JETBLUE AIRLINES

TEAM C Jason Gardner Matt Torba Luigi Napolitano

JETBLUE

Above all else, JetBlueAirways is dedicated tobringing humanity backto air travel. We striveto make every part ofyour experience assimple and as pleasantas possible.

Jet Blue Strategies

JETBLUE HISTORY

Feb-1999: Founder David Neeleman announces plan for his new airline.

Jul-1999: JetBlue announces that all seats will have live satellite TV.

11-Feb-2000: First inaugural flight from JFK to Ft. Lauderdale, FL.

21-Dec-2000: Flies its one millionth customer & reports $100 million in flown revenue for 2000.

09-Nov-2001: Installation of bullet-proof, dead-bolted cockpit doors across its fleet

11-Apr-2002: Announcement of initial public offering of its common stock.

JETBLUE HISTORY

13-Jun-2002: Launch of the TrueBlue customer appreciation program.

13-Nov-2003: JetBlue adds two inches more legroom for most customers on all aircraft

16-Mar-2004: JetBlue launches online flight check-in 4-Mar-2005: JetBlue receives FAA's highly coveted

Diamond Certificate of Excellence Award

6-Jun-2005: JetBlue opens state-of-the-art training and support campus at Orlando International Airport

24-Jan-2006: JetBlue begins offering Dunkin' Donuts coffee onboard all flights

JETBLUE HISTORY

23-March-2007: JetBlue celebrates the arrival of its 100th Airbus A320 aircraft

11-December-2007: Complimentary in-flight e-mail and instant messaging

services are introduced on aircraft BetaBlue, a first among U.S. domestic airlines

28-January-2008: Refundable fares are introduced

8-April-2008: Goodbye flying…hello jetting!

20-May-2008: Jetting to Green introduces carbon offsetting and an alternative fuel partnership

8-September-2008: Flights and vacation packages are successfully auctioned on eBay – an airline first

JETBLUE HISTORY

2008:JetBlue becomes the official airline of the Red Sox

2009:JetBlue Airways Announces Plans to Serve Punta Cana, Dominican Republic

2010:JetBlue Airways unveils specially painted Airbus A320 aircraft paying homage to the New York Jets

2011: JetBlue and Virgin Atlantic team up on transatlantic travel

Political Economic Social Technological

POLITICAL

1993 : As a response to the current recession of 1991, President

Regulatory factors

Clinton appointed the National Commission to Ensure a Strong Competitive Airline Industry

(Because in 1978 : Deregulation of the airline industry) 1994: NAFTA is implemented to increase trade to Mexico and Canada

Political stability

1999 : President Clinton’s Impeachment Trial

2000 : George W. Bush is elected to the President of the United States

2001 : September 11 terrorist attacks Hundreds of new flying rules and regulations are enacted.

ECONOMIC

1991: The Persian Gulf War and rising inflation combined to cause a

Recession

Economy began to boom due to low levels of inflation

1999: Led to record low levels of unemployment - 4.2%

Increase in minimum wage from $3.80 in 1990 to $5.15 an hour in 1997

Use of the internet helped lead to all-time high for stock market

2001: Tech bubble burst and Sept. 11 terror attacks lead to 2001 recession.

2007 recession

Rise in Inflation

Rise in oil prices

SOCIAL

1998: Television graced 98% of the households in the US

The average home had 2.4 television sets

The average viewer watched 7 hours a day

74% of US households had cable

1999: 83 1/2% of population had completed 4

years of high school (compared to only 41% in 1960) U.S.

Greater customer awareness

Security level of customers

Bad services & lost baggage

TECHNOLOGICAL 1992: Invention of the World Wide Web

Adoption of standardized software – Windows

Huge increase in available memory for computer systems

Rapid proliferation of internet to homes, schools, offices, etc.

1994 : Beginning of e-ticketing

Summer 1999: Over half the airlines tickets

purchased are e-tickets

Providing personal television

Paperless cockpit

OPPORTUNITIES AND THREATS Since Jet Blue only operates using a single fleet,

they can expand their number of fleets while increasing their number of flights and destinations

Jet Blue can also look into working with other Airlines to provide joint flights

Terrorism is one threat that scares people from boarding airplanes

With the current economic state in recession people may not travel simply because of lack of funds

Creation of Airlines Alliances

STRENGTH

Low Operating cost

Strong brand

Efficient employee

Single fleet

Consumer satisfaction

Effective use of technology

Advertisement

WEAKNESS

Relative new company

Single fleet

Concentration on middle class

Shifting customer’s need

AIRLINE INDUSTRY

NAICS Code: 481111

Scheduled Passenger Air Transportation

This U.S. industry comprises establishments

primarily engaged in providing air transportation of passengers or passengers and freight over regularroutes and on regular schedules.

Establishments in this industry operate flights even if partially loaded.

Scheduled air passenger carriers including commuter and helicopter carriers (except scenic and sightseeing) are included in this industry.

THE AIRLINE INDUSTRYTotal Revenue ($ Billions) % Market Share

American Airlines 23.8 19.14 Delta Airlines 22.7 18.26 United Airlines 20.2 16.25 Continental 15.2 12.22 US Airways 12.1 9.73 Southwest 11 8.85 Lan Airlines 4.5 3.62 TAM S.A. (Brazilian Airlines) 4.2 3.79 Alaska Air Group 3.7 2.98 Skywest 3.5 2.82 JetBlue 3.4 2.74

COMPETITION

LIFE CYCLE CHART

THE AIRLINE INDUSTRY IS IN A LATE MATURITY/EARLY DECLINE STAGE, DUE TO: •DECLINING PROFITS •STANDARDIZED FEATURES •SMALL SCALE PLAYERS AREN’T SURVIVING (ALOHA, SKYBUS AIRLINES,

SOUTHEAST AIRLINES, ETC.) •CUSTOMER LOYALTY IS KEY (FREQUENT FLYER PROGRAMS, CREDIT CARDS

WITH MILEAGE REWARDS)

VALUE CHAIN Inbound Logistics Strong internet presence (jetblue.com,

TrueBlue, Facebook, Twitter) Web-based ticketing Operations Crew-scheduling software Automated baggage handling No meals : efficient turnaround time and

reduced costs Outbound Logistics Airports are chosen carefully Less congested airports

JETBLUE PERCEPTUAL MAP & ACTIVITY SYSTEM

Price

Low

High

Quality

Low

Southwest

American Airlines

United Airlines

Delta

Frontier

AirTran

JetBlue

ACTIVITY SYSTEM

JETBLUE DESTINATIONS & WEBSITE

SOURCES OF VALUE (COMPETITIVE ADVANTAGE)

Positioning (JetBlue looks "to bring humanity back to air

travel.") Brand: Jetting Happy (and the color Blue) Not “flying”, but “Jetting” - a new experience Green and socially conscious Geography: Looking for markets with fewer competitors - not at all the large airports Point-to-point operations, not a hub airport Purchased smaller jets to facilitate smaller

airports Covers domestic flights and is moving

international

SOURCES OF VALUE (COMPETITIVE ADVANTAGE) Capabilities Products/services: Extra amenities Sleep kit, leather seats, TV’s at each seat,

additional leg room Low cost airfare Technology: High on technology TrueBlue rewards service is all online Facebook and Twitter accounts DirectTV and Satellite television/radio on all seats

on all flights

SOURCES OF VALUE (COMPETITIVE ADVANTAGE)Capabilities Processes: majority of ticketing and paperwork is done

online - streamlines the processBusiness Model: Low Price flights No airport hub - avoiding areas with lots of competition Point to point destinations Keep the employees happy - no-layoff policy No unions have been formed - during one attempt, only 35% of machinists wanted to join a union Profit sharing Highly regarded training process

ADDING VALUE WHILE DIFFERENTIATING

and Reducing Costs Removed 6 seats from the A320 fleet Net savings of $30 million over five years Additionally plan to reduce the inflight

crew to 3 Reduces the weight of the aircraft by 904 pounds Marketed to customers “more inches of

legroom than any other U.S. airlines' coach cabin”

PORTERS FIVE FORCES ANALYSIS

BARGAINING POWER OF CUSTOMERS

To reduce the bargaining power of consumers: Customer incentives such as TrueBlue, which allows customers to earn rewards, book flights in an

easier/faster manner, and stay on top of upcoming events/sales. Partnered with AmEx for a jetBlue a credit card Reward miles are used only on jetBlue Customer Loyalty: Flying round trip across the US

two times will earn you a free reward Points are earned relatively quickly Customers can research easily using the internet No switching costs - customers need a reason to

stay

THREAT FROM SUBSTITUTES

Threat is high : numerous other airlines Switching costs among airlines are low Switching costs among other transportation

options are high for everything but short distances Trains, boat and car travel are time intensive Additional partnership with Aer Lingus,

Lufthansa, and Cape Air to keep customers flying within the

partnership High exit barriers - bankruptcy laws allow loss

makers to continue operating

BARGAINING POWER OF

Suppliers Very little threat from suppliers Only two suppliers: Boeing and Airbus Little/no chance of cooperation between suppliers

THREAT OF NEW ENTRANTS

Deregulation made it possible for new entrants

Very high cost of entry Hundreds have gone defunct trying to

compete against the larger airlines Competition among airlines at airports :

must get a certain amount of “slots” at an airport Brand image and loyalty is important New airline must be seen as safe and

reliable

COMPETITIVE RIVALRY

Keeping Employees: No-layoff policy with their employees Led to pilots deciding not to form a union in

2008 Very friendly and nurturing training process Keeping Consumers: Product is differentiated through free food,

tv, extra leg room, rewards system, etc. Focus on different customer segments:

those looking for more than just a low price

VRIO Value: Does a resource enable a firm to exploit an

environmental opportunity, and/or neutralize an environmental threat? YES

Rarity: Is a resource currently controlled by only a small number of competing firms? Are the resources used to make the products/services or the products/services themselves rare? YES

Imitability: do firms without a resource face a cost disadvantage in obtaining or developing it?, Is what a firm is doing difficult to imitate? NO

  Organization: Are a firm’s other policies and procedures

organized to support the exploitation of its valuable, rare, and costly-to-imitate resources? YES

RESOURCE EVALUATION

JFK Hub The JFK Airport hub in New York City is a tangible physical resource of JetBlue

Airline Fleet JetBlue’s airline fleet is another tangible physical resource of the firm.

I.T./Operations The information technology and

operations structure of JetBlue is an intangible technology resource.   JetBlue is proud of their nearly “paper-less” operations.