Strategic Analysis on Jetblue Airways Corporation

STRATEGIC ANALYSIS ON

JETBLUE AIRWAYS CORPORATION

Submitted By

Abdullah Adnan

ID: A00071181

Table of Contents

Introduction        3

History        3

Leadership        4

SWOT analysis        5

Value Chain Analysis:        6

Porter Five (5) Forces Analysis        6

PESTEL Analysis:        7

Human and Social Capital analysis:        8

Business Strategy        9

Corporate Strategy        10

Financial analysis:        10

Recommendation:        11

Reference        11

Introduction

JetBlue Airways Corporation, stylized as jetBlue, is an American low-cost airline headquartered in New York City. A major air carrier and the fifth-largest airline in the United States, JetBlue is headquartered in the Long Island City neighborhood of the New York City borough of Queens, with its main base at John F. Kennedy International Airport. It also maintains corporate offices in Cottonwood Heights, Utah and Orlando, Florida. 

In 1999, JetBlue founder David Neeleman sought to create a new airline, which resulted in JetBlue and its goal to bring "humanity back to air travel." 

In this case, it can be seen that JetBlue has crossed a turbulent history. This company has a great brand value. But due to some incidents, customers are not feeling comfortable towards this company. This company is facing some troubles due to rise of fuel price. Analyzing the present scenario and strategies to calculate the sustainability of the company in the airline industry is the prime objective of this assignment.

History

• JetBlue was incorporated in Delaware in August 1998. David Neeleman founded the company in February 1999, under the name "NewAir". JetBlue started by following Southwest's approach of offering low-cost travel, but sought to distinguish itself by its amenities, such as in-flight entertainment, TV at every seat, and Sirius XM satellite radio.
• JetBlue started its journey with USD130 million as a start up.
• It has commenced its operation in august 2000 with JFK as its primary base of operations.
• In 2001, it has expanded its journey to West coast.
• It has originally operated single type aircraft fleet comprising Airbus A320 planes.
• The airline suffered five year losses after its IPO in 2005
• 2nd CEO, Mr. Dave Barger, has succeed to first full year profit in 2007 as an increase in traffic and operational improvements;  (Dess, 2019)
• In 2008,it faced loss again.
• 3rd and current CEO, Mr. Hayes is also expanding the code share agreement with other airlines, which has been started by Mr Barger in 2007.
• In 2013, Mr. Hayes had announced a fleet modernization program.
• In 2016, This Company has faced some turbulences.
• In 2017, JetBlue is doing better by introducing cost effective technologies.

Leadership

• Mr. David Neeleman, the founder, had started this company with perfect mission and that was to bring humanity back to air travel. This mission made this company to reach customers with positive image and positive service. He was totally clear about his idea on how to create the brand value of the company. (Dess, 2019)
• Mr. Dave Barger added several new services and embarked on capacity expansion to give the airline a new Boost. He had succeed to first full year profit in 2007 as an increase in traffic and operational improvements. There were some discomforts during his tenure. He had wider perspective and look as a leader.
• Mr. Robin Hayes, present CEO , has taken several steps to take the company to the next level. He has introduced satellite driven technology which made the operational cost lower. He has the quality to strategic thinking and problem solving attitude. He has clear vision what he wants to do. (Dess, 2019)

SWOT analysis

JetBlue is an American low-cost airline and is headquartered in New York City. This company has codeshare agreements with 21 airlines. This company has been awarded as the best airline for North American Travel by business Traveler USA in 2017.

Strengths:

1. Strong brand identity of JetBlue Airways Corporation.

2. They have a blog called “Out of the Blue” which helps this company to use social marketing.

3. Customers satisfaction in this brand is high.

4.  Efficient and effective aircraft.

5. High Operating Margin.

Weakness:  

1. No. of international destinations is few. Low cost strategy will create a complex environment for the company.
2. High repair and maintenance cost.
3. Trust issue due to some incidents.  

Opportunities:

1. New Market and new country is the best thing this company can do.

2. This company can introduce new planes so that people feel attracted.

Threats:

1. Rise of fuel prices is a threat for the company and company has a very little to do about this matter except going against their low cost mechanism.

2. Cost cutting strategies can make them vulnerable when one considers to give the customers the best experience.

3. The incomes of the company and its progress ambitions are subject to the fiscal conditions. An economic downturn or additional terrorist attacks might impact negatively JetBlue’s ability to finance its debt obligations.

Value Chain Analysis:

Inbound Logistics:

• Strong internet presence. (jetblue.com, trueblue, facebook, twitter,instagram )
• Paperless airplane.
• Online support.

Operations:

• Crew arrangement software
• programmed baggage handling
• No meals: efficient time management and cost reduction.

Outbound Logistics:

• Airports and service are chosen carefully.

Marketing and sales:

• Precise market section is identified.

Service:

• Customer service should be the first priority and JetBlue Airways Corporation is maintaining this standard in a strict manner.

JetBlue Airways Corporation is trying to reduce the cost at every step to make it a cost effective airline company. They try to grab all kinds of customers with the pricing strategy with added experience. This company has created a brand recognition which is the implication of customer first strategy.

Porter Five (5) Forces Analysis

Threats of New Entrants

New airlines with new technology and new ideas can put the company in a competitive situation. New company can come up with better pricing strategy with low cost, and can put more value in the service chain. (Dess, 2019)

JetBlue should always try to create new product and services. Research and development team of the company should be built up with skilled people so that company can be more customer oriented and technologically adaptive.  

Bargaining Power of Suppliers

To reduce cost Jetblue has to depend on the suppliers of Airplane. Therefore, Jet Blue has to build an efficient supply chain so that they can build a cost efficient system.

Bargaining Power of Buyers

Jetblue has created a good pricing strategy like carriage checking pricing. They want to give every kinds of customer every kind of price with that kind of best experience. This is a good strategy.  They are trying to build a large base of customers. New products would be better strategy to attract new customers.

Threats of Substitute Products or Services

Service oriented behavior will help the company to keep customer in using the airline service. Customer has to pay more to switch from this industry. (Dess, 2019)

Rivalry among the Existing Competitors

Competition is fierce among the airlines in USA. Customer oriented service will always put the company in a better position. (Dess, 2019)

PESTEL Analysis:

Political factors:

Political factors is very important for JetBlue Airways Corporation to find out the strategy to form to make the company more sustainable in long term and generate net profit to serve the interest of the shareholders and the stakeholders. (Dess, 2019) Factors to consider are: