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Jet Blue Term Paper

Essay by   •  March 1, 2011  •  Research Paper  •  1,858 Words (8 Pages)  •  1,757 Views

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JetBlue Airways Corporation has been a rapidly growing discount airline and biggest success story in the industry by using its strong customer service considerations and low fares to build a solid, growing customer base.

David Neeleman, CEO and director began JetBlue in 1999 and flying since 2000 after his previous airline company-Morris Air was brought by Herb Kelleher, the Southwest Airline founder. He signed a 5-year non-compete agreement not to launch another airline. Kelleher hired Neeleman at Southwest but was not happy with the structured environment he did not control and was fired (Essentials of Entrepreneurship p78).

JetBlue's strategy is developed around its core competencies. The company has benefited by being able to start with a clean slate. It has a last-mover advantage and its information technology infrastructure and use has given JetBlue a sustainable competitive advantage.

Starting with a clean slate gave Neeleman and President, COO David Barger the advantage of handpicking a management and supportive staff that reflected their vision.

JetBlue's management has numerous years of airline industry experience. The team members have catered to customers, they've been customers, and they have extensive backgrounds on what it takes to be successful in the industry.

In the early planning process, 20 members of JetBlue's management staff met for two days and settled on five core values: safety, caring, integrity, fun and passion. These five values result in a superior customer and crewmember experience (Motley Fool).

JetBlue is different from other discount airlines. While Southwest and JetBlue use the same type of jet (Boeing 737 for Southwest and Airbus A320 for JetBlue), Jet Blue planes accommodate 162 passengers versus Southwest holds 135 passengers. The use of this plane allows the maintenance costs to stay low. This low maintenance cost is lower than any other carrier in the industry. JetBlue also focuses on longer flights (Essentials).

Neeleman decided to upholster every seat in leather, which costs $15,000 more per plane. The leather surfaces are easier to maintain and last much longer (Essentials).

Another advantage is its workforce is nonunion. Neeleman is not against unionization but he would prefer to avoid them. He feels if management and employees trust one another and if people feel they are compensated fairly, he believes that there's no need for a third party. (Fast Company). There is always more flexibility in job assignments. Pilots pitch in to help flight attendants clean cabinets, which keeps flight turnaround times short. Other things pilots are participating in are creating airport diagrams to help new colleagues. Another pilot helps with financial analysis for the company. And another makes an inventory of her fellow pilots' skills in hope of identifying other abilities that might be useful to the airline. Reservation agents' work from home instead of an expensive call center. The company also offers stock option to its employees, who are actually called crewmembers (Fast Company).

As a last mover, JetBlue has capitalized on competitor's strengths. The company realized Southwest's greatest competencies and implemented them into its strategic plan. JetBlue adopted a corporate culture similar to Southwest where the employees are encouraged to take risks, enjoy themselves and do anything to make the customers happy.

By JetBlue being the leader in the discount airline category, it has not stopped Neeleman from making sure his customers still deserve the best. He gets on a plane at least once a week, talking to customers, asking their opinion. Sometimes he even helps load and unload bags with the baggage handlers. No other airline executive does this (Essentials).

While other airline CEOs are sleeping and counting money, David Neeleman is constantly making sure his customer service is up to par. He asked to be paged if any JetBlue planes are more than a minute late. Other airline employees are structured to deal go by procedure only (Essentials).

Mr. Neeleman is an innovator and so is his airline. He made JetBlue the only U.S. airline to be 100% ticketless (jetblue.com). And with this, the company causes problems for other airlines due to their prices. Neeleman believes the JetBlue can compete on more than price. In some markets, its passengers are willing to pay fares that average $20 more than on American and Song. Also, he installed security cameras at each passenger for customer and crew safety, keeping pilots aware of passengers' activity.

He installed bulletproof cockpit doors in the whole fleet. The cockpits are sealed off with steel doors that only the pilots can open; preventing terrorist attacks on JetBlue planes.

JetBlue's target market was people who would drive or take an expensive coach flight. Catering to passengers was always the key, but they also worked on attracting business professionals and people traveling that are from New York who could pay more but would like to save with compromising their standards (Fast Company).

JetBlue established a brand quickly. The branding strategy was integral part of the startup process and has remained at the forefront.

CEO Neeleman has bigger plans for JetBlue. He wants to vault his startup airline into the ranks of the major airlines. He plans in adding 290 planes and having 250,000 employees within 7 years. JetBlue almost recorded $1 billion in revenue in 2004 but is far less compared to American Airlines ($17.4 billion), United ($13.7 billion), or Delta ($13.3 billion) (Fast Company).

JetBlue is embarking on a big journey. In 2005, they hired 1,700 and 1,800 employees. It's introducing a new plane every three weeks and adding one every 10 days including a second type of aircraft (Fast Company).

One of the latest tools designed to help JetBlue as it grows is an operational recovery system. With this system and during any disruption, like bad weather, it allows selecting various goals before rerouting planes. The software can also come up with a solution for canceled flights or delays beyond three hours and calculate how much it would cost the company to do so.

As JetBlue manages to grow, it must standardize many other things it does to avoid starting from scratch every time. JetBlue developed a checklist of what has to happen whenever it enters a new market. Everyone involved has access to the list on the corporate intranet. Each department sees what has been done, what are left

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