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Analysis of Case JetBlue Airline's Success Story - Essay Example

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Analysis of Case JetBlue Airline's Success Story

For one, all airlines were facing serious financial crunch with customers losing confidence in security arrangements on airlines and government urging airlines to invest more on the same.
With additional costs being incurred on safety measures, prices per ticket went up and this ultimately led to fewer people choosing US airlines. The only way JetBlue could succeed was by discovering and developing a business model that would promote cost efficiency and effectiveness. Luring customers with lower prices is always easy but offering them quality service and making money at the same time are gargantuan tasks. The firm thus planned to use its resources efficiently by transferring costs from unproductive services to more productive once and hence creating value. Value led to volume and this led to lower fares and ultimate success. The few core areas that JetBlue targeted were cost, operations, technology, marketing and human resource.
JetBlue knew that cutting costs is not always the best practice unless it is matched by higher quality as well. It is easier to cut costs and offer sloppy service but if a firm wants to succeed in the long run and create a good image in the mind of the passengers, it is important to reduce costs by investing in more productive services. The airlines refused to serve meals on any of its flights. This could have been a dangerous move since people expect meals on flights especially long ones. But JetBlue thought of an alternative. Instead of serving meals, it served chips, crackers and cookies along with canned drinks and coffee. This way, passengers had enough to eat while the firm was saving money. While an ordinary meal would cost $4 per customer, snacks were costing 12-14 cents per passenger. Besides, serving snacks also went well with the firm's image as a fun airline.
The firm decided to offer core services at cheaper rates. This meant providing customers with services that they would really appreciate. Since people had already been complaining of airline food, it was about time that money was shifted to something better. JetBlue decided that a fraction of the money it saved on food could be easily transferred to such services as leather seats and personal television sets. In the end, the firm emerged a winner with its business model allowing more cost effectiveness and efficiency. The firm stands just a notch below SouthWest in terms of cost per passenger mile ($6.43 and $6.33 respectively) but stands far ahead of other airlines and industry average of $12.45 per passenger mile. Scanlon (2003) quotes USDTV CEO and writes: "We like what JetBlue has done, we like what Dell Computers has done and we like what Toyota has done," says CEO Lindsley, referring in particular to JetBlue's success at challenging its larger competitors by offering bare-bones service at cheaper prices. "These companies were able to gain a foothold in very maturing industries, even with incumbents that are well- heeled." The airline also uses A-320s instead of Boeing 737s since the former is more fuel-efficient.

Operations:
Interestingly JetBlue has no class distinctions on its flights. There is only one class, which means equal service to everyone, and no compromise on quality. Apart from that, it also allows the firm to use its human resources more efficiently since staff can be interchanged between flights. There were fewer scheduling issues to handle.
Another operational choice and a wise one at that was ...Show more

Summary

JetBlue's survival and success gained immense popularity by virtue of being a firm that was operating in an industry that was losing money rapidly. Airlines industry in the United States incurred major losses after September 11 and was actually encountering financial crisis even before the incident…
Author : jabari07
Analysis of Case JetBlue Airlines Success Story essay example
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