuel costs by forcing aircraft to burn 350 more gallons of fuel due to extra weight.

Rising break-even load factor is also threatening airline finances. Since 2000, most passenger airlines have been suffering in a sharp increase in their break-even load factor, measured by the number of seats they have to sell to cover operating expenses. The breakeven load factor is determined by passenger yield, which has been fallen due to recently bankrupt carriers and unit costs that have been rising due to many factors such as labor wages and fuel costs.

Company Mission

The mission of Jetblue Airways is to become a down-to-earth company with friendly, hard-working and good-humored crewmembers. JetBlues culture was founded and built on five simple company values- Safety, Caring, Integrity, Fun and Passion which we use as the basos for all decisions, in work and life. These five value not only differentiate JetBlue from the rest; they ensure a superior customer and crewmember experience.

Safety is our number one value and it always cones first. Caring, in the form of respect and understanding, is the hallmark of who we are. It brings the JetBlue experience to life. Integrity means doing the right thing; we believe its the only way to do business. Fun translates to a friendly work environment where people like to be when we enjoy our jobs, our customers enjoy the JetBlue experience. Passion for what we do is what makes our product the best in the industry.

Jetblue Airways services offered includes:

Roomy leather seats with lots of leg room

36 channels of free DirecTv

100 channels of free XM satelite radio

Free and unlimited brand-name snacks and bevarages

Low-fare,low cost offering high quality customer service and a distinguish product. Their focus is on serving underserved markets and large metropolitan areas that have high average fares with a diversified geographic flight schedules that includes both short- and long- haul routes.Internal/External AnalysisSwot analysis

JetBlue airways has the strength on providing lower fares compare to their competitors. Weakness on the fuel expenses like other airline company. 5 Forces Analysis

Threat of New Entrants. The growing number of Low Costs Carriers in the aviation industry had led to a fall in the average fares. Rivalry among Existing Firms. Many airlines that were operating began to recapture the market share. These airlines were able to undercut competition by offering very low fares, taking advantage of the protection of the bankruptcy laws. Bargaining Power of Suppliers. Aircraft manufacturers tend to sell aircraft at higher interest rate because of a limited number of substitute goods. Aircraft would also arrive to airlines later than agreed, causing delays and loss of revenue and image. Power of Other Stakeholders.Increasing Quality, safety, and environmental regulations. Bargaining Power of Buyers. Price is going to dictate with whom buyers spend their money. The more buyers a company and more source of potential revenue there is.Internal Factor Evaluation Matrix (IFE)

External Factor Evaluation (EFE)Competitive Profile Matrix (CPM)

The above analysis reveals that company scores lowest in advertising and that it needs to be improved. JetBlue Airways performs or responds better when it comes to customer service as compared to Southwest Airlines. They know how to use their strengths to neutralize threats and to exploit opportunities.

Strategic Position and Action Evaluation Matrix (SPACE)

The above analysis reveals that company scores lowest in advertising and that it needs improvement.

When it comes to Customer Service, JetBlue Airways performs or responds better as compared to Southwest Airways They know how to use their strengths to neutralize threats and to exploit opportunities.IE Matrix

Based on the result, JetBlue Airways has the IFE score of 2.81 and EFE score of 2.86 which fall under the cell V which is to hold and maintain strategies. Market penetration and product development are two commonly employed strategies for these types of divisions. JetBlue airways in the future should hold and maintain their position using Market Penetration and Product Development Strategies.

Strategic ImplicationsThe resultant strategy is Aggressive which implies that JetBlue should:

Continue to invest in innovation to sustain and build the competitive advantage which exists.

Cover any moves made by competitors to develop alternative competitive advantages.

Close off the opportunities to build a differentiated value proposition that may prove attractive to segments of the market.

Raise the stakes for other competitors to play the game.

Move into related markets which complement the existing position. Goals and Long-term ObjectivesJetBlues goals and long term objectives include:

1. The number one goal of JetBlue is to provide the best, most affordable flight experience of any air carrier while providing superior service.

2. Put more effort in raising awareness about JetBlue Airways and what we stand for.

3. Continue giving customers the best price value for their ticket, offering things our competitors don't offer.

4. Expansion Continued.

5. Should only revised- to further development-to incorporate new technoclogies-to facilitate growth and profitability.

Recommendations

International Operations

JetBlue should introduce new flights for the international travel destinations with

differentiated services and maximize management flexibility to adapt its growth

strategy.

Increase advertisement and expand to other media

Market penetration by advertising on TV, Radio, and Online to boost revenues

and popularity of the airline. Social media also greatly reduces the cost associated

with marketing.

Effective use of Reward Policy

The reward policy of the JetBlue can be made more effective by offering true blue rewards giving massive discounts on passenger seats left empty on the last moments.

Build partnership Travel Website.

In this website, users can look up information about different travel destinations; find hotels, restaurants, and hot spots and book a fight through JetBlue.References

http://www.jetblue.com/about/pressroom/http://southwest.investorroom.com/company-reportsDavid.Fred R. Strategic Management Concepts and Cases, Prentice Hall (13th Edition)

En.wikipedia.org/wiki/JetBlue