Case Analysis on Jet Blue Airways PDF

Preview

Summary

Download Case Analysis on Jet Blue Airways PDF

Description

Case Analysis on JetBlue Airways

Prepared for Mahbub Ullah Miyan Lecturer of College of Business Administration (CBA) IUBAT—International University of Business Agriculture and Technology

Prepared By-

“Analysis on various Factors of JetBlue Airways” |

1

NO.

Name

ID

Sl. No.

“Analysis on various Factors of JetBlue Airways” |

2

1. 2. 3.

Nazmul Hossain Amitabh Bhattacharya Monjurul Islam

11302056 12302068 12302163

2 4 6

4.

Arman Ibna Sahid

13102142

8

5. 6. 7.

Sadia Rahmat Ullah Maksudur Rahman Samsunnahar Any

13102207 13102287 13102415

10 12 14

8.

Tanjina Akter

13102519

16

9. 10.

Sandeep Debnath Toriqul Islam

13102609 13202026

18 20

11. 12.

Farzana Ieasmin Akikunnahar

13202050 13202122

22 24

13. 14.

Md. Mosharof Hossain Md. Abubakar Siddiqul

13302089 13302228

26 28

15.

Alif Hasan Arif

14102016

30

16. 17. 18.

Rubaya Jahan Shabrina Jahan Md. Ramjan Mia

14102022 14102025 14102035

32 34 36

19.

Md. Lutfar Rahman Akash

14102046

38

20. 21.

Ashir Alam Tahasina Islam

14102053 14102055

40 42

22. 23.

Nayma Islam Eva Shabiha Islam (L)

14102088 14102143

44 46

24. 25.

Md. Tanvir Ahmed Istiak Ahmed(L)

14102226 !4102322

48 50

26. 27.

Tamanna Akter Md. Shihab Hossain

14102429 14102497

52 54

28.

Md. Mehedi Hasan

14102529

56

Introduction: JetBlue was incorporated in Delaware in 1998 and commenced service in 2000 with primary base of operations at New York’s John F. Kennedy International Airport. The company’s goal has been to establish itself as a leading low-fare, low-cost passenger air line by offering its customers high-quality customer service and a differentiated product. The airline focused on serving “underserved markets” and large metropolitan areas that have high average fares with a diversified geographic flight schedules that includes both short and long-haul routes. From its first day of operation, JetBlue differentiated itself from other airlines by: “Analysis on various Factors of JetBlue Airways” |

3

• Starting the business with a lot of money the only carrier with over $100 million startup capital • Flying new planes that are more reliable and certainly more efficient. Seats are covered in leather with individual monitors for viewing programs from DirecTV. • Hiring the best people by screening the employees rigorously, offering exceptional training • Focusing on service by listening to customers and ensuring their flight is joyful and friendly. Much of JetBlue’s business model of low faces came right out of Southwest Airlines’ playbook. This is no surprise since JetBlue founder, David Neeleman, was fired by Southwest in 1999. In 2006, JetBlue published its first corporate sustainability report, the “1st Annual Environmental and Social Report 2006,”In 2007, JetBlue introduced the JetBlue Airways Customer Bill of Rights, which provides compensation to customers who experience avoidable inconveniences (and some unavoidable circumstances).In 2008, JetBlue introduced refundable fares and new payment options for customers, and it also launched jetblue.com en español, a Spanish version of their Web site,http://hola.jetblue.com/enes/. JetBlue was also able to maintain cost per available seat mile, excluding fuel, of 5.94 cents, which is among the lowest reported by all other major U.S. airlines. For the year ended December 31, 2008, their aircraft operated an average of 12.1 hours per day, which is the highest among all major U.S. airlines. For years, JetBlue and Southwest avoided head-to-head competition, but in 2009 the companies began battling each other in the same airports, such as New York, Baltimore, Washington, D.C., and most recently Boston.

“Analysis on various Factors of JetBlue Airways” |

4

Organizational Profile:  Name of the Company: JetBlue Airways.  Founder :David Neeleman  Date of Incorporation: JetBlue was incorporated in Delaware in 1998.  Commenced Operations:11th February,2000.  President and CEO: Robin Hayes.  Telephone: In United States1-800-JETBLUE (1-800-538-2583) All other countries:1-801-449-2525  Industry: Airline.  Type: Public limited company  First Capital: Over $100 million.  Present Asset:$13.013 billion  Number of Employees:20,000 (Approximately)  Number of Airbus:229  Total Customers: Above 1 Million

 Slogan: You Above All, Inspiring Humanity.  E-mail:[email protected]  Logo:  Website:www.jetblue.com

Product and services: Jet blue in 2009 achieved the number-one customer service ranking among low-cost carriers, according to J. D. Power and Associates. The company offers passengers new aircraft, roomy leather seats with lots of leg room, 36 channels of free DirecTV, 100 channels of free XM satellite radio, and for purchase, premium movie channel offerings from multiple major movie studios. JetBlue’s on board offerings include free and unlimited brand-name snacks and beverages, and for purchase, premium beverages and specially designed products for overnight flights.

Goals

“Analysis on various Factors of JetBlue Airways” |

5

Goal has been to establish itself as a leading low-fare, low-cost passenger airline by offering customers high-quality customer service and differentiated products.

Vision JetBlue’s vision is to be the best regional air carrier by providing low-fare, low-cost, enjoyable and safe flight experiences to our passengers.

Mission Jet Blue’s mission is to be the leading low-fare, low-cost passenger airline offering high quality customer service to underserved markets and customers who are looking for the best value in their flight. We have the newest most advanced planes that are reliable, safe, fuel efficient, utilizing advanced technologies, and unique in multimedia entertainments. Our philosophy is to give customers the best price value for their ticket and maintaining distinctive services. At JetBlue we hire highly motivated employees and train them to reach a high level of competency to provide better experiences to customers. We believe that our high-value, high quality service philosophy will lead the way to becoming the number one in the industry.

Core Values Inspiring humanity is not a platitude or mission that we take lightly. It’s a natural extension of our founding principles. When our founders created our five core values – Safety, Caring, Integrity, Passion and Fun, they understood that it would define everything we do at JetBlue. In the 16 years since, those same values have kept us on track, and because of them our crewmembers inspire humanity among our customers and stakeholders every day. 

Safety –Safety comes first. it’s every crew member job to ensure safety for all.



Caring-Caring is how a small company gets big without losing its soul. The JetBlue experience is about caring. It is delivered by crew members and we look after each other so that we can care for our customers and communities.



Integrity-Integrity means doing the right thing – all the time. The only way to do business is by communicating openly and honestly. This way, we earn trust from each other and our customers “Analysis on various Factors of JetBlue Airways” |

6



Passion-Passion is the enthusiasm we have for what we do and a great customer experience. Our passion is what keeps customers coming back, and why we do our part to keep our destinations beautiful for future generations.



Fun-JetBlue is where people like to be. When crewmembers enjoy what they do, our customers enjoy traveling with us.

Corporate Governance: Corporate governance is the system by which companies are directed and controlled. It involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed.

Board of Directors: Robin Hayes, 49. Mr. Hayes became JetBlue's Chief Executive Officer, President and a member of the Board of Directors in February 2015.

Joel Peterson Frank Sica David Checketts Virginia Gambale Stephan Gemkow Ellen Jewett Gen. (Ret.) Stanley McChrystal Thomas Winkelmann

Chairman Vice Chairman Director Director Director Director Director Director

“Analysis on various Factors of JetBlue Airways” |

7

External Environment General Environment: Airline profitability is influenced by the state of the economy, international events, industry capacity, and offerings by other airlines in the forms of bundling and packaging (with hotels, cruise lines, etc.). The airlines also compete through flight scheduling, availability, fares, routes served, safety records, on-time arrival, and customer service reputation. Passengers are increasingly interested low price as well as comfort and amenities of the air craft. Therefore, airlines are designing more living space into new planes and retrofitting old ones. For example, Delta Air Lines and American Airlines are rewiring their planes to provide Wi-Fi access and enhanced in-flight entertainment options, including live TV.

Industry Environment: According to the Air Transport Association, in 2008, the operating expenses in the industry increased 4.1 percent to $163.9 billion. Flying operations, the industry’s largest functional cost center at 37.9 percent, climbed 3.9 percent to $62.1 billion. Fuel drove the major share of this category as crude oil prices averaged $72.34 per barrel in 2007, up $6.29 from2006, and the average jet fuel crack spread—the additional amount charged for refining—rose from $16.69 to $18.59. Consequently, even after factoring in the airlines’ fuel hedging programs, the average price paid for jet fuel, excluding pipeline tariffs, tank fees, and state and federal taxes, rose 7.0 percent, from $1.97 per gallon in 2006 to $2.10 per gallon in 2007

“Analysis on various Factors of JetBlue Airways” |

8

 External Factor Analysis (EFE) An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. Assign a rating between 1 and 4 to each key external factor to indicate how effectively the firm’s current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor. Ratings are based on effectiveness of the firm’s strategies. Ratings are thus company-based, whereas the weights in Step 2 are industry-based. It is important to note that both threats and opportunities can receive a 1, 2, 3, or 4. Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. The average total weighted score is 2.5. A total weighted score of 4.0 indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry.

EFE of JetBlue Airways

Factors

Weight Rating

Weighted Score

Opportunities Rapid growth of discount airlines due to bankruptcy of rival airlines. 200 million passengers will be carried in 2005 (more than the year before by4.1%) Air travel is much safer than other means of transportation Emergence of new federal laws enhancing security in airports

0.06

3

0.18

0.08

3

0.24

0.05

4

0.2

0.04

3

0.12

0.08 0.09 0.07 0.09 0.05 0.07

4 4 3 3 3 2

0.32 0.36 0.21 0.27 0.15 0.14

.05

4

0.20

Threat High oil or jet fuel prices Union labor contracts, wages, benefits & strikes Fierce competition from other rival airlines Availability of jet fuel Rapid growth of discount airlines Emergence of new US federal laws (e.g., change in daylight saving time) Pricing is weak

“Analysis on various Factors of JetBlue Airways” |

9

Observe passengers contributing to high fuel consumption & negative environmental impact Rising security rules and obligations Rising breakeven load factor

Total weight

0.06

3

0.18

0.08 0.06 1

4 3

0.32 0.18 3.28

Total Weighted Score

Comment: As we know the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. The average total weighted score is 2.5. A total weighted score of 4.0 indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry. Here we see that the total weighted score is 3.28.If score 4 means outstanding performance than we can say 3.28 is a good score to obtain.

Competitive Analysis: Porter’s Five Forces Model Porter’s Five-Forces Model of competitive analysis is a widely used approach for developing strategies in many industries. The intensity of competition among firms varies widely across industries.

Po te nti a l e ntry o f ne w co m p eti to rs

Ba rgaining p ow e r o f su p p lie rs:

Riva lry am o n g co m p eti n g fi rm s

Ba rgain in g po w e r o f co n su m ers

Po te nti a l d eve lop m en t of su bsti tu te p ro du cts

“Analysis on various Factors of JetBlue Airways” |

10

Rivalry among competing firms :(Low) The intensity of rivalry among competitors in the industry is Low .This is due to their strategy they give their high class facilities with a very low cost. The main competitor of jet blue is Southwest Airways. In 2009 Southwest and JetBlue announced a same route with a very near price. Southwest ticket price $49 and JetBlue ticket price $39.But the other companies like American Airlines, Delta Airlines etc offer different range ticket price. Potential entry of new competitors: (Low) In this economy, it would be nearly impossible to find funding with the excessive risk, lower buyer confidence, and debt to asset ratio of the airline industry. Major competitors of JetBlue are already decreasing flights and merging with one another in order to consolidate debt and stay in business since fixed costs are extremely high. Potential development of substitute products: (Low) The cabins have only one class of seats which combined an overall first class experience. There has little or no threat to closing as the airline industry offers entry with little or no appeal. Bargaining power of suppliers: (High) The key inputs in the airline industry are the jet fuel and the aircraft suppliers. The airplane manufacturing industry is dominated by Boeing and an JetBlue’s Airbus supplying the majority of airplanes for the me large airline companies. For this reason, the suppliers have most of the bargaining powering leverage and increasing prices when costs rise. Bargaining power of consumers :(High) There are several options available to customers with what airline they choose to fly. Since products and services are essentially standard,customers of this industry are price conscious under their belief that all airline companies will get them to their destination but would prefer to fly with the one that can get them there cheaper. With websites such as www.cheaptickets.com universal booking and ticketing on-line, it’s easily accessible for customers to research the best price

“Analysis on various Factors of JetBlue Airways” |

11

Competitive Analysis 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Porter’s Five Forces

Comment: By observing the overall Factors we see that the condition is good because in Five factors they have 3 low threat and 2 high threat. In 2009 JetBlue operates 650 flights per day with 80% fulfill seat where as their very close competitor Southwest airways operates500 flights with 60% to 75% fulfill seat. So by this we can understand that our observation is correct.

“Analysis on various Factors of JetBlue Airways” |

12

Competitive Profile Matrix Agenda

Weight

JetBlue

American

Southwest

United

Market Capitalization 0.10 3 3 4 1 Employs 0.10 4 1 3 2 Quarterly Rev. Growth 0.12 4 2 2 1 Revenue 0.10 4 4 4 4 Gross Margin 0.10 4 3 4 2 Net Income 0.12 3 2 4 1 EPS 0.10 3 1 4 1 P/S 0.08 4 1 4 1 Expense passenger Miles 0.18 4 2 2 2 Total 1.00 3.68 2.12 3.30 1.68 The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its particular strengths and weaknesses in relation to a sample firm’s strategic position. The weights and total weighted scores in both a CPM and an EFE have the same meaning. However, critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. The critical success factors in a CPM are not grouped into opportunities and threats as they are in an EFE. In a CPM, the ratings and total weighted scores for rival firms can be compared to the sample firm. This comparative analysis provides important internal strategic information.

Competitive Profile Matrix Competitive Profile Matrix 4 3 2 1 0

Competitive Profile Matrix

JetBlue

American

Southwest

United

Comment: The highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. The average total weighted score is 2.5. And here jet blue score 3.68, and it’s the highest score in this tables we can say company is in very good condition. The lowest score is 2.12 that is the American airlines.

Internal Environment “Analysis on various Factors of JetBlue Airways” |

13

Corporate Structure: Chairman Chief Adviser

Board of Directors Mangling Director and CEO

Executive Vice President/

Senior Vice President

Vice President

Senior Asst. Vice President

Asst. Vice President

Senior Officer

Officer

Junior Officer

Corporate Culture: “Analysis on various Factors of JetBlue Airways” |

14

Employees of JetBlue Airways share certain common values that help to create a JetBlue corporate culture.



Fast customer service.



Search for professional excellence.



Openness to new ideas and new methods to encourage creativity.



Proper decision making.



Flexibility and prompt response.



A sense of professional ethics.

Corporate Resources: All departments are responsible to increase the organiz...