A strategic analysis of jetblue airways

A strategic analysis of jetblue air bureausThe US skyway industry trends have caused airline companies, including Jet Blue to struggle for survival. Retirement has caused a shortage of controls and instructors. Flying schools experience less instructors and hours needed to train new pilots. In 2008, crude oil prices increased to a record $140 per barrel (Thompson, Strickland, Gamble, 2010). Increased prices of evoke al imprinted the airlines to charge passenger fees for fuel surcharges, baggage fees, and beverage and snack fees. Airlines continue to charge fees with increasing fuel prices to generate an airline strategy. After 9/11, Congress passed the Aviation and Transportation Security Act (PDF), by bring out this Act federal employees were tasked to handle all airport security. Increased screening for baggage and passengers, size limits on fluids and x-ray inspections. With the additional security measures, came financial burdens to the airline industry.Jet colour strateg ic intentWhen Jet Blues was founded, David Nelleman wanted air travel to compassionate and fun. The strategic intent was to offer customers a low discount airline carrier with the comforts of home. As the archetypal airline to offer electronic ticketing, Jet Blue wanted to delay its flights instead of canceling them. Agents were allowed to go away from home and customers enjoyed gourmet snacks, coffees, in-seat televisions with satellite radio and movie channels.Jet Blue began to look into increasing the shareholder and customer determine with the expansion of New Yorks JFK aerodrome with 8 am and 9 am flights. This was hopeful to Jet Blue exe getives they wanted to appeal to younger customers, affluent New Yorkers, and those traveling to New York City. source up this new terminal has saved $50 million in labor, fuel, and vouchers. Now, the company serves more than 53 destinations (Thompson et al., 2010).JetBlues financial objectives success in achievingAlthough Jet Blues stock dropped by 50% in the five years, revenues grew 185% between 2003 and 2007, their operating expenses grew 222% during the same period. The loss in revenue was blamed on the cost of fuel (532% increase) and interest expense (658% increase). Jet Blue decided to take a conservative financial strategy in which they hold opened high liquid ratios congener to the other major(ip) airlines (Thompson et al., 2010). Jet Blue was millions behind the competitor but developed new equity capital and credit, which was needed to keep the company, and allow them to maintain strong runniness.Assessment of competitive advantageCost. JetBlue operates at a lower cost than its competitors. According to Thompson, Strickland Gamble (2010), JetBlues total operating expenses were 12.17 per revenue passenger millilitre in 2008 versus $18.18 for American Airline, $18.18 for Continental, $20.95 for Delta, $13.85 for Southwest, $19.13 for United, and $21.45 for US Airways. Its planes, such as, the Airbus A 320, tended to be newer than those of its competitors resulting in lower maintenance costs and no maintenance-related fines. The company increased flying time by minimizing turnaround time. Reservation agents worked at home resulting in cost savings as compared to a traditional call center. These measures paid off creating a major competitive advantages in the form of low operating costs that other airlines did not achieve.Organizational culture. JetBlues organizational structure was created based on five steps. First, the companys values were determined. Then, hiring managers selected employees who mirrored the companys values. Next, the company ensured that the company exceeded employee expectations and to listen to customers. And, finally, the company created a plan to drive excellence. The values established by JetBlue were safety, caring, integrity, fun, and passion. As an example, George Forman grills were set up at the JFK terminal to allow employees to have fun. By only hiri ng employees that mirrored those values, the company could encourage hiring managers to be creative during the hiring process and to weed out those that would not be a fit. By making these steps an active part of getting work done, JetBlue developed a strong organizational culture.Human resource practices. JetBlue is a company with a strong focus on people. In anticipation of airplane pilot shortages they implemented Aviation University Gateway, partnered with universities to identify exceptional candidates, and implemented internship programs. They turn to a lack of confidence in JetBlues leadership by providing leadership development training. They developed an airline training center at the Orlando International Airport. To brighten up for paying employees a lower base salary than its competitors, they offered health c everywhereage, profit sharing, and 401k retirement plans. They also avoided layoffs through voluntary packages and attrition. This focus on coming together the needs of its employees, growing talent, and creating a talent pool was essential competitive benefits that were very difficult to imitate.JetBlues strategies for 2008 beyond and likelihood of success.In 2008, JetBlue adapted new strategies to re-evaluate the way its assets were used, reduce capacity, cut costs, raise fares, grow in select markets, offer services for business travel, form strategic partnerships, and increase ancillary revenues. JetBlue formed an federation with Lufthansa to enable the company to use their terminals at JFK and signed a contract with Continental to provide LiveTV (Thompson et al., 2010). JetBlue cut their capacity by selling nine aircrafts and reduced costs by delaying the delivery of 21 new aircrafts (Thompson et al., 2010). They reduced aircraft utilization rates, suspended service in some cities, and cancelled plan service in order to cut costs. After choosing Orlando to become a target market, they then raised prices but to lower fares than com petitors. Furthermore, they provided incentives to corporate travelers, entered into agreements with Expedia for leisure travelers and Travelocity for business customers, and with Aer Lingus to expand their advert internationally. To generate revenue, JetBlue created new fees, including a fee for a second bag and for select seats. Even with these strategies, the airlines financial performance shows that they are falling short of expectations during the first six months of 2008 (Thompson et al., 2010).However, 2009 was a successful year for JetBlue. The company was one of only a few to report four consecutive quarters of profitability in this year (JetBlue, 2010). A net income of $58 million was generated with an operating margin of 8.5% which was an improvement of more than $140 million compared to 2008. They continued to have one of the strongest liquidity positions in the U.S. airline industry relative to our revenues. In addition, JetBlue generated positive free cash flow for t he first time in its history. According to JetBlues 2009 annual report, these results demonstrate the benefits of JetBlues disciplined growth strategy, its focus on managing capital expenditures, rationalizing capacity, maximizing revenue, and controlling costs. Given that the company is prosperous in challenging times, it is likely that the companys sound strategies and cash-rich positions entrust give the company longevity over the long term.ConclusionsThe purpose of this report was to examine JetBlues business strategy. Trends in the U.S. airline industry impacting crude oil prices, pilot shortages, and 9/11 aviation security measures. Overall, these trends, combined with a weak economy, caused airlines to struggle to survive. JetBlue has survived by a focus on bringing humanity post to air travel at low fares. They focused on providing value, customer service, and unique extras for customers. Employees benefit from training and a strong organizational culture. The business be nefited from measures to cut costs and form lucrative partnerships. Presently, the financial reports of JetBlue showed that the company was outperforming its competitors in a recession making the company highly likely to be successful over the long term.