Jetblue Airlines' Success Story|Business Strategy|Case Study|Case Studies

Jetblue Airlines' Success Story

            
 
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Case Details:

Case Code : BSTR045
Case Length : 15 Pages
Period : 2003
Organization : JetBlue Airways
Pub Date : 2003
Teaching Note : Available
Countries : USA
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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EXCERPTS

Jetblue's Success Model

JetBlue succeeded because of its cost advantages and no-nonsense approach to business. The company adopted aggressive cost cutting by doing away with most of the frills other airlines provided (which only increased their cost and did not improve customer value) without compromising on quality or comfort.

Said Neeleman, "You can be efficient and effective and deliver a great experience at the same time." JetBlue's aim was to create a cost structure that would support low fares, without lowering service standards. The fares charged by JetBlue for a round trip averaged between $98 to $498, which was more than 50 per cent less than those charged by the majors in the industry (For instance, a round trip from New York to Florida cost about $ 500 on the major airlines; JetBlue charged about $ 140 for the same trip with a seven day advance purchase). To support its decision to become a cost leader, JetBlue adopted a number of innovative measures on its flights. Jetblue decided not to serve meals on its flights, no matter what the distance or duration. Neeleman identified food as an area in which major cost cutting was possible...

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Looking Ahead

JetBlue succeeded where a number of other airlines failed. The primary reason for this success was that the airline tried to be different. It built its success on low cost and high standards, which attracted and kept passengers, and at the same time helped the airline remain solvent in times when the majors were crumbling to dust.

However, analysts wonder whether this magnitude of success can be sustained for a longer period. JetBlue's cost leader approach succeeded because the airline was in its growing stage and could yet exercise close control over the business. There were no labor problems because the airline was small enough for all the employees to feel involved and for the management to look after its employees well. Things cannot be the same forever. With JetBlue growing at a very rapid pace, its real success would be in replicating the same model successfully on a larger scale. An important factor in JetBlue's success was that it operated in a niche market, where it had no competition. It adopted the Southwest model, but did not operate in the same markets. However, competitors were catching up with JetBlue...

Exhibits

Exhibit I: A Note on Low-Cost Airlines
Exhibit II: Income Statements of Jetblue
Exhibit III: Loss Position of Airlines in America
Exhibit IV: Awards Received by Jetblue
Exhibit V: Route Map of Jetblue


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