...JetBlue Airways: Managing Growth Case Analysis Part I: Issue Identification In May 2007, David Barger, President and CEO of JetBlue Airways, expressed the great need to slow down the airline’s growth in response to increasing fuel costs and the consequences stemmed from the Valentine’s Day crisis. As an LCC, JetBlue had to decrease its growth rate by reducing deliveries of E190 and A320 due to its weak financial position and the market’s softening demand. Considering the performance of JetBlue after the addition of E190 to its fleet, JetBlue overestimated its capacity of handling this large scale of expansion. The new CEO, David Barger was now facing with JetBlue’s key issue that he should reconsider the distribution of E190 and A320, and building long-term managing strategies for sustainable development. Besides, with a big movement of launching E190 in 2005, some small but critical problems loomed: Compensation of pilots, satisfaction of customers and employees, challenges for staff to adopt unexpected changes, complexity resulting from the integration of E190 and A320. Without experience of operating two types of aircrafts and combining them, as well as without sufficient capital, large scale of purchases of the new aircraft would definitely lead to operational failure. It was the key principle for JetBlue, which made a difference from other airline companies, that fight cancellations should be avoided at all costs. Unfortunately, this principle was...
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...JetBlue Airways: Managing Growth Case Analysis Instructed by: Prof. Jonathan Lee Section3 Team 2 Jie Yan | 103795915 | Ling Lu | 103999797 | Nan Liu | 103744807 | Renhan Zhu | 103943651 | Yishi Shi | 103956048 | 2014/10/20 Part I: Issue Identification In May 2007, David Barger, President and CEO of JetBlue Airways, expressed the great need to slow down the airline’s growth in response to increasing fuel costs and the consequences stemmed from the Valentine’s Day crisis. As an LCC, JetBlue had to decrease its growth rate by reducing deliveries of E190 and A320 due to its weak financial position and the market’s softening demand. Considering the performance of JetBlue after the addition of E190 to its fleet, JetBlue overestimated its capacity of handling this large scale of expansion. The new CEO, David Barger was now facing with JetBlue’s key issue that he should reconsider the distribution of E190 and A320, and building long-term managing strategies for sustainable development. Besides, with a big movement of launching E190 in 2005, some small but critical problems loomed: Compensation of pilots, satisfaction of customers and employees, challenges for staff to adopt unexpected changes, complexity resulting from the integration of E190 and A320. Without experience of operating two types of aircrafts and combining them, as well as without sufficient capital, large scale of purchases of the new aircraft would definitely lead to operational failure...
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...Originally started as a low-cost carrier, JetBlue still continues to compete in its existing market of point-to-point travel. With $130 million startup costs, industry’s best talents, and a brilliant CEO, JetBlue was able to have the first flight on February 11, 2000. In an attempt to cut costs even further, David Neeleman, CEO, supplied JetBlue with new aircraft which was purchased rather than rented. JetBlue tried to build its reputation by offering the best amenities. Some of the amenities offered leather seats and seat-back TVs. According to the 2007 JetBlue Annual Report, the firm continues to find innovative ways to enhance their services. For example, in 2007 they introduced complimentary in-flight e-mail and text messaging services. Also JetBlue offers live television, satellite radio, and other amenities since their first year of service. JetBlue’s core values include: SAFETY – of crewmembers and customers CARING – for crewmembers and customers INTEGRITY – demonstrate honesty, trust, and mutual respect FUN – sense of humor and ability to laugh at self PASSION – crave and deliver superior performance JetBlue exists to provide superior service in every aspect of our customer’s air travel experience. According to our research, we have specified that the main issue for JetBlue in the aviation industry is competition. Since every firm in the industry is facing exactly the same forces, the main concern is: Is JetBlue going to survive? From detailed...
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...School Case 20: JetBlue Airways Subject: Business Policy and Strategic Management Instructor: Dr. Olimpia C. Racela Group Members: 1. Miss. Nguon Phuongtepsonich ID: 540101919847 2. Miss. Shi Lilin ID: 54010919850 3. Miss. Ananya Duangthowset ID: 54010919845 Submitted Date: Thursday, September 18, 2014 JetBlue Airways 1. Situation Analysis JetBlue Airways was founded by David Neeleman and lawyer Tom Kelly in 1998 with $160 million of capital. Its main base is John F. Kennedy International Airport (JFK) in New York. JetBlue positioned itself as the Low-Cost Carrier (LCC) but distinguish itself by its services such as in-flight entertainment, TV on every seat and Satellite radio. SWOT Analysis: Strengths | Weaknesses | * Good customer service: * Allow passengers to choose their seat on the plane whenever possible. * Unlike other LCC, JetBlue served free snacks on board. * Cost management: * Saving more cost by serving snack rather than meal. * Good routing management: * Flew only point-to-point flights helps to avoid the complication that resulted from connecting flights and passenger transfers. * High technology: * E-ticket and paperless operation. * Human resource management: * Family-like atmosphere at the workplace which leads to positive attitude in its employees. * Employees were free to suggest ideas and comments in order to improve operations. * Organizational culture: * Five key values - safety...
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...Management Cases “JETBLUE AIRWAYS” UFUK CANDAR FOYA BAHÇEŞEHİR UNIVERSITY Table of Contents INTRODUCTION 3 BRIEF SUMMARY 3 ENVIRONMENTAL ANALYSES: 4 VALUE CHAIN ANALYSIS: 10 FINANCIAL ANALYSIS: 13 SWOT ANALYSIS: 19 SPACE MATRIX: 21 TOWS MATRIX: 24 QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM): 25 CONCLUSION: 26 INTRODUCTION Within case analysis assignment, the JetBlue case is analyzed strategically in this document to set answers for following basic questions: * To make a set of recommendations based on the analysis, * To describe exactly what need to be done for success, * To explain why the proposals will solve the problems, * To suggest how best to implement the proposed solution After giving a brief summary regarding the case of JetBlue has and drawing a general picture of the company, several strategic analysis methods will be used to analysis JetBlue. BRIEF SUMMARY The economic downturn in the late 1990s and 9/11 terrorist attacks in 2001 have severe consequences on airline industry. The demand for air travel dropped and led to decrease in flights and revenue. The security costs increased. Airlines significantly reduced capacities. As a result low-cost strategies with new route services became important. Rebounding of economy by the end of year 2003, the demand for business and leisure travel was expected to grow in low-cost competition marker after flight reductions and fewer routes. JetBlue started operations...
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...JETBLUE AIRLINES The Basics of JetBlue Airlines JetBlue was founded in 1998 by David Needleman and many of the first executives, including Needleman were former Southwest Airlines employees. First flight was from Buffalo, NY to Fort Lauderdale, FL in February 2000. One operating base: JFK International Airport Five focus cities: Orlando International, Luis Muñoz Marín International Airport (San Juan) International, Logan International (Boston), Long Beach and Fort Lauderdale – Hollywood International Airports. 84 destinations, 198 aircraft Company slogan: You Above All 15,000+ employees JetBlue’s Nasdaq price from 2002 to present (JBLU) Brief History of the Domestic and Global Airline Industry The two of the oldest airlines in the world which are still operating are Qantas (Queensland And Northern Territory Aerial Services) in Australia and KLM (Koninklijke Luchtvaart Maatschappij) Airlines, in the Netherlands, both of which started flying in 1920. Following World War I and many trained veteran pilots, with airmail service offered by the United States Postal Service through contract air carriers some of which evolved into PanAm, TransWorld, American, and Delta Airlines. Following World War II, the commercial airline industry continued to expand under government regulation. Until congress deregulated the airline industry in the United States in 1978 and airlines were able to set the prices for their own fares...
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...Introduction and industry analysis JetBlue Airway Corporation is an American low-cost airline and it was one of a few U.S. airlines that were profitable during the sharp downturn in airline industry affected by the September 11, 2011 attacks. With its strong capital base, the company was successful due to its impressive management team, in which, David Neelaman has rich experience with airline start-ups; COO David Barger and CFO John Ower are all experienced former senior managers from other airlines. The company’s sales rose from $104,618 to $320,414 from December 2000 to December 2001 and net profit is negative $21,330 in December 2000 and reach positive $38,537 only one year later. As we can see, the company is a high growth company with huge potential. To meet its further growth needs, it going to public to finance more money. The advantage of IPO is by raising more capital, the firm could use the capital to fund capital expenditure (buy more airplanes), pay off existing debt and also it increase public awareness and let potential customers know their products. Subsequently, this may increase its market share. And the venture capitalists may want to use IPO to cash in on JetBlue as they helped start-up. The disadvantages is that JetBlue has to disclosure more information for investors, prepare periodic financial reporting and they must also meet other rules and regulations that supervised by SEC. it is always costly of complying with regulatory requirements, such as preparing...
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...CASE ANALYSIS Southwest Airlines, Co. COMPANY NAME: Southwest Airlines Co. INDUSTRY: Regional Airlines COMPANY WEBSITE: www.southwest.com COMPANY BACKGROUND: Southwest Airlines was founded in 1967 (Yahoo Finance, 2012) and started out as an idea from Rollin King, a San Antonio entrepreneur of a commuter air service. The idea was a response to complaints from his banker about the expense and inconvenience of ground travel between the cities of Houston, Dallas and San Antonio, also known as the Golden Triangle (Dess, Lumpkin, & Eisner, 2010 page C194). King, wanting to bring the idea to fruition, pooled his money together with a San Antonio lawyer, Herb Kelleher, who later won many of the company’s legal and territorial battles, and they started Southwest Airlines. After four years of legal battles with major airlines while the company was still very new, Southwest Airlines (SWA) finally launched its first flight in 1971 and continued to run with the assistance of many key people. One of the key people who got the company on its feet was Lamar Muse, former CEO. Howard Putnam later took Muse’s place as CEO from 1978 to 1982 and was then replaced by Herb Keller who was previously Chairman of the Board. Under the influence of Keller and SWA’s “low-cost strategy” (Dess, Lumpkin, & Eisner, 2010 page C194), SWA expanded from flying to only 14 cities, but still earning $270 million, to later servicing 64 cities, all at low rates. SWA continues to be a popular...
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...Case Study 13: JetBlue Airways External Environment Analysis: * PESTEL(Macro-level environment) * Political: September 11 terrorist attack, tons of new flying rules and regulatory factors, political stability, competitive industry, * Economic: Improved purchasing power, rise in oil prices & inflation * Sociocultural: Increased entertainment level, greater customer awareness, security level of customers, bad service & lost baggage * Technological: Automated cockpit systems, introduction of animated advertisements, e-ticketing * Ecological: N/A * Legal: N/A * Five Forces * Threat of Entry: Low. Deregulation allowed easy entrance, low profit margin, hard to differentiate, high cost of capital to enter, brand image and customer loyalty important, safety and reliability important for new companies entering * Power of Suppliers: High. Only 2 suppliers, not much bargaining ability, fuel suppliers can control the price of fuel, fuel supply extremely important for JetBlue * Power of Buyers: High. Several flying options for customers, no switching cost, easy for customers to research competitors, customer incentives * Threat of Substitutes: High. A number of other airlines available, high existing barriers, bankruptcy laws allow continued operation for companies operating at a loss * Rivalry among competitors: High. Large competitors such as Delta, United Airways & American Airlines...
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...strategic analysis of JetBlue from it’s the establishment date to year 2003. In order to the analysis, a precise strategy is decided upon for JetBlue Company. 2. HISTORY David Neeleman was born in Brazil, Sao Paulo in 16 October 1959. He attended the University of Utah for three years then he dropped out university and served a mission for The Church of Jesus Christ of Latter-day Saints in Rio de Janeiro, Brazil for two years. He made his beginning in establishing own business by renting out condominiums in Hawaii. Then he established his own travel agency and began chartering flights from Salt Lake City to the islands. He was co-founder with June Morris of charter airline Morris Air, a low-fare airline. From 1984 to 1988, he was an Executive Vice President of Morris Air. From 1988 to 1994, he was the President of Morris Air Corporation. In 1993, Morris Air was then acquired by Southwest Airlines for $129 million. For 5 years, he worked on the Executive Planning Committee at Southwest Airlines. By 1994, he left Southwest Airlines after signing a five year noncompeting agreement. With his experience of aviation, he established a company named Open Skies which a touch screen airline reservation and check-in systems company that acquired by Hewlett Packard in 1999. At the same time, acted as a consultant to another start-up airline, WestJet. The BlueJet was founded by entrepreneur David Neeleman in August 1998 in Delaware under the name of “Newair”. JetBlue is David Neeleman’s...
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...JetBlue Airways: Growing Pains A case report prepared for MG 495 Business Policy Spring II 2014 Paige Pence Jamie Neidholdt Tyler Slayton Ja-ir Gooden Jacob Miller May 4, 2014 JETBLUE AIRWAYS: GROWING PAINS I. Introduction A. Executive Summary 1. Summary statement of the problem: JetBlue Airways was a fairly new airline that was going up against such airlines like Southwest, AirTran, and Delta. Started in 1999, JetBlue Airway was able to turn profits fairly quickly; in 2001 the company had profits of $38.5 million (George & Regani, 2008, 20-4). From there on it seemed that the company would continue to be profitable especially with expansions in the works; moving into areas that competitors ignored, ordering more planes, expanding to the west coast, and building a new terminal at JFK. However, due to various external and internal factors the company once again posted losses in 2005 and 2006. 2. Summary statement of the recommended solution: The problem is that JetBlue is expanding too fast and too soon to keep up. The company needs to slow their growth so that the company can keep up with the pace. Furthermore, the company needs to continue to do what the company does best; superior customer service, low fares, short-to-medium routes instead of offering what the competitors are doing. This is lessening JetBlue’s differentiation from other companies creating just another option for customers. Finally, JetBlue needs to continue to make cuts...
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...1. Choose one of the following three industries (NOT specific companies) for analysis: . Airlines (carriers) . Automobiles . Personal computers. RATE (not Rank) the global importance of each of Porter’s five industry forces on a scale of 1 to 5 (1 = Low, 5 = High), and provide at least two reasons for each rating. In addition, list at least three industries that complement the industry you choose. (30 points) Airlines Industry 1. Oil Service Industry- Fuel airplanes, and shuttle-bus. 2. Banking Industry- Some airline have their own credit union and others rely on banks for reward sky miles. 3. Insurance Industry- Employee insurance. Rate 4 Threats of New Entrants. At first glance, you might think that the airline industry is pretty tough to break into, but don't be fooled. You'll need to look at whether there are substantial costs to access bank loans and credit. If borrowing is cheap, then the likelihood of more airliners entering the industry is higher. The more new airlines that enter the market, the more saturated it becomes for everyone. Brand name recognition and frequent fliers point also play a role in the airline industry. An airline with a strong brand name and incentives can often lure a customer even if its prices are higher (Investopedia, 2012). Rate 4 Powers of Suppliers. The airline supply business is mainly dominated by Boeing and Airbus. For this reason, there isn't a lot of cutthroat competition among suppliers...
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...Strategic Report for Southwest Airlines Tycen Bundgaard John Bejjani Edmund Helmer April 12, 2006 Table of Contents EXECUTIVE SUMMARY............................................................................................... 3 COMPANY BACKGROUND ....................................................................................... 6 PORTER’S FIVE FORCES............................................................................................ 10 MARKET DEFINITION .............................................................................................................. 10 INTERNAL RIVALRY ................................................................................................................. 11 ENTRY ....................................................................................................................................... 12 SUBSTITUTES AND COMPLEMENTS ........................................................................................ 14 SUPPLIER POWER ..................................................................................................................... 15 BUYER POWER .......................................................................................................................... 18 FINANCIAL ANALYSIS.............................................................................................. 19 OPERATION FINANCIALS .................................................................................
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...Report A Report on Southwest Airlines Prepared for: Mr. Balasubramanian Shankar Due date: Monday, 5th October 2015 Submitted by: Jiyeon | CT00000000 | TABLE OF CONTENTS 1. INTRODUCTION 2 2. COMPANY BACKGROUND 3 3. PESTEL ANALYSIS 4 3.1 Political 4 3.2 Economic 4 3.3 Social 5 3.4 Technological 5 3.5 Environment 5 3.6 Legal 6 4. PORTER’S FIVE FORCES ANALYSIS 7 4.1 Threat of New Entry 7 4.2 Threat of Substitution 7 4.3 Buyer Power 7 4.4 Supplier Power 8 4.5 Competitive Rivalry 9 5. STRATEGIC RECOMMENDATIONS 10 5.1 Managing Technology Advancements 10 5.2 Maintain Cost Advantage 10 5.3 Geographical Expansion 10 5.4 Product Diversification 11 6. CONCLUSION 12 7. REFERENCES 14 1. INTRODUCTION The focus company in this report is Southwest Airlines (SA), a major low cost carrier in the United States (US). The aim of this report is to examine the current market environment and competitive power of Southwest Airlines. In order to have a substantial overview of its environment, two analyses, the PESTEL analysis and Porter’s Five Forces analysis, will be used to evaluate SA. With the findings, strategic recommendations will be made for the problems that the airline is facing or may encounter in the near future. 2. COMPANY BACKGROUND Southwest Airlines is a budget airline established in 1967 by Rollin King and Herb Kelleher and had its first flight in 1971. Headquartered in Dallas, Texas, SA is an important...
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...Global Competitive Strategy Executive Brief: Delta Airlines Executive Summary: After years of instability, decreasing profit margins, and volatile costs, the airline industry is experiencing stabilization and profitability. Though low-cost carriers, such as Southwest and Jetblue, were able to succeed during rough economic times, Delta should not launch a new stand-alone discount airline to directly compete within this market. As shown in Exhibit 1, despite recent changes in the industry - including consolidation, bankruptcy filings, and a forecasted positive economic outlook - intense competition and supplier power remain extremely high for the industry. Based on the following analysis, Delta is in direct competition with other legacy airlines such as United/Continental and American Airlines for the higher end market juxtaposed to its less direct competition with low-cost carriers, e.g. Southwest, which fall into a separate strategic group targeting a different market and consumer. As a result of Delta’s entrenched strategy of providing many routes and amenities for higher ticket prices, the company’s core competencies, resources, and activities do not align with the discount airline market and, therefore, the company should not launch a new low-cost carrier airline. Company and Competitor Analysis: Delta’s core competencies are to provide multiple domestic and international routes to travelers, customer service and luxury, technological innovation, and access...
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