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JETBLUE CASE STUDY - Research Paper Example

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JETBLUE CASE STUDY

However, a disturbing fact about turnover of Jetblue is that, far from increased percentages of sales over the years, the percentages are actually falling. Sales for 2006 constituted a 36% increase over 2005, but sales proportion of 2007 is only around 20% increase over 2006. It is imperative that sales growth is consistent through larger quantum of sales and revenues over profitable segments. Coming to variable costs, it is seen that the proportion is larger for variable costs rather than fixed. Aircraft fuel, as expected, holds the largest chunk. Rising fuel prices is one of the principal risks in the airline business. Jet fuel costs were considered the second largest operating cost in the airline industry, after staff costs. Coming to hedging it is seen that occasionally the company should purchase crude oil options contract or swap agreements. These commodity prices are connected with aircraft fuel, making derivative of them effective. These are short term measures designed to counteract against steep increases in prices of aircraft fuels.
Lower distribution costs, lower selling overheads and higher instance of productive output. This has been brought about by use of electronic ticketing and maximum use of internet services for airliners.
Only two types of aircrafts in use: The...
Coming to variable costs, it is seen that the proportion is larger for variable costs rather than fixed. Aircraft fuel, as expected, holds the largest chunk. Rising fuel prices is one of the principal risks in the airline business. Jet fuel costs were considered the second largest operating cost in the airline industry, after staff costs. Coming to hedging it is seen that occasionally the company should purchase crude oil options contract or swap agreements. These commodity prices are connected with aircraft fuel, making derivative of them effective. These are short term measures designed to counteract against steep increases in prices of aircraft fuels.
Four possible reasons on how the company has, up to now, managed and achieved low operating costs are as follows.
Lower distribution costs, lower selling overheads and higher instance of productive output. This has been brought about by use of electronic ticketing and maximum use of internet services for airliners.
Only two types of aircrafts in use: The Company flies only two types of aircrafts, A320 and Embraer 190. Thus, it is possible for Jetblue to plan and control its operations, servicing and maintenance. Moreover, its pilots are more comfortable flying aircrafts whose technical and flight systems are well known to them and this helps in attaining ultimate flight efficiencies and lower chances of accidents or operational malfunctioning.
Higher aircraft utilization: By effective and harmonized scheduling of aircrafts, and well- planned movement control, it is able to spread its fixed costs over a larger number of flights and available seat miles. Some of their aircrafts are on day-and-night ...Show more

Summary

The profitability of the company is not consistent and it is not a dividend paying company. Nevertheless, it is believed that over the years, it may gain high incomes and reward its stakeholders substantially. It is seen that its profits/losses for the last five fiscal years have been profits of $103M during 2003, profits of $46M during 2004, losses of $ 20M during 2005, profits of $1M during 2006 and profits of $18M during 2007…
Author : christiansenjac
JETBLUE CASE STUDY essay example
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