JetBlue Airways Corporation

JetBlue Airways Corporation is a low-fare, low-cost airline that offers high-quality customer service mainly on point-to-point routes (JetBlue Airways Corporation, 2003). It intends to maintain a disciplined growth strategy by increasing frequency on their existing routes and entering new markets. JetBlue Airways Corporation derives its revenue mainly from transporting passengers on their aircraft. Passenger revenue was 97% of their operating revenues at the year ended December 31, 2002 (JetBlue Airways Corporation, 2003).

The company endeavors to increase its passenger revenue by increasing its load factor. Other revenues are composed chiefly of the $25 charge to change or adjust a customer's reservation. Other mechanisms include excess baggage charges, mail revenue, revenue from the sale of liquor in-flight, commissions from website travel sales, and concession revenues at the company’s terminal at John F. Kennedy Airport. JetBlue offers the customers a differentiated product, including reliable operating performance, low fares, new aircraft, pre-assigned seating, leather seats, and free LiveTV at every seat.

On September 27, 2002, JetBlue bought all the membership interests of LiveTV, LLC (LiveTV), for about $80 million. LiveTV provides in-flight entertainment systems for commercial aircraft, including live in-seat satellite television, wireless aircraft data link service and cabin surveillance systems. Other services and products offered by JetBlue Airways include the following: online hotel booking and car rental, geographically diversified flight schedule including both long-haul and short-haul routes, free airport parking, SuperShuttle travel pass, and travel gift certificates.

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Additionally, JetBlue in-flight crewmembers have first aid training. By 2003, JetBlue Airways has generated $344 million of equity capital, which has enabled the company, among others, to acquire a fleet of new, single-class Airbus A320. Moreover, by the end of 2007, JetBlue will have an additional 48 new A320 aircraft to their operating fleet of 39 aircraft in 2003 (JetBlue Airways Corporation, 2003). In addition, one characteristic of JetBlue is that it has low operating costs.

JetBlue Airways has low operating expenses because it works with a single type of aircraft and a single class of service with a high utilization. In addition, it has a productive and high-performing workforce and uses the latest technologies. Much of JetBlue’s operating expenses go to aircraft fuel and employee salaries, wages, and benefits, including provisions for profit sharing plan (JetBlue Airways Corporation, 2003). JetBlue’s distribution costs are lower compared with those of other airlines on a per unit basis since many customers book through JetBlue’s website and its own reservation agents.

The airline industry is highly competitive and JetBlue expects competition to continue in the future. For the past few years, unfavorable economic conditions have continued to pressure the airline industry; so much is the pressure that 11 major airlines in the US went in bankruptcy. Moreover, responding to the growth of low-fare airlines in the market share, a number of major airlines have declared efforts to meet the ever-growing demand of fare-conscious travelers (JetBlue Airways Corporation, 2003).

The principal competitive factors in the airline industry are customer service, fare pricing, flight schedules, routes served, safety record and reputation, types of aircraft, in-flight entertainment systems, code-sharing relationships, and frequent flyer programs. JetBlue’s competitors and potential competitors include other low-fare airlines, major US airlines, regional airlines, and new entrant airlines. In 2004, the competition was particularly felt.

Fare-conscious passengers shifted away from large US airlines, prompting these companies to undertake broad cost-cutting measures. Early in 2005, Delta reduced and simplified its fare structure, eliminated many of its ticketing restrictions and reduced change fees to $50. However, the company retains its competitive advantage. While Delta’s one-way maximum domestic coach fare of $499 is much lower than its previous maximum fare, it is still higher than any fares charged by JetBlue (JetBlue Airways Corporation, 2003).

JetBlue’s major marketing strategy is to attract new customers by widely communicating value proposition that low fares and quality air travel need not be mutually exclusive (JetBlue Airways Corporation, 2003). Services and products are marketed through advertising and promotions in the media, and through targeted public relations and promotional efforts. The company also relies on word-of-mouth to promote the brand. Furthermore, the company also largely depends on its website.

In order to attract customers to their website, the airline provides double TrueBlue points to customers who book reservations online. In order for JetBlue to be competitive in the industry, and in order to achieve an effective and efficient bricks and clicks operation, JetBlue should conduct a training program for computer programmers in charge of conceptualizing, designing, and maintaining the website. The training program must ensure that the values of the company are deeply ingrained in the minds of the employees so that these values are reflected in the website.

For example, JetBlue's homepage should be developed into a more user friendly website, and should have additional features. Moreover, JetBlue's website should be always available in order for potential passengers to make some bookings any time of the day. Training employees and updating existing technologies are a daunting and costly task. However, benefits will outweigh costs in the long-term.

Reference

JetBlue Airways Corp (200). http://sec. edgar-online. com/2003/02/18/0001047469-03-005952/Section2. asp

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