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A. SUMMARYIn April 2009, the fear of swine flu going viral shakes the airline industry. JetBlue's stock decreases by 7% to $4.91. Such bad outbreaks could be disastrous for an industry's economy. The risks are even high for JetBlue because it is on track to generate free cash flow for the first time in nine years. JetBlue is a low-cost, low-fare passenger airline and is on road to increase its revenues slightly for the year 2009. JetBlue is ranked number 10 in United States by traffic. The number 1 airline in the industry is Southwest airlines, based in Dallas, Texas.JetBlue has over 11,000 crew members and achieved the number 1 customer service rating. The company has a lot to offer its passengers like new air craft's, more space, luxurious seats, 36 DirectTv channels and premium movie channels. Their onboard products and services include unlimited brand beverages and snacks, and for purchase many other premium brands. JetBlue operates around 650 flights per day and is serving more than 56 cities in 19 states. JetBlue first began international flights in mid of 2009 to Jamaica, Mexico and Dominican Republic.JetBlue stated its operations from Delaware in 1998 and services in 2000 with their primary base of operations in New York. The goal they have set for themselves is to become the leading low-fare, low-cost passenger airline by offering their customers high-quality and differentiated service and products. Since the inception, JetBlue differentiated their service by having a startup capital of $100 million, flying new planes, hiring employees through rigorous screening and focusing on customer feedback. Most of the JetBlue business model is from the Southwest airlines playbook. The founder of JetBlue airways was a former employee at Southwest airways.Because they play by the same strategies as Southwest airlines, JetBlue also takes pride in their superior customer service. JetBlue also became the first carrier to introduce the Customer Bill of Rights which held them accountable if they did not make the customer's travel convenient. In 2008, JetBlue introduced refundable fares and new payment options for their passengers. They also launched a Spanish version of their website to cater that target market. For many years JetBlue and Southwest avoided competition but when companies battling each other in 2009 with the same airports, before these low-cost carriers crossed each other in a very few of cities.

The total of JetBlue's sales booked on their website is 77%. JetBlue also introduced TrueBlue flight gratitude program to awards their regular or VIP passengers with award points. The number of these awards used during 2008 was approximately 297,00 that represented 4% of the total revenue passenger miles. But due to the structure of the program and low level redemptions the displacement revenue by passengers using the TrueBlue awards has been minimal up to date.In financial terms the 2nd largest expense for the company is airline fuel. Although JetBlue enters into agreements with suppliers to partially protect itself from increase in fuel prices. In current scenario the prices are highly effected by the state of the economy, international events and bundle the carriers are offering to their customers. The passengers are more and more interested in low prices as well as comport and luxury for their travels. Some of the other airlines are even providing WiFi services to their passengers onboard. Demand for regional airline capacity remains strong, mainline carriers continue to align capacity more closely with demand.One of the major problems that airlines face today is labor union contracts. Labor negations can take a lot of time i.e. 1.3 years. Once the negotiations are done it goes through several months of federal mediation. Unions such as the International Association of Machinists and the Aircraft Mechanics Fraternal Association works hard on behalf of the ramp workers. The major pitfall to the labor union negotiations is that unions can plan to strike if the agreements are not reached.The congress placed a security reform after the terrorists attacks in 2001. And in 2009 President Obama outlined a new administration budget plan that proposed to increase per passenger fee to $2.50. This fee was to be used to fund the next-generation air traffic control projects. Rising break-even load factor is also threatening airline finances. Most of the airlines since 2000 have been suffering from increase in break-even load factor. This factor is measured by the number of seats the carriers have to sell to cover the operating expenses.Passengers select airlines based on their reliability and on-time travel. The delay or cancellation of flights can could very because of bad weather, unsafe environment, emergencies, airport congestion, maintenance and so on. Competition is very strong in many medium to long haul connecting markets. But with all the efforts, Southwest remains the nation's leading low-fare carrier. They differentiate themselves by charging the passenger no extra fees for window or aisle seats and continues to offer complementary snacks, soda's and coffee.

B. STRENGTHS-WEAKNESSES-OPPORTUNITES-THREATS (SWOT)

a) STRENGTHS Low-fare, low-cost passenger airline. Ranked among top 10 U.S airlines by traffic. Number 1 customer service ranking among low-cost carriers. Wide variety of services for passengers. Operates 650 flights per day. Only carrier with $100 million startup capital. Hiring process rigorously exceptional. New planes with high reliability and efficiency. Introduction of Bill of Rights. Launch of Spanish version of official website.

b) WEAKNESSES Minimal use of True-blue awards. 2nd largest expense is fuel. 23% increase in fuel expenses from 2007 to 2008. Union labor contracts a major problem. Rising break-even load factor. Mishandling of luggage.

c) OPPORTUNITIES Plans to increase TV channels from 36 to 100+. Existence in the largest travel market that is New York. Continuous increase in Travel business. Designing more space into new planes and retrofitting old ones. Opportunity to cater underserved markets.

d) THREATS Viral outbreaks resulting in decreasing stocks. Slow economic growth and unemployment. Competition from biggest competitor Southwest Airlines. Continuous increase in fuel prices. Additional consumption an environmental problem. $2.5 increase in passenger fee to fund air traffic control projects. Decreasing passenger yields due to increased fuel costs. Flight delays and cancellation due to unforeseen factors.

C. PROBLEM STATEMENT

The problem currently for JetBlue Airways is to compete with Southwest Airlines in a very competitive industry. Other issues involve the major economic slowdown, changes in technology and high unemployment. The Major segment of the industry is all under Southwest Airline's command. So, JetBlue Airways requires a clear strategic plan to tackle competitors, keep growing and to keep the financials in shape.

D. EXTERNAL FACTOR EVALUATION MATRIX (EFE)Key External FactorsWeightRatingWeightedScore

Opportunities

1. Plans to increase TV channels from 36 to 100+.

0.0540.20

2. Existence in the largest travel market that is New York.

0.1140.44

3. Continuous increase in Travel business.

0.0930.27

4. Designing more space into new planes and retrofitting old ones.0.0840.32

5. Opportunity to cater underserved markets.0.0730.21

Threats

1. Viral outbreaks resulting in decreasing stocks.0.0920.18

2. Slow economic growth and unemployment.0.1110.11

3. Competition from biggest competitor SouthWest Airlines.

0.1130.33

4. Continuous increase in fuel prices.0.0920.18

5. Additional consumption an environmental problem.

0.0420.08

6. $2.5 increase in passenger fee to fund air traffic control projects.0.0630.18

7. Decreasing passenger yields due to increased fuel costs.0.0620.12

8. Flight delays and cancellation due to unforeseen factors.0.0410.04

Total 1.002.66

E. INTERNAL FACTOR EVALUATION MATRIX (IFE)

Key Internal FactorsWeightRatingWeightedScore

Strengths

6. Low-fare, low-cost passenger airline.

0.1340.52

7. Ranked among top 10 U.S airlines by traffic.

0.0730.21

8. Number 1 customer service ranking among low-cost carriers.0.0740.28

9. Wide variety of services for passengers.

0.0840.32

10. Operates 650 flights per day.0.0530.15

11. Only carrier with $100 million startup capital.0.04

30.12

12. Hiring process rigorously exceptional.0.0640.24

13. New planes with high reliability and efficiency.0.0740.28

14. Introduction of Bill of Rights.0.0330.09

15. Launch of Spanish version of official website.0.0130.03

Weaknesses

1. Minimal use of True-blue awards.

0.0220.04

2. 2nd largest expense is fuel.0.1110.11

3. 23% increase in fuel expenses from 2007 to 2008.

0.0720.14

4. Union labor contracts a major problem.0.0910.09

5. Rising break-even load factor.0.0420.08

6. Mishandling of luggage.0.0610.06

Total 1.002.76

F. COMPETITIVE PROFILE MATRIX (CPM)

JetBlue AirwaysSouthWest AirlinesAmerican Airlines

Critical Success FactorsWeightRatingScoreRatingScoreRatingScore

Advertising

0.1520.3040.630.45

Market Share

0.220.440.830.6

Company Image

0.1740.6840.6830.51

Expansion

0.130.340.420.2

Diversification

0.1340.5230.3930.39

Market Capital

0.130.340.430.3

Competitive Prices

0.1540.630.4520.3

Total1.003.103.722.75

G. STRENGTHS-WEAKNESSES-OPPORTUNITIES AND THREATS MATRIX (SWOT)

SWOT MATRIX FOR JETBLUE AIRWAYS

STRENGTHS-S1. Low-fare, low-cost passenger airline.2. Ranked among top 10 U.S airlines by traffic.3. Number 1 customer service ranking among low-cost carriers.4. Wide variety of services for passengers.5. Operates 650 flights per day.6. Only carrier with $100 million startup capital.7. Hiring process rigorously exceptional.8. New planes with high reliability and efficiency.9. Introduction of Bill of Rights.10. Launch of Spanish version of official website.WEAKNESSES-W1. Minimal use of True-blue awards.2. 2nd largest expense is fuel.3. 23% increase in fuel expenses from 2007 to 2008.4. Union labor contracts a major problem.5. Rising break-even load factor.6. Mishandling of luggage.

OPPORTUNITIES-O1. Plans to increase TV channels from 36 to 100+.2. Existence in the largest travel market that is New York.3. Continuous increase in Travel business.4. Designing more space into new planes and retrofitting old ones.5. Opportunity to cater underserved markets. SO STRATEGY1. Plan new flights for the underserved international markets using differentiated services. (S1, S5, O5)2. Start a new advertising campaign highlighting JetBlue's new planes, their reliability, efficiency and space and other services. ( S2, S3, S8, O1, O4)WO STRATEGY1. Increase passenger fee slightly keeping it below the competitors fees to increase revenues. (W2, W3, W5, O2, O3)

THREATS-T1. Viral outbreaks resulting in decreasing stocks.2. Slow economic growth and unemployment.3. Competition from biggest competitor Southwest Airlines.4. Continuous increase in fuel prices.5. Additional consumption an environmental problem.6. $2.5 increase in passenger fee to fund air traffic control projects.7. Decreasing passenger yields due to increased fuel costs.8. Flight delays and cancellation due to unforeseen factors.ST STRATEGY1. In case of a viral outbreak or economic slowdown decrease prices to minimum lower levels to maintain operations. (S1, T1, T2)

WT STRATEGY1. Using True Blue awards give massive discounts on passenger seats left empty on the last moments . (W1, T7, T8)

H. STRATEGIC POSITION & ACTION EVALUATION MATRIX (SPACE)Financial Positionrating 1 (worst) to 6 (best)Ratings

1Market capital of JetBlue Inc. is $1.35 Billion5

2Gross Profit Margin for JetBlue Inc. is 26.18%5

3Revenues of $3.4 Billion4

4Earnings per share of -0.3362

Industry Positionrating 1 (worst) to 6 (best) FP Total16

1Continuous growth in air travel5

2Increased demand for regional airline capacity5

3Fluctuating fuel prices2

4Strongest barrier to entry5

Stability Positionrating -1 (best) to -6 (worst) IP Total17

1Recession & unemployment-5

2Competitive Pressure between JetBlue & SouthWest-2

3Viral outbreak of swine flu-5

4Competitive Pricing-2

Competitive Positionrating -1 (best) to -6 (worst)EP Total-14

1Market share-2

2Capacity Utilization-2

3Website ease of access and language options-4

4Customer loyalty-2

CP Total-10

SP Average = -3.5, IP Average = +4.25CP Average = -2.5, FP Average = +4.0Directional Vector Coordinates: x-axis: -2.5+(+4.25) = +1.75 y-axis: -3.5+(+4.0) = +0.5

I. INTERNAL-EXTERNAL (IE) MATRIX

Total IFE Weighted Score

The interaction point lies in the V Quadrant Cell in Average category and the best strategies for this quadrant are "hold and maintain strategies" i.e. market penetration & product development. So, JetBlue Airways in the future should hold and maintain their position using Market Penetration and Product Development strategies. Although these estimations are based on approximation, but are not far from what the case is indicating to the reader in a very clear concise manner.

J. QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM) Alternative Strategies

Key Internal Factors

Weight Start a new advertising campaign highlighting JetBlue's new planes, their reliability, efficiency, space and other services. Using True Blue awards give massive discounts on passenger seats left empty on the last moments

Strengths AS TAS AS TAS

1. Low-fare, low-cost passenger airline.

0.1320.2620.26

2. Ranked among top 10 U.S airlines by traffic.0.0730.2130.21

3. Number 1 customer service ranking among low-cost carriers.0.0730.2130.21

4. Wide variety of services for passengers.0.0840.3220.16

5. Operates 650 flights per day.0.0530.1520.10

6. Only carrier with $100 million startup capital.0.04---

7. Hiring process rigorously exceptional.0.0620.12--

8. New planes with high reliability and efficiency.0.0740.28--

9. Introduction of Bill of Rights.0.0330.0920.06

10. Launch of Spanish version of official website.0.01----

Weaknesses

1. Minimal use of True-blue awards.0.0210.0220.04

2. 2nd largest expense is fuel.0.11--10.11

3. 23% increase in fuel expenses.0.0710.0710.07

4. Union labor contracts a major problem.0.09----

5. Rising break-even load factor.0.04--10.04

6. Mishandling of luggage.0.0620.12--

1.00

Alternative Strategies

Key External Factors

Weight Start a new advertising campaign highlighting JetBlue's new planes, their reliability, efficiency, space and other services. Using True Blue awards give massive discounts on passenger seats left empty on the last moments

Opportunities AS TAS AS TAS

1. Plans to increase TV channels from 36 to 100+.

0.0530.1520.10

2. Existence in the largest travel market that is New York.0.1130.3330.33

3. Continuous increase in Travel business.0.09--30.27

4. Designing more space into new planes and retrofitting old ones.0.0840.3230.24

5. Opportunity to cater underserved markets.0.0720.1430.21

Threats

1. Viral outbreaks resulting in decreasing stocks.0.0910.0920.18

2. Slow economic growth and unemployment.0.1110.1110.11

3. Competition from biggest competitor SouthWest Airlines.0.1120.2230.33

4. Continuous increase in fuel prices.0.0920.1820.18

5. Additional consumption an environmental problem.0.0430.1230.12

6. $2.5 increase in passenger fee to fund air traffic control projects.0.0620.1210.06

7. Decreasing passenger yields due to increased fuel costs.0.06--30.18

8. Flight delays and cancellation due to unforeseen factors.0.0420.0830.12

TOTAL1.003.713.69

QSPM indicates that the first alternative strategy is the comparatively more viable to execute as determined by the total scores. The strategy is to Start a new advertising campaign highlighting JetBlue's new planes, their reliability, efficiency, space and other services.

K. CONCLUSIONIt is quite clear from the above analysis of the JetBlue Airways company that they require strategic course of action to counter competitors like Southwest Airlines.. The suggested strategy in the QSPM could work if properly implemented. It is apparent from the results of the above analyses that JetBlue Airways has to come up with another change in strategy to retain the domestic as well as international market. The above viable strategy if implemented in an effective way could prove to be very fruitful for JetBlue Airways.

L. ANNEXURE

PRO-FORMA INCOME STATEMENT:

ASSUMPTIONS:The above is a pro-forma income statement projection for the year 2009. A 20 % increase in operating income is assumed. Other income (expenses) to be 70% of operating income and 56% tax rate. Retained earnings and dividend ratio has not been used because no such sort of policy was discussed in the case. Simple financial terms have been used to elucidate that increasing net income figure. All the above figures used are in millions.