A strategic analysis of jetblue airways

A strategic analysis of jetblue airwaysThe US airway industry trends rush ca subprogramd airline companies, including pitchy olive-drab to struggle for survival. l mavinliness has caused a on the spur of the momentage of pilots and instructors. Flying schools experience less instructors and hours needed to geartrain refreshing pilots. In 2008, crude oil prices increased to a temper $140 per barrel (Thompson, Strickland, Gamble, 2010). Increased prices of can allowed the airlines to charge passenger fees for discharge surcharges, baggage fees, and beverage and snack fees. Airlines continue to charge fees with increasing fuel prices to generate an airline dodging. After 9/11, Congress passed the Aviation and expatriate Security Act (PDF), by issuing this Act federal employees were tasked to compensate all airport security. Increased screening for baggage and passengers, size limits on fluids and x-ray inspections. With the additional security measures, came financial bu rdens to the airline industry. tarry color strategic intentWhen Jet Blues was founded, David Nelleman wanted air exit to compassionate and fun. The strategic intent was to exsert guests a low drop airline carrier with the comforts of home. As the first airline to outer electronic ticketing, Jet Blue wanted to delay its flights instead of canceling them. Agents were allowed to exit from home and customers enjoyed gourmet snacks, coffees, in-seat televisions with satellite radio and movie channels.Jet Blue began to look into increasing the shareholder and customer values with the expansion of raw(a) Yorks JFK Airport with 8 am and 9 am flights. This was hopeful to Jet Blue executives they wanted to appeal to younger customers, affluent New Yorkers, and those traveling to New York City. Opening up this new terminal has saved $50 one thousand thousand in labor, fuel, and vouchers. Now, the participation serves more than 53 destinations (Thompson et al., 2010).JetBlues financia l objectives winner in achievingAlthough Jet Blues stock dropped by 50% in the five years, tax incomes grew 185% between 2003 and 2007, their operating(a) expenses grew 222% during the same period. The loss in revenue was blamed on the bell of fuel (532% increase) and interest expense (658% increase). Jet Blue decided to take a conservative financial strategy in which they maintained high liquid ratios congenator to the other major(ip) airlines (Thompson et al., 2010). Jet Blue was millions behind the competitor but create new equity capital and credit, which was needed to keep the companionship, and allow them to maintain bullocky liquidity.Assessment of competitive advantageCost. JetBlue operates at a trim put up apostrophize than its competitors. According to Thompson, Strickland Gamble (2010), JetBlues total operating expenses were 12.17 per revenue passenger burl in 2008 versus $18.18 for American Airline, $18.18 for Continental, $20.95 for Delta, $13.85 for Southwe st, $19.13 for United, and $21.45 for US Airways. Its planes, such as, the Airbus A320, tended to be newer than those of its competitors resulting in lower maintenance costs and no maintenance-related fines. The company increased flying succession by minimizing turnaround magazine. Reservation agents worked at home resulting in cost savings as compared to a traditional call center. These measures paid off creating a major competitive advantages in the form of low operating costs that other airlines did not achieve.Organizational culture. JetBlues organizational structure was created establish on five steps. First, the companys values were determined. Then, hiring managers selected employees who mirrored the companys values. Next, the company ensured that the company exceeded employee expectations and to hear to customers. And, finally, the company created a plan to drive excellence. The values established by JetBlue were safety, caring, integrity, fun, and passion. As an example, George Forman grills were set up at the JFK terminal to allow employees to have fun. By only hiring employees that mirrored those values, the company could encourage hiring managers to be inventive during the hiring process and to weed out those that would not be a fit. By making these steps an active part of getting work done, JetBlue developed a strong organizational culture.Human resource practices. JetBlue is a company with a strong condense on people. In anticipation of planing machine pilot shortages they implemented Aviation University Gateway, partnered with universities to identify exceptional candidates, and implemented internship programs. They address a lack of confidence in JetBlues leaders by providing leadership development training. They developed an airline training center at the Orlando internationalistic Airport. To make up for paying employees a lower base honorarium than its competitors, they offered health coverage, profit sharing, and 401k retirement plan s. They also avoided layoffs through voluntary packages and attrition. This rivet on meeting the needs of its employees, flummoxing talent, and creating a talent family was essential competitive benefits that were very difficult to imitate.JetBlues strategies for 2008 beyond and likelihood of success.In 2008, JetBlue adapted new strategies to re-evaluate the way its assets were used, reduce capacity, cut costs, raise fares, grow in select markets, offer assists for military control travel, form strategic partnerships, and increase ancillary revenues. JetBlue formed an alliance with Lufthansa to enable the company to use their terminals at JFK and signed a contract with Continental to provide LiveTV (Thompson et al., 2010). JetBlue cut their capacity by selling nine aircrafts and reduced costs by delaying the delivery of 21 new aircrafts (Thompson et al., 2010). They reduced aircraft utilization rates, suspended service in some cities, and cancelled plan service in revise to cut costs. After choosing Orlando to become a target market, they then brocaded prices but to lower fares than competitors. Furthermore, they provided incentives to corporate travelers, entered into agreements with Expedia for leisure travelers and Travelocity for caper customers, and with Aer Lingus to expand their clear up internationally. To generate revenue, JetBlue created new fees, including a fee for a second bag and for select seats. Even with these strategies, the airlines financial performance shows that they are falling short of expectations during the first six months of 2008 (Thompson et al., 2010).However, 2009 was a successful year for JetBlue. The company was one of only a few to report four consecutive canton of profitability in this year (JetBlue, 2010). A net income of $58 million was generated with an operating margin of 8.5% which was an improvement of more than $140 million compared to 2008. They continue to have one of the strongest liquidity positions in the U.S. airline industry relative to our revenues. In addition, JetBlue generated positive free cash flow for the first time in its history. According to JetBlues 2009 annual report, these results demonstrated the benefits of JetBlues disciplined growth strategy, its focus on managing capital expenditures, rationalizing capacity, maximizing revenue, and controlling costs. Given that the company is well-situated in challenging times, it is likely that the companys sound strategies and cash-rich positions will give the company longevity over the long term.ConclusionsThe purpose of this report was to examine JetBlues business strategy. Trends in the U.S. airline industry impacting crude oil prices, pilot shortages, and 9/11 aviation security measures. Overall, these trends, combined with a weak economy, caused airlines to struggle to survive. JetBlue has survived by a focus on bringing humanity back to air travel at low fares. They focused on providing value, customer service, and u nique extras for customers. Employees benefit from training and a strong organizational culture. The business benefited from measures to cut costs and form lucrative partnerships. Presently, the financial reports of JetBlue showed that the company was outperforming its competitors in a recession making the company highly likely to be successful over the long term.