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Jet Blue Airways - Case Study Example

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The author of this case study under the title "Jet Blue Airways" touches upon the business led by the mentioned air company. It is mentioned that in a competitive market, for a provider to be successful they would need to have an edge over competitors…
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Download file to see previous pages This is because airline fortunes change quite quickly and by large margins that if one made a profit, it is appealing but a loss if incurred, it is devastating. There are many airlines competing in the US market most of which register losses for years. This has proved difficult especially for companies with limited resources that compete with those with enough resources to afford less travels charges for customers and higher pay packages for employees. These two factors result in mass exodus of customers and staff from poor performing airlines. The more financially able firms were also the ones that could offer high quality service, more value addition services and subsidized rates. Aviation colleges were not graduating enough pilots and other airport staff to cater for the high demand in this industry. Thus, the airlines that could not afford the high cost of hiring more staff had to do with grounding their planes since there is an official limit of hours that an employee should work per day. The high number of airlines in the US causes congestion in the JF Kennedy International Airport (JFKIA). Congestion results in delays and flight cancellations that in turn resulted to loss of customers for airlines who had no alternative strategies for dealing with these inconveniences. Airlines undergoing financial difficulties could only obtain limited financial assistance from well-off multinationals since the law required that a Non-US company can only have a maximum 25% stake in a US airline. No US airline could obtain foreign financial assistance beyond 25% of its value. The only other option left for these companies were mergers and cost cutting especially with the steep rise in cost of crude oil and by extension, jet fuel. Strategic Intent Jet Blue had planned to expand mainly by increasing the number of destinations that it had direct flights. This was achieved by identifying an alternative hub since JFK Airport was overly congested. In addition, the company provided discounted services that included low fares, snacks during flights and speedy clearance to travel. Value addition was another strategy used to attract customers mainly by offering services like private massage, manicure, hair styling, a children play area and a big screen TV. Jet Blue put these fine details into consideration and they paid off well making customers want to seek their travel services. Financial Objectives Before offering low cost services, the company had to cut down its operation costs. First, it bought economical planes for its fleet by replacing Boeing 737 with Airbus A320 that is easier to operate and maintain. Second, it used IT to cut operational costs by use of Open Skies software to manage internet bookings, electronic ticketing and revenue management. Use of IT also included phone bookings and use of PayPal to pay for their tickets. These strategies worked well for Jet Blue as it continued expanding at a faster rate than competition.  ...Download file to see next pagesRead More
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