Jetblue’s Business-Level Strategy
JetBlue’s business-level strategy can be summarized in the words of its founder: To bring humanity back to air travel. In simple words, it means to increase the number of people that choose air flight as a mode of transportation.
JetBlue had a clear vision since its formation that the increase in passenger number can be reached only through the combination of high-end quality customer service associated with low cost. The JetBlue management team believed that innovation would be the driving force behind achieving the designated strategy. This is why since their beginnings, they have tried to differentiate their company from the competition by offering services which only a few other companies industry offered. They imitated their main competitor, Southwest Airlines, by offering a single seat class for their passengers. But instead of using the standard Boeing 737 aircraft, which many US companies use, they innovated by using the Airbus A-320 as their aircraft. The narrower body of the Airbus A-320 permitted them to offer wider passenger cabins and wider seats with more room for carry-on baggage.
Another innovation they introduced is the use of last-generation IT programs. These were programs like the new online booking system, which allowed customers to reserve a flight online or by a touch-tone phone. To have flights on schedule and avoid customer dissatisfaction due to delays, they introduced the use of a paperless cockpit which allowed pilots to prepare more quickly for the flight. JetBlue also provided unlimited beverages and snacks to customers during flights. For flights over two hours, they aired a selection of first-run movies and installed 36 channels of DIRECTV programming.
The methods mentioned above were the actions on which the JetBlue management team based on turning this newly launched company into an industry leader. In the beginning, it seemed that they did it. The September 11th, 2001, attacks resulted in widespread fear of travel throughout the United States and Europe. Many airlines encountered huge difficulties and announced millions of dollars in lost revenue, and some even declared bankruptcy. Nevertheless, JetBlue reported increased profits and even expanded its investments in IT technology to offer even more innovative services and improve the quality of the existing ones. In 2004 the company expanded its aircraft fleet and invested $80 million as part of the John F. Kennedy airport expansion in New York. The new aircraft ordered had bigger television sets on them with even more satellite channels.
But here, we see the turn. Gradually the growth rate showed signs of saturation, and while operating expenses grew significantly, revenues began slowly to decrease until, in 2004, the company reported its first quarterly net financial loss. The factors that influenced this situation were a combination of increased competition and the rising threat of substitute products, increasing expenses, and bad management decisions. The case of the flights in February 2006 where the managers believed the weather would improve and did not cancel the flights is an example of bad management.
JetBlue has positively impacted the industry and has changed it by introducing new technology and techniques in serving the client. Yet, this company still has a long way to achieve its business strategy, as expressed when it was formed.