JetBlue Airlines SWOT Analysis - Research Paper Example

JetBlue Airline S.W.O.T Analysis (Faisal Bakri) (Dr. Theodore) (MGT320) 27th February JetBlue Airline S.W.O.T Analysis Introduction JetBlue Airline is an American based firm whose headquarters are located in Long Island City. Having been founded by David Neeleman in 1999, the airline serves more than 85 destinations in various regions including Latin America, Caribbean and South America. One of the major aspects that make JetBlue Airline a successful company is its culture of forming alliances with other firms in the airline industry. For example, in 2007 the company formed an alliance with Aer Lingus, an Irish flagship company. The alliances according to the JetBlue management will ensure that their customers are able to connect between the two airlines in Boston Logan or JF Kennedy using a single ticket. Other airline companies that JetBlue has formed alliances with include Lufthansa, OpenSkies, American Airlines, Virgin Atlantic Airways, Jet Airways and South African Airways among others. In its effort to maintain strong positive relationship with its clients, JetBlue emulates strong advertising strategies by use of local newspapers, televisions and social media including YouTube and Hulu.com (Laurence, 2008). The company has adopted advertising phrases for example we like you too and unbelievable. As the result of extensive marketing strategies, the company has benefited from strong customer awareness and distinctive positioning aspects that have made it to attain a competitive edge in the market. One of the notable core values that make JetBlue Airline to be the option of US travelers is its strong binding with Customer Bill of Rights. According to the company management, the company has to refund the customer’s funds in the event of a cancellation or delay of flights. JetBlue airlines suffered two major incidents that did not result to any casualty. The first one is the 2005 emergency landing of Flight 292 at Los Angeles Airport. The second one happened on Flight 191 when the traveler subdued the captain and locked him out of the cockpit after a panic attack. S.W.O.T Analysis Weaknesses One of the major weaknesses of JetBlue Airline is that it does not have large number of hubs as compared to other airlines in the US. As a result, the company is not in a position to effectively compete with its rivals that includes Southwest, Pan AM, Northwest, American and Delta among others. This inadequacy in the number of available hubs for the company to use makes it impossible to attend to most of its customers from various locations in the United States. For instance, the company cannot attend to its customers on the west properly without bringing in the services of another airline that has a hub in the west, and this brings down its profits, especially considering that the airline is still small and growing. This also hampers its expansion program especially to meet the international market threshold. JetBlue Airlines has few flight destinations, which is another weakness that it grapples upon especially in comparison with other firms in the US airline industry. The airline has less international destinations and does not even have presence in numerous unsaturated markets such as the Middle East and Asia. The more flight destinations an airline has, the higher the passenger traffic it is able to transport within a given period, and as such, the more revenue it makes within the specified period. However, with a minimal flight destinations outlay, the company is unable to expand its passenger traffic and as such continues recording a low volume on its sales. The low sales volumes also deny the company a sustainable flow of income and profits. This implies that the sales that the company makes are not highest possible and if the company invests in more destinations across the US and abroad, it could make higher sales and sustainable profits. As compared to its competitors, JetBlue Airline has small airlines thus the number of passengers that it carries per year is low. Most of the airlines operating across the United States use big airlines, which carry a large number of passengers in a single flight. As such, these airlines are able to maximize on the economies of scale that come about from their operating on a large scale. However, the small aircrafts used by JetBlue airlines only enables it to carry a minimal number of passengers within a single flight. This means that it has to make frequent trips of flights for it to be able to cover the same expanse as most of its competitors. furthermore, it lacks the advantages that accrue from the economies of scale that come about from operating in a large scale, hence a low profit return as compared to its competitors, such as the Delta Airlines. The low annual sales that the company makes due its small size, such as the small passenger aircrafts that they use, as well as, the few numbers of its flight destinations, denies it an opportunity to maximize its profits. As such, the profit margin of the company is sluggish, thereby coming in such small quantities that the company is unable to use it for expansion and development strategies. As such, in order for the airline to grow, expand, and develop its operations across the United States market, as well as, to the outside world, it has to rely on credit from financial institutions or seek out for mergers and acquisitions with other established airlines. This move would however deny the company the opportunity to enjoy profits as the sole owner of the enterprise, and maybe it may have to lose its brand name and image to the merger. The sluggish profit that the company makes denies it the ability to cover all its debts completely. As such, the company has very high debts because it is unable to meet both its fixed and variable costs. Furthermore, the company suffers high debts because it is unable to meet is floating interest rates, as well as, undergoing numerous other financing problems. JetBlue Airline has approximately 15,000 employees. As compared to its competitors who have large number of workers, the company has high maintenance costs. This is because of the rising operational issues, low fares charged by the company, as well as, other numerous amenities. This has made the company to be less competitive compared to other players in the airline industry, thereby missing potential market share control. Operating in a single class makes JetBlue to discriminate its customers. It is worth to note that customers like to experience the value for their money. Thus, the company does not provide choices for its customers an aspect that makes its clients to look for the services of JetBlue competitors. The single class offer by the airline brings about monotony of services, which denies its customers a quality service experience. As such, customers eager to experience some new classes while flying shun the airline and prefer its competitors’ services, which deny it market revenues and reduce its sales volumes. Consequently, it is imperative for the airline to introduce a variety of classes within its flight programs in order to attract more customers, and provide them with a value for their money. The company has a poor brand image caused by the negative press aired about the airline and its activities. As such, the negative press that the airline received, especially during the last very recent period pose a grave weakness to the airlines brand and reputation. For instance, in May 2010, a pilot in one of JetBlue flights threatened to cause physical and bodily harm to himself just a few moments to the takeoff. In another incident on August 2010, one flight attendant by the name Steven Slater started an argument with a passenger aboard a flight. He later grabbed a beer from the plane and slid down the emergency exit of the plane. Passengers of JetBlue airline flight 751 remained stranded at the tarmac for over eight hours on February 2007. This sort of negative news press only tarnishes the name, image, brand and reputation of the airline, thereby making it lose greatly on the market share available in the country as passengers shun it for its dirty reports. Being a new airline in the industry is also another grave weakness of the JetBlue airlines. This is because the already established airlines in the industry pose stiff competition to the airline and to its services. For instance, it is difficult for the company to make a stunning market entrance since the competitors in the market are some of the leading industry players in the world, which makes it so difficult for a new and small airline to shake its customer base and market share. In addition, these existing and established airlines have economies of scale due to their brand reputation, large size, vast resources, and numerous flight destinations, a privilege that is lacking from the JetBlue airlines disposal. As such, it becomes impossible for the company to grow, expand and develop its services using its own streams of revenue. The global market nowadays is fast adopting technology and creating a massive online presence in order to promote its services and products, as well as, pose a competitive front for the customers and competitors. However, the JetBlue Airlines has a weak online presence, which denies it a number of opportunities that arise from the online platform. one of the most important aspects that the airline misses due to its weak online platform is the inability display essential information on its products and services, as well as, making their sales. This denies the customers of the airline the ability to enjoy online services from the company, and as such, have to do transactions with it the old-fashioned way, which is always long and cumbersome. Consequently, the company ends up being less competitive. Conclusion JetBlue Airline focuses at establishing more destinations across the US. If the company continues with its strategies to form merger or acquire other firms in the airline industry, it will attain a strong financial position that will make it to attain a competitive position in the international market (Laurence, 2008). Additionally, the company should expand its marketing strategies in order to ensure that it creates stronger customer awareness locally and globally. As indicated in the paper, JetBlue weaknesses include few hubs and destinations, small airlines, high debts, high maintenance costs and single class. Based on the various merges that the company has embarked on, it will in the short-term, address the financial problems that it is facing. In the long-term, JetBlue will exploit new markets in other countries if it handles the current financial obstacles and expand its workforce. In order to meet the increasing global demand for airline services, JetBlue will expand its airlines and classes. In this way, the company will attain sustainable profits in its future operations. References Laurence, D. (2008). JetBlue, Exception among Airlines, is Likely to Post a profit. The New York Times. Retrieved February 27, 2014. Read More