JetBlue is a relatively new airline in the United States. JetBlue has produced impressive financial results at a time when the other airlines were suffering from losses. The company instead of targeting the masses selected to target a niche market and specialize in the underserviced airline routes. It currently stations its planes in secondary airports to avoid competition and get better treatment from the airports, and has been promptly acquiring new aircrafts in response to its growing popularity and increasing number of passengers.
SWOT Analysis
Strengths:
- Balances cost cutting well with high levels of customer service
- The company does not cut back on value-adding services such as leather seats, seat allocation and others.
- JetBlue offers more in-flight amenities than other airlines. JetBlue provides personal televisions to each individual passenger
- Best on time record in industry as flights consistently arrive on time
- Airfares are less than 50% of those of the major players in industry
- Operates high quality planes which offer customer comfort as well as fuel economy
- Majority of capital equipment require low levels of maintenance
- Standardized fleets reduce costs as staff and equipment become interchangeable across flights
- Fewer scheduling and maintenance conflicts as a result of a single fleet
- Concentrates on few routes to offer specialty service
- Point to point flights with lower travel time and expense accrual
- Operates more flights per day than other airlines due to lower turnaround time- planes are readied in an hour less for the next flight
- Save on office rentals as staff works from home
- Implemented an electronic database and automated processes for more efficiency
- Elite customer service – CEO himself interacts with passengers to make them feel valued
- Best on time travel record in industry
- Less luggage mishandling and customer complaints than other airlines
- Highly motivated workforce – employee efforts are recognized and rewarded with pay schemes and perks
- JetBlue has a work culture which does not foster egos by treating each employee equally
- Robust safety and security protocols
Weaknesses:
- Does not offer meals during flights irrespective of the distance or time duration between routes
- Company prefers equipments which require larger capital expenditure than others
- Operates a single fleet – different classes not available to cater different types of customers
- Some customers prefer interacting with the staff of the company to get comprehensive travel information and guidance
- Less appealing to business class customers who want greater comfort and specialized service
- Company does not sell tickets via travel agents
- Caters to niche markets which offer less potential
- Not enough customers available in niche markets to facilitate large scale expansion carried out by company
- JetBlue does not fly on too many routes
- Main competitor, Southwest Airlines, has a lower cost per passenger mile and thus it shows that the cost of operations of JetBlue is high
Opportunities:
- Profitable in an industry marred by financial losses
- Innovative business approach has been well received by passengers in the airline industry
- JetBlue has a CEO with great business acumen and a pro-active approach towards satisfying customer needs. Therefore, the company has potential to come up with strategies to meet the needs of the customers and satisfy them.
- Low cost carriers are gaining more and more popularity among flyers
- Positive word of mouth – 74% of first time flyers speak well of the airline, and this helps in attracting consumers.
- A fun and a cool image of the company which appeals to both thrifty and affluent customers
- Could enter mass markets now that brand recognition has been achieved
- Secondary airports host fewer competitors and can offer better flight slots and terminals.
- Few competitors fly on JetBlue’s routes
Threats:
- Passenger traffic in the industry is falling
- The airline industry as a whole is making losses and thus, it could threat the company such as JetBlue that are earning profits.
- Travelling via secondary airports could tarnish the company’s image and dissuade potential flyers
- Flyers that prefer to utilize travel agents for booking and assistance might look elsewhere.
- The company’s continual capital expansion needs to be matched with increasing revenue figures in a depressed industry
- Terrorist attacks could destroy the goodwill and reputation built by the company
- It will be difficult to maintain harmony and intimacy amongst the workforce as the firm grows
- Competitors are catching up in terms of cost cutting and service standards and thus it could create threats for the company.
- Increased capital expenditures (new planes) need to be matched by increased revenue
Strategies:
JetBlue at the moment is undergoing rapid capital expansion. The company was adding an airplane a month to its already large fleet, with an outstanding order of 65 airplanes; however; this airplane is yet to be added. Needless to be told, the mammoth outlay required for such an undertaking has to be balanced by larger sums of revenue to make the practice financially viable.
JetBlue, however, currently caters to a niche market which may not offer enough potential for growth. This is simply because the market may not have enough customers, existing or potential, to help service this expansion.The company needs to start appealing to the mass market by increasing its now limited routes and thereby accommodate new ones which will bring in customers. JetBlue will have to come out of its comfort zone of serving just the Westcoast, Northeast and Florida, and start operating flights in other areas as well where its competitors are currently flying.
Operating from primary airports could be a great starting point for JetBlue. Since many of JetBlue’s major competitors have established themselves here, JetBlue will not find it as easy to penetrate this market, as opposed to the one it started off with. But this strategy still seems pragmatic as the company has now established itself as a valuable brand which is recognized by flyers across the nation. There is no uncertainty associated with the expected level of service as in the case of a new start up. Given such familiarity on the part of customers with the company, JetBlue could very well attract flyers despite its premature existence in such routes.
Furthermore, as the study mentions, low cost carriers are fast gaining popularity amongst modern flyers that have increasingly started to prefer functionality, punctuality and affordability. JetBlue excels in all these aspects. As a low cost carrier, it has an emerging market in front of it waiting to be pounced on, which is why it should capitalize on mass market passengers who are subscribing to their mode of travel. JetBlue also holds one of the lowest costs per passenger mile, indicating that it can rival the more experienced airlines on these routes in terms of cost structure.
Moreover, as JetBlue starts to cater to a wider market, it will have to inform customers about these new offerings in their portfolio. JetBlue should hence create an advertising campaign to create awareness among flyers about their increased scope of operations. It would be a good idea to structure the campaign such that it emphasizes on the objective factors which make JetBlue the optimal choice for flyers, since the modern flyer is a no-nonsense character willing to cut back on luxuries for practicality. This is where JetBlue’s impressive industrial benchmarks come in to play. JetBlue flight turnover time is 35 minutes, approximately one hour less than other airlines. It also has on-time performance record of 80%, and a luggage handling error rate of 2.54 per 1000 bags handled, as compared to 72% and 5.2 respectively of the top ten airlines in the United States. These statistics provide an important point of differentiation for JetBlue from its competitors, and should be emphasized on using informative advertising mechanisms on television, social media, specialty journals etc.
Other features worthy of being mentioned are JetBlue’s wider collection of in-flight amenities, such as personal televisions – a value adding facility useful on long flights which is not being offered by competitor airlines. JetBlue’s fun and cool image can also be exploited here with slick adverts that put across messages in a manner that appeal to multiple market segments. This can work in tandem with the company’s reputation for high levels of customer service – flyers in the mass market will start viewing it as an attractive option featuring both pragmatism and service. Given JetBlue’s 74% ratio of new customers spreading positive word of mouth, it can also count on such passengers, to assist their promotion.
However, as the company expands, it should not drift from the very principles and work practices which have brought it enormous success thus forth. Creating seating classes on mass market routes could be counterproductive – it could create confusion in the minds of flyers regarding JetBlue’s perception of a standardized airline sponsoring functionality. Such a move could also end up increasing costs as staff and equipment will become the category specific rather than interchangeable. The company should hence maintain its core strategy which has enabled it to become one of the cost leaders of the airline industry, or else it could find it difficult to emulate the same levels of performance and success on the new routes.
Moreover, with regards to the current strategy, JetBlue should also start cutting back on further capital expenditure. Despite low cost carrier popularity, the airline industry is in decline. JetBlue is one of only two firms to post profits, and while this is good performance indicator, the company should not overstep its mark by assuming that such success could be easily replicated on a larger scale. With lower passenger traffic and other macroeconomic factors determining airline prospects, it would be a wise choice for JetBlue to hold to their guns for the time being especially given that they will have a sufficiently large fleet at their disposal once all the newly ordered planes arrive.
