Jetblue

Jetblue

Case study
Main problem
Ice storm grounded air bus. Affected 130000 passengers, caused the cancellation of 1100 flights over a six day period, and cost Jetblue an estimated 30 million dollars.
The ice storm was a problem in Jetblue’s external environment and as such was out of the company’s control.
Stock   prices fell from 12.99 to 3.97 from feb 13 2007 to may 30 2008
Rising jet fuel prices – another factor in the firm’s external environment.
New competititors – the firm’s industry environment was seeing the rise of many competitors mainly Southwest airlines.

Jetblue’s reaction to problem
Passenger’s bill of rights- this can be seena as a reactive strategy to correct problem that occurred during ice storm.
Assembly of new senior management team

Founding of jetblue
Neeleman’s vision: a company that would combine the low fares of a discount airline carrier with the comforts of a small cozy den in people’s homes.
Introduction of 24 channel live television via satellite for free to make air travel entertaining. Individual monitors installed in all seats.
Introduction of electronic tickets and the allowing of reservation agents to work from home.
Money was saved on paper tickets, on postage for mailing of tickets and rental of office space.
Competitive advantage – Jetblue was able to obtain a competitive advantage by striving to be the industry’s low cost provider. Feb 11 2000, launching of first flight between buffalo and nyc. This round trip at jetblue cost $98 while fares for this route at other carriers were as high as $600. Flight from jfk to fort laudeerdale, florida one way fare was $159 which was 70 percent lower than fares of other carriers. Jetblue’s operating expenses amounted to 12.77 cents per revenue passenger mile, compared to 20.95 cents per passenger mile for Delta and 13.85 for Southwest. Exhibit 3. Booked more than 75 percent of its sales on its own website leading the industry and reducing travel agent commissions.

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