JetBlue Hits Turbulence
CASE STUDY n February 2000 JetBlue started flying daily to Fort Lauderdale, Florida, and Buffalo, New York, promising top-notch customer service at budget prices. The airline featured new Airbus A320 planes with leather seats, each equipped with a personal TV screen, and average one-way fares of only S99 per passenger. JetBlue was able to provide this relatively luxurious flying experience by using information systems to automate key processes such as ticket sales (online sales dominate) and baggage handling (electronic tags help track luggage). Jet Blue prided itself on its "paperless processes." JetBlue's investment in information technology enabled the airline to turn a profit by running its business at 70 percent of the cost of larger competitors. At the same time, JetBlue filled a higher percentage of its seats, employed non-union workers, and established enough good will to score an impressive customer retention rate of fifty percent. Initially, JetBlue flew only one type of plane from one vendor: the Airbus A320. This approach enabled the airline to standardize flight operations and maintenance procedures to a degree that resulted in considerable savings. Chief information officer (CIO) Jeff Cohen used the same simple-is-better strategy for JetBlue's information systems. Cohen depended almost exclusively on Microsoft software products to design JetBlue's extensive network of information systems. (JetBlue's reservation system and systems for managing planes, crews, and scheduling are run by an outside contractor.) Using a single vendor provided a technology framework where Cohen could keep a small staff and favor in-house development of systems over outsourcing and relying on consultants. The benefit was stable and focused technology spending. JetBlue spent 1.5 percent of its revenue on
