JetBlue Case Study
What does it take to make money in this industry?
- High load factor per Available Seat Mile (ASM)
- High fuel usage
- Low fuel cost
- Labor utilization
- On-time arrivals
- Maximize Revenue per ASM
- Reduce Cost per ASM
- Minimize DOT (complaints)
- Minimize Bags lost
- # customer JVD
- Be in the top JD Power or other customer surveys/reviews
- Maintain a excellent Airline safety record: # of flights/safe landings
- Be profitable
- Maintain a high Stock Price
- Maximize Airplane Utilization (hrs)
- Consistently providing high service standards at in a cost-effective manner.
What is jetBlue’s strategy?
- JetBlue is positioned to capture business ...view middle of the document...
- Cost leadership by:
o having a single class of service with fares averaging 65% less than the competition
o reducing costs by going paperless, using new technologies, and creating a team mentality among the employees.
o adding value to the customer experience by giving a $159 voucher whenever a flight was delayed for more than four hours for reasons other than weather or air traffic, and giving a $25 voucher for misplaced bags
o Saved money by not selling tickets to coordinate with other airlines
o not transfer a passenger’s bags to another airline
o develop “the perfect 30-minute turnaround” so that JetBlue could maximize aircraft utilization
What are the tasks that are critical to implementing the strategy?
- Being adequately capitalized from the start
- Having the top management with experience whose reason to join the team was because they wanted to “ do things right from the start”
- Developing and implementing the operations strategy:
o Choosing the right equipment and technology to fit and enable the strategic measures:
▪ AirBus A320
▪ Computer based (laptops, PDA’s) paperless operations strategy for all areas: to include pilots, maintenance, etc.
- Hiring the right fit people that will embrace jetBlue’s values: Safety, Caring, Integrity, Fun and Passion
What does it take to execute their strategy? (People / Culture / Systems)
- Alignment: Strong allegiance to the firm. However not a permanent position
- Avoid a culture of blame
- Staff is selected to be the right fit for jetBlue
o Human resource levers
▪ Recruitment (recruit for the right fit, word of mouth; friends, relatives, referrals, large pool of applicants)
▪ Selection (based on right fit, consensus, integrity, jetBlue’s core values)
▪ Solutions (involve employees in the solutions by creating Tiger Teams)
▪ Communication (very sensitive to internal and external communication)
▪ Turnover – tailor jobs and employment packages to attract the best employees but not necessarily for ever
o Safety, Caring, Integrity, Fun and Passion were the five core values. These core values shaped the culture of the company. Values drive activities and decision making.
o Work was designed to give people autonomy.
o Supervisors function as coaches rather than bosses
o Non-union workforce. “as long as we are working together well, we won’t need unions”
o Customized Employment Packages that were tailored to employee needs. Not a standardized/one size fits all approach.
o Attracted top management talent that wanted to “do it right from the start”
▪ New airplanes that were highly computerized.
▪ State-of-the-art revenue management system
▪ Single class of service with fares roughly 65% less than the competition
▪ Develop “the perfect 30-minute turnaround” so that JetBlue could maximize aircraft utilization
▪ Computer based(laptops, PDA’s) paperless operations strategy for all areas: to include pilots,...