JetBlue

Case 22
Anna Panasenko, Jessie Golata,
Kelsey Morrison, Angel Gonzalez

Key Information
Financial Analysis

Agenda

External Analysis
Internal Analysis
Strategy
Recommendation

Key Information
Vision: To provide the best, most affordable flight experience of any air carrier while providing
superior service.
Mission: Jet Blues mission is to be the leading low-fare, low-cost passenger airline offering high
quality customer service to underserved markets and customers who are looking for the best value
in their flight. We have the newest most advanced planes that are reliable, safe, fuel efficient,
utilizing advanced technologies, and unique in multimedia entertainments. Our philosophy is to give
customers the best price value for their ticket and maintaining distinctive services. At JetBlue, we
hire highly motivated employees and train them to reach a high level of competency to provide
better experiences to customers. We believe that our high-value, high quality service philosophy will
lead the way to becoming the number one in the industry.

Value Chain Analysis - Primary

Inbound

Outbound

Wont get bumped

Exclusive airports

Online booking

Larger aircrafts

Operations
Paperless
Luggage handling
automation

Marketing & Sales

Call center employees work
from home
Market segment targeted
specifically
Effectively priced

Value Chain Analysis Supportive

Procurement: Well-conceived aircraft procurement plan to support growth
Technology Development: Paperless. E-tickets. Automated bag handling
Human Resource Management: Competitive salaries, bonuses, and benefits
unheard of in the industry. Offer training and development as well as
advancement opportunities
General Admin: Experienced Staff, Hands-on Management

Financial Analysis

Financial Analysis

Financial Analysis

External Analysis
5 Forces Model
Bargaining Power from Customers - High
Research easier via internet
True Blue Loyalty Program - building points

Threat from Substitutes - High

numerous other airlines

Bargaining Power from Suppliers - High

Airbus and Boeing only

External Analysis
Threat of New Entrants - Low
High cost of entry
Low profit margin

Competitive Rivalry - High

Keeping consumers
more amenities
market segmentation
low fares better quality
Numerous competitors

External Analysis
Key Rivals
Spirit, Southwest, Delta, American, Lufthansa, Virgin
Any Major Airline with similar destinations and low fares

Stage of Industry Life Cycle

Airline industry is in the late maturity and early decline stage
profits are declining
features are commonplace
stagnant innovation
more need of customer loyalty

External Analysis
Macro Environments
Legal
1978 Deregulation of airline industry
1993 Clinton appointed the National Commission to ensure competitive airline
industry
2001 more regulation after 9/11
Social
September 11, 2001 Terrorist attack
1992 invention of WorldWideWeb
1994 beginning of e-ticketing

Internal Analysis - VRIO

Reso
urce

Valu
able

Rare

Inimi
table

Orga
nize
d

InFligh
t
Ente
rtain
ment

Yes

Yes

No

Reali
zed

Assi
gned
Seati
ng

Yes

Yes

No

Reali
zed

Cust
omer
Bill

Yes

Yes

No

Reali
zed

Internal Analysis - SWOT

Strengths

Weaknesses

Low Operating Cost

Relatively New Company

Single Fleet

Single Fleet

Strong Brand
Customer Satisfaction
Technological Advantages
Advertisement

Concentration on Middle Class

Shifting Customers Needs

Internal Analysis - SWOT

Opportunities

Threats

Lucrative Industry

Terrorist Incidents

Route and Fleet Expansion

Security

Creation of Airline Alliances

Technological Improvements
Deregulation of International Air
Travel

Increasing Fuel Prices

Strong Competition
Global Crisis
New Regulations by FAA

Strategy
How JetBlue Implements Porters Three Generic Strategies
Cost Leadership: JetBlue is creating a low-cost position relative to its peers
by reducing value-chain inefficiencies
Differentiation: JetBlue differentiates through its in-flight entertainment,
assigned seating, and customer bill of rights
Focus: creates a targeted geographic segment through limited routes and
a single fleet, where its advantage can be obtained by differentiation or
cost leadership

SouthWest Competitive
Strategies
1. Bags Fly Free
2. International Presence - with AirTran
3. Low-Cost Strategy

Strategic Recommendations
BCG Portfolio Matrix

U.S. Dept of Transportation

Strategic Recommendations

Acquisitions

Acquire a smaller airline to increase market share

Joint Ventures

Agreements with other airlines to facilitate ticket purchase and transfers to/from JetBlue

Divestitures

Bibliography
https://sites.google.com/site/admn703ai/vrio-analysis
http://mbacase.blogspot.com/2012/08/jetblue-airways.html
https://sites.google.com/site/admn703ai/the-team
http://www.transtats.bts.gov/