Strategic Planning: Jet Blue Airways Gregory James Professor John Mitchell BUS 599 Strategic Management April 24, 2011

Abstract
This report has been produced to determine if the strategic planning in which new of Jet Blue Airways CEO David Barger has created, will help to ensure the company long term success. Addressed in this report will be the following topics: (1) What are the trends in the U.S. airline industry? How might these trends impact a company’s strategy? , (2) What is Jet Blue’s strategic intent? , (3) What are Jet Blue’s financial objectives? Has the company has been successful in achieving their objective? , (4) What are Jet Blue’s strategic elements of cost, organizational culture, and human resource practices? Does each of these elements provide the organization with a competitive advantage? , and (5) What are Jet Blue’s strategies for 2008 and beyond? Will Jet Blue be successful implementing these strategies or not?

Strategic Planning: Jet Blue Airways
What are the trends in the U.S. airline industry? How might these trends impact a company’s strategy?
With the constant changes in the country’s economy, airlines are having more difficulties reaching a competitive advantage. The constant raise in fuel and oil cost to fuel airplanes has caused airlines to come up with a plan to maintain these cost. In addition, the airlines also focus on increasing profit return to shareholders and company executives. To achieve this goals airlines have started to charge fees for services such as for checking in in-person, booking with a credit card, overweight baggage by the pound, luggage per distance, booking online, bags that want fit under the seat, transferring tickets to another persons name, and to use the bathroom. From these new charges airlines have reported earning a $2.1 billion dollar profit in 2010 (Mayerowitz, 2011).
What is Jet Blue’s strategic intent?
Airlines, such as JetBlue, strategized in a way that resulted in reduced operating costs. JetBlue’s strategic intent is to focus on customer service and low fares. Ceo David Neeleman’s constructed his plans upon his own experiences as a passenger, and also his professional experiences employed in the airline industry. Additionally, JetBlue’s customer service provided by its employees and Neeleman himself went above and beyond the call of duty to please customers. Neeleman once drove an elderly couple from the JFK airport to their home in Connecticut to save them $200 for a tax (Thompson, Strickland, & Gamble, 2010).
To cut cost, JetBlue Airlines only offer only one class of seating. Each seat contained leather upholstered with satellite television monitors installed in every seat; which was free of charge. To cut operating cost, JetBlue has decided not to offer meals to its passengers. Instead they provided gourmet snacks to customers during flights. Another plan organized by JetBlue was when they implemented information technology. Customers now have the option to purchase electronic tickets better known as e-tickets, which helped to reduce costs by nine dollars. The use of e-tickets saved on operating costs and provided a convenience to its customer. The e- ticket allowed JetBlue’s reservation agents to work at home, which reduced the company’s overhead costs and use of supplies for paper tickets. The convenience of an e-ticket for its customers remedied the all too often occurrence of forgotten paper ticket. These strategic plans helped to reduce ticket prices and a shorter wait time for aircraft turnaround (Thompson, Strickland, & Gamble, 2010).
What are Jet Blue’s financial objectives? Has the company has been successful in achieving their objective? JetBlue’s financial goal was to make enough profit for expansion. JetBlue Airlines began with offering services to the New York and metropolitan area. JetBlue’s first home was the John F., Kennedy (JFK) International Airport. The mission was to operate service to high salary paid professionals within a five mile radius of the JFK Airport. When the issues involved with air traffic congestion in its operating home became a concern. In response JetBlue expanded and offered flights from slighter congested airports within and surrounding the New York City metropolitan area. During JetBlue’s second year in business, it added additional destinations. (Thompson, Strickland, & Gamble, 2010). In the third year the company began to offer public stock and acquired its satellite television system, LiveTV, LLC. The company also again expanded to more destinations and offered additional weekly flights to destinations such as Las Vegas. Between the years of 2003 to 2007, JetBlue acquired more airplanes, offered flights to the Caribbean, Mexico, and Puerto Rico and more amenities and services while in flight (Thompson, Strickland, & Gamble, 2010).
What are Jet Blue’s strategic elements of cost, organizational culture, and human resource practices? Does each of these elements provide the organization with a competitive advantage? JetBlue’s elements of cost exercised the company’s strategies of offering services as a discount airline. The company offered passengers low fares; operated point to point systems; used two types of aircraft; served only snacks; and maintained quick turnaround times at airports. The cost-cutting strategies enable JetBlue to keep operating costs and ticket fares comparatively lower than other U.S. carriers. The cost cutting strategies certainly give JetBlue a competitive advantage over competitive carriers (Thompson, Strickland, & Gamble, 2010). JetBlue believed people can accomplish the extraordinary when they are given the authority and responsibility to succeed. The company’s executive vice president of Human Resources, Ann Rhoades, established a culture that encompassed safety, caring, integrity, fun and passion. Rhoades challenged hiring managers to be creative in the interview of candidates and created employment options so employees would not feel they were locked into contracts. Rhoades also created programs where employees could share responsibilities and a job could be split so that one could spend more time with their children. Rhoades also ensured that the company continually exceeded employee expectations and to ensure that it listened to its customers. The company aims to continually improve its services and differentiate itself from its competitors (Thompson, Strickland, & Gamble, 2010). When the company seeks to hire new employees, candidates was hired based upon their performance in group activities. JetBlue offers lower salaries to their employees than any other airline. JetBlue makes up the low salaries with the company’s benefits packages. JetBlue’s benefits include health coverage, profit sharing, and 401k retirement plan. The company also incorporated a no lay off policy where the company relied on downsizing through voluntary packages and attrition during difficult economic times (Thompson, Strickland, & Gamble, 2010).
What are Jet Blue’s strategies for 2008 and beyond? Will Jet Blue be successful implementing these strategies or not? In 2008, JetBlue’s executives were convinced in establishing new strategies which included, reevaluating the ways the company was using its assets, reducing capacity and cut costs, raising fares and growing in select markets, offering improved services for corporations and business travelers, forming strategic partnerships, and increasing ancillary revenue. Unfortunately, the new strategies did not prevent the all time low that JetBlue reached on July 2008. Jet Blue only held 4.3 percent market share in the airline industry. With most of the airline industry struggles of 2008 resulting in mergers, Jet Blue braced itself for takeover (Thompson, Strickland, & Gamble, 2010). Although Jet Blue holds a small percentage of the market share in the airline industry the company is still in business today. With other company adding new fee for passengers, Jet Blue may end up receiving the turnaround customers who decides they are not going to continue to pay for extra fees. By continuing to strive to bring back humanity in the airline industry, Jet Blue could possibly become a top airline in the U.S.

References

Mayerowitz, S. (2011). 11 New Airline Fees We Might See in 2011. Retrieved online http://abcnews.go.com/Travel/11-airline-fees-2011/story?id=12540664 Thompson, A.A., Strickland, A.J., & Gamble, J.E. (2010). Crafting and Executing Strategy (17th Ed.). New York: McGraw-Hill-Irwin.