JetBlue Airlines Case Analysis Essay Example

2000, their primary goal has been to grow enough to be successful, but to remain small enough to preserve their original strategic direction. Corporate Governance & Key Players Key information on the corporate governance of Jet Blue Airways is presented in Appendices 1-3. Appendix 1 provides an overview of the Board of Directors. Appendix 2 introduces the reader to the top management team.

Appendix 3 reviews the Standing Board Committee Composition for the audit, compensation, and corporate governance committees. Jet Blue Airways has painstakingly followed guidelines from the Sarbanes-Oxley Act to institute clear charters for each committee. Further, the company has implemented a code of business for the entire organization conduct and a code of ethics for its board members. A major director holder of Jet Blue Airways is Deutsche Lufthansa AG with 19% of equity or 42 million common shares (2007 Annual Report on 10K, 2008, February 19, p.

66).Major institutional investors include Manning and Napier Advisors, Thornburg Investment Management, Primecap Management, and Capital World Investors (Appendix 4; Jet Blue Airways Corporation Major Holders, n. d. ). Major goals and objectives JetBlue’s major goals and objectives are to offer a low fare, low cost passenger airline that provides high quality customer service, and to build an organization where the employees take pride in their company (JetBlue Airways 2006 Annual Report, n.d. ).

Present strategy/strategies Some of JetBlue’s most important strategies are:

•Limiting operating costs

•Flying with a new Airbus A30 Fleet Developing a quality brand

•Hiring dedicated employees

•Pursuing the latest technology

Its overall strategy has been to identify routes with high average fares and beat the competition price, as well as to distinguish itself with service offerings such as TV and

radio programming. Identification of the Industry The passenger airline industry in the U. S.is comprised of three segments: major carriers, regional carriers, and low-cost airlines. Currently there are 16 major carriers, the largest of which are American, Continental, Delta, Northwest, Southwest, and United (JetBlue Airways 2006 Annual Report, n. . ). These airlines offer scheduled flights to most large cities, and except for Southwest, use the traditional hub and spoke network route system (Flint, 2005).

Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume routes. These airlines generally form alliances with the major carriers and provide service from their hubs to smaller cities in the region. Low cost carriers such as Southwest developed after deregulation in 1978. Southwest pioneered the low cost airline model, which many other airlines have tried to copy.Although there are currently four low cost major U.S. carriers (JetBlue Airways 2006 Annual Report, n. d. ), major competitors according to market share include (Figures 1 and 2; JetBlue Airways Corporation Overview, n. d.):

•AMR Corporation

•Southwest Airlines, and

•UAL Corporation.

Industry Profitability

Intensity of Rivalry

The airline industry can be considered an imperfect oligopoly. There are several large carriers that dominate long distance flights, and many small carriers that compete for short distance flights. Competition is fierce, and the return for most carriers is very low.Some airlines are trying to differentiate themselves, like JetBlue for example, by offering superior services at low prices. Other low cost airlines, like Southwest, offer low costs with no frills.

Most airlines offer a frequent flyer programs in order to develop brand loyalty. In recent years there has also been several alliances formed between airlines. These alliances

enable the airlines to share customer information, schedules, and distribution systems. Threat of New Entrants The airline industry is a highly capital intensive industry, which is a major barrier for new entrants.Along with the capital required for start-up, government regulations and licensing which can be difficult to obtain. A second reason the risk of new entrants at this point in time is low is the current cost of fuel, which is a major operating costs for all airlines.

Other deterrents are: the difficulty in establishing a strong brand identity, generating start-up capital, and obtaining the distribution channels required to compete. Threat of Substitutes There are several substitutes to air travel including automobiles, buses, and trains.Most potential customers make their travel decision based on time, money, personal preference and convenience. Air travel offers a good benefit/cost ratio, and offers time advantage over most other methods of travel.

Bargaining Power of Suppliers For aircraft, there are basically two major suppliers, Boeing and Airbus. Because of the limited options available, it is difficult for airlines to exert much power over these two suppliers. However, both Boeing and Airbus are very dependant on the airline industry as well, and must remain competitive to stay in business themselves.If purchasing new aircraft becomes unaffordable, airlines have the option of purchasing second hand aircraft.

There is a considerably large market for used aircraft, since a well maintained aircraft can have a useful life of more than 20 years. Over the last few years there has been an interest in smaller more efficient aircraft for regional airlines. There are more suppliers in this market such as Bombardier and Embraer. One of the major areas of concern

for the entire industry is their reliance on fuel. Some airlines such as Southwest have been very successful in hedging fuel costs.Fuel costs are the number one concern for airlines, and they are relatively powerless in this area.

Bargaining Power of Buyers The bargaining power of airline customers is low because of several factors, low concentration of buyers, the large number of buyers, and no threat of backward integration. Recently though, with the introduction of the internet, consumers information has improved dramatically, and this has given some power to consumers especially in markets that are serviced by multiply carriers.

Summary

The airline industry has several basic competitive forces in their favor. The first and foremost is the low risk on new entrants.

Even with deregulation, the capital required to start up can be enormous. Global alliances between major carriers provides numerous advantages to these carriers and makes them more competitive. The industry also has few substitutes, especially for long distance travel. The relatively low bargaining power of consumers is also favorable for the industry. The downside of this industry is its fierce competitiveness, and its dependence on oil. These two factors are major concerns that have a substantial impact on profitability and maybe even survival of some carriers.

The Macroenvironment Political-Legal Forces Government Regulations – Airlines must comply with DOT, FAA, and TSA. The DOT regulates economic issues, the FAA regulates flight operations and matters affecting air safety, and TSA is part of the Department of Homeland Security and is responsible for all civil aviation security. Compliance costs can be significant.

Economic Forces

•Reduced Corporate Travel – Over the last few years there has been a dramatic reduction in travel budgets in

most businesses in the U. S.

To reduce costs, businesses have restructured their travel policies putting limits on meals and entertainment, lodging, and first class air travel.Corporations are also giving up long standing relationships with major carriers for lower cost, no frill carriers, resulting in substantial savings. •Fuel Price – The high price as well as the fluctuations in fuel costs are the industries main concern. Fuel makes up about 15 to 20% of total operating costs, and is the second largest cost to airlines, surpassed only by labor.

•US Economy – Airlines depend on the health of the US economy which affects air travel by business travelers as well as leisure travelers.

Many of the airlines costs are fixed, and to be profitable, the flights must be full.

Social Forces

•Mergers – The airline industry has not performed well over the last few years. To benefit from economies of scope and scale, airlines are considering mergers with other airlines. •Terrorist Attacks – The events of September 11 was one the most influential socio-cultural factors affecting the airline industry. Besides the impact on the already weakened economy, the attacks brought into question the safety of public air travel. Weather – Weather can have an impact on customer satisfaction level due to cancelled or delayed flights, as JetBlue found out the hard way in 2007 (Field, 2007).

Technological Forces

•Internet – The internet has brought the most fundamental changes to the airlines. Customers can now purchase tickets on line, eliminating the need for customer service agents and travel agents. The internet has also made consumers more sensitive to price since they can very easily compare costs and schedules of competing carriers on line.

Successes and Failures in the Industry In 2002, United Airlines became the 11th U.S. airline to file for protection under Chapter 11 since the industry was deregulated in 1978.

The second largest airline in the U. S. , United, was the largest airline in U. S. history to invoke Chapter 11. In restructuring, United focused on operational rigidities, aircraft debt, lease and municipal bond obligations, labor costs and collective bargained constraints on flexibility, retiree medical costs and pensions (Sprayregen, 2008). In a report published in 2002, research showed that there was a relationship between several variables and the health of the airline. Airlines operating many brand types of aircraft, older fleets and in an unstable economy (high inflation) can be expected to be more prone to be distressed” (Gudmundsson, 2002). The study also indicated that high load factors, more departures per aircraft and high average number of passengers carried per departure are positively related to success. In recent years, low cost and low fare carriers such as Southwest, JetBlue, AirTran and ValuJet have been successful (Higgins, 2005).

All fly busy routes between mostly secondary airports or point to point between major irports, have a low cost structure, and emphasize customer service (Flouris, 2005). Critical success factors for these carriers are:

•Pricing Structure – carriers offer a great variety of services to differentiate their product and target all possible groups of passengers from cost conscious leisure travelers to time sensitive business travelers.

•Since low cost carriers focus heavily on costs, carriers select lower cost airports such as Love Field in Dallas. These smaller airports also have a faster turn around time as.

•Low cost carriers generally (except for AirTran) operate only

one to two types of aircraft.This reduces training costs for pilots, flight attendants, and maintenance personnel.

Having a uniform fleet also reduces maintenance costs.

•Low cost airlines fly point to point. This eliminates wasted time at hubs, reduces operation costs since there is no luggage transfer, and increases plane utilization.

•Low cost airline employees are much more productive. On average, pilots in low cost airlines have a 60% salary base and receive the remaining 40% according to their performance.

(Flouris, 2005) Current Firm-level StrategyJetBlue’s strategy is to establish itself as a high quality, low-fare, low-cost passenger airline and maintain a growth plan that takes advantage of their competitive strengths (JetBlue Airlines 2006 Annual report, n. d. ). The key elements of their strategy are:

•Stimulate demand with low fares – Low fares are designed to stimulate demand from cost conscious consumers. The low costs will also compete with alternate forms of transportation such as bus, rail, and automobiles.

•Commitment to low costs – Low costs and thus low fares are designed to attract customers from higher costs carriers. Offer high quality service and product – Providing quality services at low costs differentiates JetBlue from its competitors. JetBlue offers new aircraft, roomy leather seats, LiveTV, and free XM radio and movies.

•Expand their presence in New York City and their network – JFK is the largest travel market in the U.S. , by expanding operations in this key market more market opportunities will become available.

•Operate new and efficient aircraft – JetBlue operates a fleet consisting of two types of aircraft, the Airbus A320, and EMBRAER 190. The average fleet age is only 2. years (JetBlue Airlines 2006 Annual report, n.d. ). Operating a

fleet of new aircraft with the latest available technology is efficient and improves overall reliable. Current Business-level Strategy JetBlue is a good example of a low-cost-differentiation strategy (Parnell, 2002).

The airline provides low cost service and distinguishes itself from other low cost providers by offering satellite television on board, new aircraft, and leather seating. JetBlues competitive strengths are:

•Low operating costs – JetBlue has one of the lowest cost per available seat in the business.The focus on high aircraft utilization, low distribution costs, workforce productivity, and operate only two types of aircraft which helps keep training and maintenance costs to a minimum.

•Strong brand – JetBlue is a widely recognized brand that helps distinguish them from the competition. They have a reputation for being a safe, reliable, low-fare airline that focuses on customer satisfaction.

The company continues to deliver the “JetBlue Experience”.

•People – JetBlue realizes that its people are its key competitive advantage.It focuses on hiring individuals who are friendly, helpful, team oriented, and committed to providing the JetBlue experience.

•Well positioned in the New York area – the New York vicinity has a market of over 25 million people, the largest single market in the U. S.

Business Strategies of Major Competitors Major competitors for JetBlue are AMR Corporation, and Southwest Airlines. American Airlines is the number one airline in the U. S. and one of the largest airlines in the world.

American serves over 250 destinations in about 40 countries. The overall fleet consists of over 1000 aircraft.AMR has the distinction of being the only one of the 6 largest traditional U. S. airlines that has never filed for bankruptcy protection (Trottman, 2006).

American’s long term strategy is to repair the

company’s balance sheet and keep the brakes on growth (Trottman, 2007). Managers at American work closely with employees to reduce costs and improve efficiencies, encouraging cooperation between the unions and management. Although filing for bankruptcy could quicken the recovery process, AMR believes avoiding bankruptcy at all costs is a better strategy.The company also announced they would sell American Eagle to save costs and help them focus on core operations (Trottman, 2007).

The company recognizes that despite all their efforts to reduce costs, low cost airlines such as Southwest and JetBlue still have lower costs, and that a major restructuring may be required in order to compete on price. Southwest continues to be North America’s most successful airline. “Southwest’s strategy has been to draw travelers not from other airlines, but from cars, buses, and trains, by providing then the least expensive and fastest service available (Parnell, 2002).To keep costs low, Southwest flies only one type of aircraft, the Boeing 737, and flies linearly, as opposed to the conventional spoke and hub model. Their entire focus is on low cost, no frill travel. Other airlines are copying Southwest’s business model, and the gap between conventional carriers and themselves is closing.

Their very successful hedging strategy is also becoming less effective, eating away at their profitability. The company recently announced that they will reduce the number of routes currently being served (Trottman, 2008) Current Functional Strategies Marketing StrategyJetBlues marketing strategy is to attract new customers by offering superior services at low costs. The message JetBlue tries to make is that low cost and quality air travel are not mutually exclusive. The company markets it products through newspapers, magazines, television, ratio,

internet, billboards, and targeted public relations and promotions.

The company is involved in large multi market programs, local events, and sponsorships and mobile marketing programs to promote brand awareness. The primary distribution strategy is to have customers purchase their tickets directly through the internet.This program is very effective, 79% of all sales in 2006 were done through JetBlue’s website. Remaining sales were carried out by agents and Global Distribution Systems (GDS). GDS’s have resulted in higher average fares, helping to offset the additional costs of using this distribution channel (Air Transport World, 2007). Having a variety of channels creates significant cost savings and helps build customer loyalty.

JetBlue also sells vacation packages through JetBlue Getaways. Packages include airfare, hotels, car rentals and attractions. JetBlue cruises are also now available.JetBlue has also started to offer gift cards, credit cards for both businesses and individual consumers. JetBlue has a customer loyalty program called TrueBlue. The program offers free travel and additional services for loyal customers.

The company offers a range of fares including 14 day, 7 day, and 3 day advanced purchase. The fares increase as the number of days prior to travel decreases. JetBlue is committed to offering lower fares than their competition, typically 50% to 60%, and match the sale fares offered by other airlines (JetBlue Airlines 2006 Annual report, n. . ).

JetBlue believes that one of its people provide a competitive advantage. Customers return to JetBlue because they provide a more enjoyable travel experience.

Production & Purchasing Strategies

To keep operation costs as low as possible JetBlue has the following strategies:

•Maintain a high aircraft utilization rate – JetBlue schedules and operates their aircraft efficiently, and operate a number of

red eye flights to keep the fleet productive throughout the night. Keep distributions costs low – JetBlue uses electronic tickets

•Select, train, and retain a productive workforce – JetBlue high productivity is a result of fewer labor work rules, and the use of part time employees.

•Utilize only two types of aircraft.

This helps reduce training costs, maintenance costs, and simplifies scheduling.

•Fuel costs are the largest operating expense. JetBlue uses a third party fuel management service to procure their fuel. They also have a fuel hedging program that covered approximately 38% of their fuel requirements last year (JetBlue Airlines 2006 Annual report, n. . ).

JetBlue also contracts out their line maintenance activities and maintenance checks to a third party. Component overhaul and repair is also contracted out. Human Resource Strategy JetBlue believes that the high quality service provided by their employees provides them with a competitive advantage. They hire the best people and treat them the way they expect to treat passengers. They carefully select, train, and maintain a flexible and diverse work force of caring, passionate, fun and friendly people. JetBlue offers flexible work hours, paid training, a uniform allowance and benefits.

Leadership training is also provided for all supervisors and managers to ensure the correct culture in maintained throughout the company. JetBlue’s compensation package includes a competitive salary, wages and benefits, a profit sharing program, and an employee stock purchase plan. Certain employees also participate in a stock option plan. The total compensation package is reviewed annually to ensure JetBlue remains competitive. JetBlue also provide each FAA licensed employee with a 5 year contract. To date, all JetBlue employees are non-union.

Information Systems Strategy JetBlue’s created the paperless

cockpit which allows pilots to access all flight information and keep detailed records electronically. This speeds up flight departures and arrivals. JetBlue uses automated systems and technology to operate their business, enhance customer service and achieve low operating costs. Their systems include computerized reservations systems, flight operations systems, telecommunication systems, websites, maintenance systems, check in kiosks, and in flight entertainment systems.Since the performance and reliability of these systems is critical to the business, the company has implemented security measures and change control procedures and have disaster recovery plans. JetBlue’s revenue management system is used to maximize passenger revenue by optimizing the fair mix.

The system determines the number of seats offered at each fare through a process of forecasting, optimization, and competitive analysis. The system uses historical data along with current bookings, upcoming events and other pertinent data to forecast anticipated demand and optimize ticket price.

Financial Strategy & Position of the Firm

All financial ratios are located in Appendix 5. The companies current ratio is 0. 9 versus an industry mean of 1. 16 and a market medium of 1.69. This means that current liabilities are greater than current assets. A ration of 2. 0 is considered healthy.

Asset turnover is comparable to both the industry median as well as the market median. Gross profit margin in above both the industry mean and well as all three major competitors. UAL gross profit margin is only 4. 2%. Return on assets for JetBlue is poor at less than 1%.

Industry mean is almost 4%, with Southwest showing the highest return with over 4%.Return on equity is also poor. JetBlue is currently at 4%, with the industry mean at 12. 6%.

SWOT

Analysis Strengths

•Low cost – JetBlue’s cost per passenger mile, excluding fuel, was the lowest of all major carriers in the U. S. JetBlue’s results are due to their high aircraft utilization rate, low distribution costs, productive workforce, and low operating costs. •Productive non-union workforce – JetBlue is non-unionized, which is generally more productive than union shops.

This however could change in the next few years, and could have a significant impact on the company (Tobias, 2003).JetBlue is effective at using part time labor, and uses labor saving technology.

•Strong brand – The company has strong brand recognition. It’s recognized as a reliable, low cost airline focused on customer service.

•Leadership team with extensive airline experience – The leadership team is comprised of individuals with considerable experience in the airline business. The airline business is very complicated, and depth of expertise is an asset.

•Major presence at JFK – JetBlue is the largest airline in the New York City area, the nation’s largest travel market.Weaknesses •High fixed costs obligation – JetBlue has approximately $3 billion of debt, most of which has floating interest rates (JetBlue Airlines 2006 Annual report, n. d. ).

An increase in lending rates could significantly impact the company.

•Dependence on highly automated systems – JetBlue is highly dependant on automated systems. A failure of one of these systems could have a significant impact on the business.

•Dependence on Boeing and Embraer – There are advantages to operating only two types of aircraft, however, this can be a weakness as well.If either company were to experience financial problems, or be subjected to FAA actions, this could have a severe impact on the company.

Opportunities

•Growing demand for low cost airlines – Consumer

are becoming more and more cost conscious. This is true both with business travelers as well as leisure travelers. JetBlue is in a good position to take advantage of this trend.

•Marketing alliances – Establishing an alliance with other carriers would provide for code sharing, frequent flyer program reciprocity, coordination of flight schedules, and other efficiency improvements. Threats Increasing fuel costs – Fuel costs are the largest single operating costs.

Prices and availability are major concerns to all carriers.

•Increasing competition – The airline business is very competitive, profit margins are low, and fixed costs are high. Companies compete on price, and even small changes in price can have a big affect on profits. Other airlines are becoming more efficient and lowering cost directly competing with low cost carriers like JetBlue.

•Terrorism – In the event of another terrorist attack the airline industry would experience a significant drop in demand similar to 9-11. Poor economy – The airline industry is very dependant on the economy.

If another recession occurs, the industry will see a significant drop in demand.

•Security obligations or other government requirements – All carriers are subject to DOT, FAA, and TSA regulations which could change over time and compliance could be costly.

•New York City Market – JetBlue relies heavily on the New York City area for its core business. Changes in this market for what ever reason could have a significant impact on the company. Changes in the industry - Restructuring/mergers/bankruptcies/consolidation of other major airlines allowing them to reduce costs and rationalize route structures.

•Inability to attract and retain qualified personnel – One of JetBlue’s competitive advantages is their people (Ford, 2004).

The workforce is the U. S. is shrinking,

and the availability of key resources will decrease in coming years. JetBlue will have to compete for skilled employees such as pilots and maintenance personnel.

SWOT Matrix Opportunities

1. Growing demand for low cost airlines

2.Market alliances

Threats

1.Increasing fuel costs

2. Increasing competition

3. Terrorism

4. Poor economy

5. Security / government requirements

6. NYC market

7. Changes in the industry

8. Recruitment

Strengths

1. Low cost

2. Productive non-union workforce

3. Strong brand

4. Leadership team with extensive airline experience

5. Major presence at JFK

Offensive Alternatives (Strength/Opportunity combination)

1. Expand the business to other markets such as Canada, Latin America and Europe. (S1, S3, S4, O1)

2.Form a market alliance with another carrier. (S1, S3, S4, O2) Defensive Alternatives (Weakness/Threat combination)

3.Renegotiate debt to a fixed rate. (W1, T2) Offensive/Defensive (Strength/Threat combination)

4. Use the companies strong brand recognition to develop a recruiting strategy that identifies potential talent at the high school level. (S3, T8)

5. Use the low cost culture to find additional savings to help offset fuel costs, poor economy, and increasing competition. (S1, T1, T2, T4, T5, T7) Offensive/Defensive (Weakness/Opportunity combination)

6. Form market alliance: this could provide a source of qualified personnel, address the systems weakness, and reduce dependencies on Boeing and Embraer.This option will be combined with option 2. (W1, W2, W3, O2)

Weaknesses

1. High fixed cost obligation

2. Dependence on highly automated systems

3. Dependence on Boeing and Embraer

Alternative #1: Expand the Business By taking advantage of their low cost structure, JetBlue could expand their market since there is a real demand for low cost travel, both for business travelers as well as leisure travelers.

This would require an investment in more aircraft which would also take advantage of the current low interest rates.

Alternative #2: Form a Market AllianceJetBlue has a lot to offer to

other airlines. They have a low cost structure, a very productive work force, a well know brand, and a leadership team with extensive airline experience. Forming an alliance with another carrier could be profitable for both parties.

Alternative #3: Renegotiate Debt Reducing JetBlue’s current debt structure from floating rate to fixed rate would reduce the company’s exposure to higher interest rates which would affect their overall costs and thus their competitiveness in such a cost conscious business.The lower costs would also help offset and increase in fuel costs.

Alternative #4: Recruiting Strategy JetBlue could use their strong brand recognition and major presence in the New York City area to recruit personnel. One area that could be explored is the recruiting of potential employees at the high school level. With such strong brand recognition, and with appropriate marketing, younger individuals could be drafted as future employees. Alternative #5: Cost Reduction Culture From day 1, JetBlue developed a cost conscious culture.By further exploiting this culture, the airline could reduce costs even further which would help offset the threat of increasing fuel costs and increasing competition from other low cost airlines, and larger airlines that have been able to significantly reduce their costs by restructuring, forming mergers, consolidating, or by filling for bankruptcy protection.

Analysis of the Alternatives Alternative

Pros Cons Benefit Effort Expand the Business

•Increases profits if done correctly

•Requires a considerable amount of capital

•Increase debt

•High risk

•Requires more people

HighHigh Form a Market Alliance

•Would require less resources Opens up markets

•Less dependence on current resources

•Could get resistance from anti-trust regulations

•Could have an impact on current routes

•Alliance with another company could eventually have a negative impact on the brand

HighLow Renegotiate Debt

•Has the potential to reduce

costs

•Reduce risk if rates increase

•Would require a renegotiation of terms if rates were to drop significantly in the future

•Lenders may not be willing to renegotiate

High Low Recruiting Strategy

•By targeting talented resources at the high school level, the company accesses a resource that is currently untapped. Individuals as well as the company would get the opportunity to see if there was a good fit between the company and the individual.

•Recruiting at this level may have a negative social impact, a “robbing the grave” appearance.

HighLow Cost Reduction Culture

•Increase profitability

•Increase competitiveness

•Increase market share

•More pressure to reduce costs may have a negative impact on moral

HighHigh Recommended Alternatives

Of the five options discussed above, three have a high benefit and low effort rating.

The option of renegotiating debt will not be considered since negotiating a fixed rate may not be an option for the company.Even if it was possible, the fixed rate would take into consideration possible long term effects and would reduce the overall impact. The option of forming an alliance with another airline will also not be considered since some experts (Air Transport World, 2007) disagree whether or not this is a good long term arrangement for the industry. The remaining option has to do with recruitment. One of the factors that differentiate JetBlue from its competition is the high quality of service provided by their employees. Customers return to JetBlue not only because of their low prices, but because of the JetBlue experience.

Since this is a major competitive advantage, a pool of skilled individuals is critical to the success of the company. One source of skilled resources is other airline companies. However, these individuals may not have the values

that JetBlue needs in order to be successful. One relatively untapped resource of potential applicants is high school students.

A strategy to select, train, recruit and retain individuals from this target group is proposed. Implementation For this new functional strategy to be effective, structural as well as cultural changes will be required.From a structural point on view, new procedures will be required to select, train, and retain the right people. Since the target group is relatively young, determining the “right stuff” at such a young age will be difficult. A marketing strategy will also be required to get the message out that JetBlue is a great place to work and is interested in hiring young people who have an interest in a career in the airlines. At first, the focus on the hiring strategy should be on positions that are deemed to be the most critical in the near future.

A detailed analysis of the current as well and future labor pool will be required.If for example this analysis indicates that there will be a shortage of trained mechanics in the near future, then this is the target group that should be selected. In this particular case, schools with good trade programs should be targeted. Besides this recruitment strategy, training systems will be required.

Since these entry workers will be generally at a lower level than normal recruits, training systems that are more basic in nature will be required. On a cultural level, the airline currently places great value on experience. This will need to change.Placing value on “new blood” and the opportunity to mold individuals will be needed. Patience will also be required, since visible results may

take several years. This change will also take strong leadership skills.

The leaders of the company must recognize the need for this new strategy, create a vision that everyone can understand and accept, and then put the necessary structure in place for it to happen. Control To track how well the new strategy is doing, several key measures could be put in place:

•Number of unfilled positions (should be very low if the strategy is working).

•Number of recruits in the system compared to plan. Percentage of recruits that are hired and become “successful” employees.

•Cost of recruitment, either in total dollars, or cost/position filled compared to the traditional costs. In three years, the system should be up and running and well established with all the structure in place.

After 5 years, there should be a steady stream of candidates emerging from the system and there should be few in any vacant positions. The culture should have changed, and new recruits should be readily accepted into the company.

In 10 years, the recruitment strategy should be a model for other organizations to follow.Future Prospects for the Company JetBlue is currently having difficulties due to the public relations fiasco it experienced last year due to a weather delay and also due to the current high price of fuel. However, the company is rebounding with its Consumer Bill of Rights, and compared to other airlines, has an excellent business model. It has the best of both worlds; JetBlue has a low cost structure and has managed to differentiate itself with their JetBlue experience. Short term, the airline may experience some turbulents, however in the long term it should become more profitable.If fuel prices

do remain high, eventually all carrier will have to raise their prices to return to profitability.

When this happens, JetBlue will be in a good position to benefit from the higher fares. In order to succeed, the company must be able to attract and retain the right people. This will be critical especially over the next 5 to 10 years. As well, the company need to keep focused on keeping costs under control and finding ways of differentiating itself from other low cost carriers.

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