Jet Blue

Case Overview: JetBlue entered the airline market with the idea of offering its passengers comfortable seats and in-flight entertainment for an average one-way price of $99 per passenger. They have a paperless ticketing system and baggage tracking system. In order to be competitive against the other airlines, JetBlue ran at 70 percent of the operating costs of other carries by flying one model of plane, a non-union workforce and a single vendor software to run their information systems. Under normal circumstances this philosophy allowed JetBlue to compete at a high level within the airline industry. A 2007 Valentine’s Day storm and bad decisions led to a disastrous week for JetBlue and led management to reassess their business strategy.

Company Information:

Background: JetBlue, a small airline focused on “luxury” flights at a low price with a focus on customer service by offering its passenger’s leather seating and TV’s in the headrests flights for an average one-way price of $99 per passenger.

Business Model: JetBlue adopted a business model based on offering value priced tickets with an attention to customer service. They would compete in the airline market by flying a single make and model aircraft, have a non-union workforce and streamlined information systems to keep cost down.

5 Forces Analysis: Jet Blue’s new model was the initial threat to the industry with low cost fares and great customer service, easy reservations and streamlined IS systems and operations in an industry that was cutting back on customer service. JetBlue was able to develop a loyal customer base using this model and creating a high level of customer satisfaction. JetBlue had Competitive Advantage through their low cost IT Innovation of a simple system and a small staff. They also have a lean non-union workforce and fly a single make and model of aircraft to keep operations simple.

In an industry flooded with fixed costs, JetBlue found ways to minimized costs while...