Industry factors
The company enjoyed prosperity in 2001 and 2003. In fact, it took advantage of the situations of other Airlines in U.S due to September 11 attack. The competitors began to recapture the market by lowering prices. Due to the changes, JetBlue was affected by low fares implemented by Delta and United Airlines. In 2003, JetBlue focused on busiest routes by launching new flight routes. The competitors entered the market and lowered its prices and at the same time increasing capacity. Delta and AirTran responded JetBlue flights from Atlanta to Los Angeles aggressively. This move forced JetBlue to withdraw its operations from Atlanta. Delta through the launch of Song focused on competing directly with JetBlue. It offered most of the amenities and services that were offered by JetBlue, but only changed liquor and meals. The financial performance of Song was not satisfactory, which led to its integration to Delta in 2006. In general perspective, JetBlue faces stiff competition from LCCs, which included West Spirit Airlines, Southwest, America West, Frontier Airlines, as well as AirTran. These airlines did not offer the same series as JetBlue but they depended on loyal customers from home markets.
Company analysis
For many years, Jet-Blue has been one of the successful airlines in the United States. In the year 2005, the company began facing various problems. The airline was established in the year 1999, and it began under the capital contributed by top investors such as Soros Private Equity Partners, Weston Presidio Capital, as well as J.P. Morgan partners. In the same years, it was awarded takeoff and landing slots at John F. Kennedy International Airport. JetBlue operated under key values, which included fun, integrity, passion, safety and caring. The company was positioned as fun and a colorful airline. It carried out a strategy that combined low fares and value-added services. Operations carried out by the company was key to its low fares. It also operated under non-unionized workforce. JetBlue focused on positive attitudes of its employees and created a positive workplace culture. In addition, the company tried by all means not to inconvenience the customers. They implemented a policy that never allowed cancelling of flights. In the case of flight delays, the company gifted its customers with redeemable vouchers.
Administrative problems
The leadership styles of the new CEO and Neeleman differed considerably. Analytically, most of the company’s stakeholder believe that the new CEO was the best in taking the company through various challenges. The administration of the company focused on reducing cost and scrutinizing the management to increase revenue. The increase of load factor stressed the operations of the company leading to flight delays.
Correct the path
Return to profitability plan was important to JetBlue and its stakeholders. The return to profitability plan took place in April 2006. The main focus on the plan was to reduce costs, improve capacity management, optimize revenue, as well as retain the commitment to deliver quality services. JetBlue focused on short-to-medium routes. On the same note, JetBlue undertook serious scrutiny on yield management. Cutting of unprofitable routes was achieved through capacity management. The introduction of short-haul routes enhanced non-stop services in various destinations. The employment portfolio of JetBlue changed since it emphasized on employing few full-time employees. Correcting the path was beneficial. One of the benefits is that the company desisted from cancelling the fights. It also enhanced easy tracking of crews and baggage. The training that took place enabled employees to be more proactive to emergency situations in the airport.
The RTP benefits are evident through revenue earning. The company posted an improvement in profit by earning a net profit of $17 million. On June 30th 2007, there was improvement in the net profit earned, which was an increase of $53 when compared to March 2006. On March 31 2006, the company made a loss of $32 million. The improvement was also exhibited in the sense that JetBlue ended 2006 with a net loss of $1 million, compared to a loss of $20 million in 2005.
Future turbulence and challenges
One of the challenges faced by the company is the issue of fuels costs. The fluctuation of fuel prices is a threat to the company. On the same note, the cancelling of flights, which was against JetBlue policies affected the company’s success. It was also difficult to track crews and pilots. These led to the customer service fiasco. Major competitors are also a critical challenge in the future. Frontier and AirTran alliance is a threat to JetBlue.
Recommendation
The company should focus on the new policy of acquiring leather seats
Empower employees on issues related to emergency response and to value customers
Reduce the operation cost by purchasing new fleet aircrafts
The company should adopt EPR techniques
Utilize technological advancement and launch online booking and rebooking
