Jetblue

JetBlue: Managing Growth |

75-498 Strategic Management (Dr. Francis Reiger) |

Final Exam Case Analysis on JetBlue and its strategic growth options. Written by Imad Patel (103001645) |

4/16/2012

4/16/2012

Company Background

Jet-Blue is categorised as a LCC (low cost carrier) operating domestically in the United States. It was founded by David Neeleman in 1999. Neeleman had in depth experience in the airline industry, especially in the LCC sector. Neeleman set ambitious goals for the company that it consistently achieved, thus making it the ninth largest passenger carrier in the United States.

The company shared objectives similar to its competitor Southwestern Airlines. Neeleman was able to incorporate best practices learnt through his experience with Southwestern. The three striking similarities between JetBlue and Southwestern are –

* Focus on providing low cost fare

* Abstaining from the use of the hub-and-spoke structure used by legacy airlines

* Limiting aircraft fleet to a single type of plane (Airbus A320) to benefit from economies of scale and expedite learning curve associated with plane use and maintenance.

The company differentiated itself by providing a hybrid of low cost and differentiation models. It provided fares at 65% discount compared to legacy carriers and gave attention to comfort features, value added attributes and esthetics of its planes. These provisions set it apart from players in the LCC sector, making it an intermediary choice between LCC and Major/Legacy carriers.

JetBlue deviated from its single airplane model to include the Embrear E190 aircrafts to service its low traffic destinations. The E190 was a smaller plane than the current Airbus A320, and seated 100 passengers. This strategic move was meant to position JetBlue in competition with legacy airline RJ’s, connecting non-focus cities to focus cities. Addition of the...