Anders Mærøe - X Triin Tartes - Y

“Bringing humanity back to air travel” - D. Neeleman

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SummaryJetBlue

From 9 to 50+ departures per day

in 11 months

Founded 1999Commenced 2000

6th biggest airline company in the US

Low-cost airline for an underserved

segment

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5,2% domestic market share

X & Y

Success story of innovating with ICT

paradigm

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ContentsJetBlue

New Type of Business Model

Organisation and Technology

Applicability

Context Strategy / Markets

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X & Y

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New Type of Business ModelJetBlue

New Customer SegmentTargeted the sector of those who rather

would drive, not go at all or was disgusted by their current option.

Choice of AirportChose JFK as airport because of cheap

slot times, was a secondary airport, less congestion for domestic flights

and were close to much of their customer segment

Customer FriendlyIt should be easy to fly, good

reimbursement policies, paperless e-tickets and one single ticket class for all

customers.

Use of new technology and way of organising

Time saving technology and better way of organising. Point-to-point

Many of the alliance bound airlines had huge networks of hubs. JetBlue chose to fly independently directly

where the customers would go.

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X

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In perspectiveJetBlue 5

The Airline Deregulation Act 1978 in the U.S.To encourage an air transportation system which relies on competitive market forces to determine the quality, variety and price of air services

Impact of 9/11US airline revenues falling drastically, JetBlue making profit - low per-passenger mile cost structure and labor cost (no unionization)

Dot.com bubble & early 2000s recession Weakened competition as an advantage. More possibilities to raise money with an innovative approach

ICT revolution Paradigm already in economies, production, communication, but not yet diffused to air industry. Reduction of digital divide in late 1990s

Political support from local and state leadersGeneral dissatisfaction with high fares, stagnated service and “legacy carriers”. E.g. NY officials granted JetBlue with 75 slots at JFK airport

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Market positioning of JetBlueJetBlue

Delta

SouthwestFrontier

United Airlines

American Airlines

Quality

Price

Low

LowX & Y

Employees unionized in 2001

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Lessons learnedJetBlue

New and better HR policiesBenefits from day one, above the industry average, good for short term employees, shared position option, better payment for ramp workers and customer service. Happier staff may lead to happier customers.

No central management or call centerNew ICT tools made it possible to have a spread management and call center all over the USA. Less expenses and no need to relocate.Company values without financial goalsPrimary objective was to create a good work environment and provide the best customer service.

PassengersE-tickets and rotatable computer screens

made flying more comfortable. Later pioneers in internet self service booking.

EmployeesReporting got easier when all pilots got

computers. This as well made communicate easy with the headquarter.

InfrastructureInvested in new fuel efficient airplanes with larger dimensions. Standardized

fleet made maintenance cheaper.

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Used the technological advantages

Shift in way of organising

X

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Lessons learned (2) JetBlue

Profits can be made from bubble burstsDot-com bubble allowed capital creation for IT-based solutions in a strong industry

National tragedy weakened competition for the innovative to advance Legacy carriers were distracted and hit by surprise while JetBlue grew

Location benefitsStrategic location close to the segment had a crucial impact on low costs and making profit

Benefits of point-to-point transitAvoids hassle of entering well-established hubs

Research on market segment & destinations

Knowing the target preferences and underserved segments in the market will likely expand options

Advantages of individualityNo alliances and unions means freedom of

choice in strategic and daily decision-making

Flat and open learningLearning process internally and externally to

JetBlue allowed to copy good features and avoid failures

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Company strategy Impact of the context

Y

National System of InnovationNSI is inseparable from JetBlue’s success - business environment, effective trade, tax, regulatory environment and policy system

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ApplicabilityJetBlue

Other transport industry companiesThe bus industry has adopted the ideas of low-cost, potential in others

(e.g. train industry).

Low-cost airline industry diffusionNew low-cost airline companies are all over the world today. Low-cost

branches attached to many big companies, using ICT to keep costs low.

New type of organizationThe idea of decentralizing different parts of your company can be

done in other businesses and government organizations.

Companies dependant on ICT solutionsExamples of innovating old industries with ICT based business models, e.

g. hotel and music industry etc.

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What other sectors/industries are the lessons applicable to?

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Took the double technological opportunity to make airline travels more efficient and made it possible for a new customer segment to fly.

To be able to provide low-cost fares you are dependent on lowering administration costs and to get more potential passengers.

Used new tools from the ICT revolution and new organizational structures.

Renewal and co-existence with the old industry

OLD VS. NEW PARADIGMJetBlue 10

OLD PARADIGM

NEW PARADIGM

Access to mature specific technologies

Access to new generic technologies and organizational models

Potential for rejuvenation of mature industry

Time

Degr

ee o

f mat

urity

and

dep

loym

ent

Based on slide 31, lecture 5 (Perez)

Deregulation Act

New ICT tools

New organizational models

Advancements in aircraft technologies

X & Y

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X & YBased on slide 22, lecture 5 (Perez, 2015)

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ReferencesJetBlue

Perez, C. Effect Of Context Changes On Viable Strategies: Installation and Deployment; Core and Periphery, lecture 5, slide 31, last viewed 27. September 2015

Market Realist.com, Must-know: JetBlue’s competitive airline positioning, A key overview of JetBlue Airways, last viewed 27. September 2015, http://marketrealist.com/2014/07/must-know-jetblues-competitive-airline-positioning/

Gittel, Jody Hoffer & O’reilly, Charles 2001, JetBlue Airways: Starting from Scratch, Harvard Business School

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X & Y

United States Department of Transportation, Airline Domestic Market Share July 2014 - June 2015, last viewed 27. September 2015, http://www.transtats.bts.gov/

Perez, C. Effect Of Context Changes On Viable Strategies: Installation and Deployment; Core and Periphery, lecture 5, slide 22, last viewed 27. September 2015

International Air Transport Association (2011) The Impact of September 11 2001 on Aviation, last viewed 27. September 2015, http://www.iata.org/pressroom/Documents/impact-http://www.aabri.com/manuscripts/10478.pdf9-11-aviation.pdf

JetBlue.com, Where we Jet, last viewed 27. September 2015, http://www.jetblue.com/WhereWeJet/

Randall, K. 2007, The Jetblue Fiasco: Private profit vs the public interest, last viewed 26. September 2015, https://www.wsws.org/en/articles/2007/03/jet-m02.html

Brizek, M. 200, JetBlue Airways, Trouble in the Sky, Journal of Aviation Management and Education, last viewed 27. September 2015, http://www.aabri.com/manuscripts/10478.pdf

Aras, G., Crowther, D. 2012, Governance and Social Responsibility: International Perspectives, pp 28-29

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Thank you! JetBlue 13