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Jet Blue Executing Strategy

Essay by   •  July 18, 2010  •  Case Study  •  1,266 Words (6 Pages)  •  2,489 Views

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Jet Blue's Executing Strategy

The economical recession has taken a toll on individuals and businesses in many different ways. Due to the increased pricing of fuel, the United States (U.S.) airline industry has taken a major hit to their budget. Industry Manager's have taken immediate action to review their company's environment, resources, and competitive position in order to implement new strategies that would help put them at an advantage over the competition.

The U.S. airline industries have had to establish ways to gain customer loyalty over their competitors and yet, compensate for higher fuel prices. One of the first trends to impact the U.S. airlines was to incorporate ancillary revenue by removal of free meals from flights and/or charging for them; this saved the airlines millions of dollars. Other trends lead to company mergers, charging customers to check their luggage and extra bags; as well as charging fees for early boarding benefits.

In effort to join in on the world's environmental green awareness projects, Jet Blue made a decision to charge seven dollars for an environment friendly blanket and pillow combination, which would in turn compensate the passengers with a coupon from a nationally known retailer. Strategic managers in the airline business realized that passengers were willing to pay for certain comforts; therefore another strategic move from Jet Blue was to charge passengers for extra leg space which management estimated that this would bring in revenue of at least 40 million dollars. They also stopped handing out free head phones, charging one dollars for them at the gate and began adding an additional charge of ten dollars more for passengers booking their flights at the airports or over the phone.

Along with increasing ancillary revenues, Jet Blue sought out other ways to cut cost, improve customer service to corporation and business travelers to obtain strategic partnerships, increase growth in chosen areas and raise fares.

Jet Blue's founder David Neeleman envisioned starting an airline that would save passengers money while enjoying top of the line customer service. David Neeleman studied accounting in college and gain travel agency experienced when he opened his own agency after his junior year in college. His travel agency employed 20 workers and conducted eight million dollars in business. In 1983, Neeleman had to close down this business after a partnering business abruptly closed due to lack of capital.

Neeleman joined Morris Air in 1984 where he gained strategy experience as Executive Vice President and later President of the company. He work on strategic plans that he later used at Jet Blue.

In February 2000, David Neeleman successfully began flights out of New York, between Buffalo and New York city. A one way ticket at that time cost passengers twenty-five dollars. Neeleman's main focus was to help customers save money and he was well on his way.

Jet Blue's strategic plan in the airline industry was to have passengers experience a flight with the comforts of home at discounted airline prices. Jet Blue offered customers comfortable leather seating, extra leg room, individual television screens and gourmet snacks. With every strategic plan, changes are constant. As the world changes a company must always revisit the company's strategies to see if changes are necessary. New marketing strategies are constantly needed. Financial crisis, trials and errors, customer preferences and competitors new strategies are guides for strategic managers to use when a plan is in need of an update.

Jet Blue caters to their customers, seeking out distinctive perks that would entice their customers to return. They offered low air fares, and fast turnaround periods, while maintaining lower operating costs than their competitors. A company has created the makings of a successful strategy when a strategic plan fits the company's situation, helps the company accomplish competitive advantages, and aids the company in achieving better performance.

Passenger safety is Jet Blue's number one priority. However, integrity, caring, passion and fun are also amongst their organization culture values. Jet Blue employees are expected to do what's right, at all times. Jet Blue hires employees that reflect values of the company and clearly show a passion for their work. Their organization has a crisis fund that the CEO also contributes to and the beliefs of the entire organization are to ensure that each employee goes above and beyond the call of duty to help others.

Jet Blue's human resource practices concentrate on hiring, paying, and training. Hiring employees consists of a team that reviews resumes, conduct phone interviews and participate in screening and selection process of applicants; after an all day event in which



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