SWOT Analysis: JetBlue Airways
Known as one of the very few airlines which has actually managed to make a profit since the downturn in the travel business, which was a result of the September 11th attacks, JetBlue Airways continues to pride itself by living up to its dedication of “bringing humanity back to air travel”(JetBlue Bill of Rights). JetBlue was incorporated in Delaware in August 1998 and was founded by David Neeleman, a former Southwest Airlines employee and practicing Mormon man with nine children in February of 1999(JetBlue Airways).
The vision of the airline was to provide low cost air travel with certain amenities, including TV’s on every seat of the plane and a Satellite radio system. “JetBlue was given 75 initial takeoff and landing slots at JFK Airport and was provided with their authorization to take to the skies in February of 2000. Flight operations began on February 11, 2000, with their charter service of JFK to Buffalo and to Fort Lauderdale”(JetBlue Airways Information). Now, the airline “serves 46 destinations with over 400 flights daily operating with a fleet of 107 Airbus A320 aircraft and 35 EMBRAER 190 aircraft”(JetBlue Airways).
JetBlue has the following cities as their operating bases: JFK Airport(NYC), Logan Int’l(Boston), Orlando Int’l, Hollywood Int’l(Fort Lauderdale), Long Beach Airport and Luis Munoz Marin Int’l(San Juan, Puerto Rico). The headquarters of JetBlue are located in the Forest Hills neighborhood of Queens, New York with nearly 12,532 employed. For the year of 2009, the airline incurred $3. 286 billion in revenue, had an operating income of $279 million, a net income of $58. 0 million, total assets of $6. 554 billion and a total equity of $1. 39 billion.
JetBlue Airways announced its initial public offering on April 11, 2002 and is traded on the NASDAQ as JBLU”(JetBlue Airways). JetBlue offers to its airline passengers innovative and strategic services, such entertainment and food and drinks on flight, with the intent of attracting more travelers by providing affordable airline fares. In addition, JetBlue makes it a #1 priority to assure the fun and comfort level of its passengers, which assures that it remains one of the highly regarded airlines in the friendly skies today.
Organizational Strengths and Weaknesses To begin with, “JetBlue was named by Conde Nast Traveler Magazine’s “Readers’ Choice Awards” as the number one U. S. domestic airline for six years”(JetBlue Airways Information). JetBlue is known as the low cost airline which has low operating costs and also which makes effective use of technology and advertising. The airline tends to focus on serving those markets which have been underserved and markets which have average fares that are on the high side.
Considering the fact that many of JetBlue’s top management has migrated from Southwest Airlines, they follow the low cost strategy which Southwest has established, but JetBlue tends to differentiate itself by providing their customers with certain perk incentives such as offering a “live TV at every seat with 36 Direct TV channels and XM Radio with over 100 channels”(JetBlue Airways Summary). And don’t forget free wireless Internet and movies. In addition to the entertainment options, JetBlue also offers complimentary snacks to everyone.
Another strength of JetBlue is the “unique relationship which the company has maintained since the beginning with its employees”(JetBlue Airways Info). The manner in which they acquire new personnel through their hiring and talent acquisition process, to perform their unique job functions in such a manner which they service their customers in a positive and pleasing way. During their hiring process of new talent, JetBlue not only relies on and looks at the skills of a potential candidate, but they also take a close look at other attributes such as the candidate’s attitude and personality.
The company learned early on that it was more of a cost effective approach when employees are used in a variety of job roles, as opposed to having employees who are specialized in one area only and that are not permitted to work outside of their job expertise. In addition to their wonderful staff and customer service, JetBlue also offers their passengers “comfortable seating, with lots of leg room. They actually are able to offer their taller passengers some extra leg room with 4 more inches of space available”(JetBlue’s Bill of Rights Info).
Along with the seating options, JetBlue also operates with a fleet of newer jets, as compared to some of the other budget airlines. Now, the weaknesses of JetBlue happen to be first of all, that they continue to expand, however, at a slow rate. They currently only offer flights to 61 cities in the US and to a few other countries, with their home base airport, JFK, having the highest congestion in the country. Plans for global expansion are also on the drawing board, however, this is also happening at a slow pace. In order for the airline to remain competitive, they must expand their horizons and soon.
Another issue which came up recently and happened to be a weakness, is that JetBlue received some negative press. “What had happened was that in May of 2010, one of their pilots threatened to harm himself a few hours before takeoff. Also, in August of 2010, one of their flight attendants started an argument with a passenger, decided to grab a beer for himself and slid down the emergency exit. Not to mention the story of how in February 2007, there were passengers on a Jet Blue flight who ended up being stranded on the tarmac for over 8 hours”(Jet Blue Info). Organizational Opportunities and Threats
Considering the fact that JetBlue’s financial position is stable, the company has an excellent opportunity to be able to work on both national and international expansion. This expansion plan would increase the number of flights which the airline will have to offer, which will in turn, increase the company’s revenue. “The expansion of the Caribbean routes in particular, will allow JetBlue to use the new Embraer 190 fleet for those haul trips which are shorter and that originate from Florida”(JetBlue Airways Summary).
In addition to expanding the routes of the company, the ompany also may be able to close those routes which have proven to be not so profitable and which show a low potential for demand in the future. Another opportunity which exists for JetBlue is that the airline has created some joint ventures with other airlines with the goal of new market development. In particular, “American Airlines and JetBlue announced the launch of a recipro- cal frequent flyer agreement, effective November 18, 2010, which allows members of the American Airlines AAdvantage program and JetBlue’s TrueBlue customer loyalty program to earn AAdvantage miles or TrueBlue points, respectively, in select markets”(PR Newswire).
This joint venture will only result in many good long term effects for JetBlue. It will make the airline even more of a household name than it already is. In addition to the joint ventures with other airlines, JetBlue recently also made a change with their reservation system to Sabre. “Sabre will allow JetBlue to offer greater revenue-producing codeshare and interline partnership opportun- ities, which will expand network choice for our customers; expanded ancillary revenue and marketing opportunities; and will help us gain more insight into our customers”(Boardingarea. com).
Due to the fact that the previous system which JetBlue was using previously, this limited the company in terms of compatibility. Now, this will change significantly and JetBlue will evolve even more. In taking a look at the threats which JetBlue is faced with, I feel that the #1 threat which JetBlue and all the airlines for that matter are faced with is the issue of the increase of fuel prices. With the way in which our economy is operating now, the airlines are concerned about the rising price of jet fuel, just as the consumer is concerned about the rising price of gasoline.
The increased costs will obviously cut into the profit which JetBlue is making, which will in turn, affect their bottom line. Secondly, another threat to this organization would happen to be that of the increased strong competition which they are facing from the other major airlines. The marketplace right now consists of airlines who are doing everything which they can possibly think of to increase their revenues, but of course, at the same time, cut their costs. In order to achieve long term survival in the business, measures need to be taken to ensure this. And this is not just in reference to the airline business, but to all industries.
Lastly, the third threat which I would like to mention is actually similar to the previous threat of increased strong competition from the other major airlines. What I am speaking of would be related to customer service and more in par- ticular, the issue of customer complaints and refunds. Once again, due to the extremely volatile workplace environment which exists today, when it comes to customer service issues, especially when money is involved, it is extremely crucial, now more than even before, to provide excellent and efficient customer service, or else there is going to be the possibility of the customer going some where else.
The consumer has many choices of where they can take their money and business these days, so JetBlue needs to be ready to service and retain their passenger base. Strategies and Summary As we have learned from this SWOT Analysis, the JetBlue Airline organization was introduced into the ever so competitive airline industry as a small, but quite innovative airline, which has weathered through a large part of the economic crisis that faces us all today. In lieu of this though, the airline is now faced with some particular issues such as rising jet fuel costs and competition from other airlines.
We have also learned that it can be an extremely challenging task to keep on top of the airline industry, and that a company(in any business) can only achieve profits if they are able to maintain their costs. When JetBlue was first formed, it had the advantage of having lower costs due to the fact that their fleet was new and younger than a large part of the rest of the industry. However, now this is changing, and as the crew members and the aircraft fleet begin to age, JetBlue will not be able to maintain the same scenario which they enjoyed before.
Just like any intelligent organization or businessman, JetBlue has recognized that there is a need for change to occur. Topics such as entering into new ventures with other airlines, for example. JetBlue also has recognized the need for the company to decrease the cost per available seat mile(CASM), in addition to concentrating on decreasing their operating expenses as well. Also, the newer management staff is working hard on scaling back their initial expansion plan, in addition to considering the concept of charging the passengers for some particular on-flight amenities.
In addition, JetBlue is in the process of revitalizing the workforce with the assistance of a team based performance pay structure and also by altering their current boarding structure. They will be able to decrease the “taxi out time”, which will in turn help to reduce flight delays and decrease unnecessary fuel expenditures. In the event that JetBlue is able to successfully carry out these strategic components, JetBlue will enhance the performance profitability of their workforce, without having the possibility of sacrificing the core strategy of providing a high quality/low cost experience for the customer.