Overview of the JetBlue Airways Corporation - Coursework Example

Business Profile

JetBlue Airways Corporation (JBLU) is an American leading low-cost carrier in the airline industry. Its main operation base is at John F. Kennedy International Airport, where they are in charge of terminal 5, T5. The company is headquartered in Long Island, Queens, New York. They also have corporate offices in Cottonwood Heights, Utah, and Orlando in Florida. JBLU is ranked the fifth largest domestic airline in the US. The year 2016 saw the company boast a 5.5% share of the domestic market.

JBLU operates over 100 destinations in the US, Mexico and South and Central America with a daily average of 800 flights (statista.com, 2017). As of 2016, the company served over 38 million passengers; also, recording 6.6 billion US dollars in operating revenue in the same fiscal year with a net income of 759 million US dollars. The airline was ranked number two in customer satisfaction in March 2017 with a satisfaction index score of 80.

The airline has entered into codeshare agreements with some other airlines such as Qatar Airlines, WestJet, Iceland Air, Emirates, Turkish Airlines, Etihad Airways and Cape Air among others. JBLU has 240 aircrafts in operation as of November 2017 with an additional 125 airplanes scheduled for delivery from 2019 – 2022.

According to the Bureau of Transportation Statistics (2017), the primary competitors of JBLU and their market shares are American Airlines Group Inc. 18.4%, Southwest Airlines Co 18.3%, Delta Airlines 16.9%, United Continental Holdings Inc. 14.9, Alaska Airlines 4.7%, Spirit Airlines 3.2%, Sky West Inc. 2.5% and Frontier Airlines 2.5 %.

Regarding opportunities, the airline operates in America which a single largest market in the world (Dalavagas, 2015). Also, the airline's prospects of introducing new planes will create opportunities for new routes and destinations; this includes tapping into the Asian market. The associated threats the airline is facing are the rise in fuel prices and the increased difficulty in fuel availability. Furthermore, the airline's primary competitors are doing cost reformations to reduce their fares, and this may affect the revenues collected by JBLU. Another threat is the event of a terrorist attack there is fluctuation in demand for air travel.

Government Action

The government awarded JetBlue Airways a travel contract that will see federal employees use travel using this airline from New York to Milan, Italy, and Dubai, United Arab Emirates. The action has since caused an uproar from other airlines such as Delta and America because JetBlue does not operate transatlantic flights notes Nunes (2016). However, in the fulfillment of the contact, the flights will be done by Emirates Airline which is in a codeshare agreement with JetBlue. According to the US General Service Administration defended the move citing that it will help save taxpayers 2.4 billion US dollars in the fiscal year 2017.

The lingering question is why was the contract not awarded to other US-based airlines that operate transatlantic flights. Some believe that awarding the contact to JetBlue was contrary to the Fly America Act that requires all federal employees whose flights are funded by the federal government to travel using US carriers (Nunes, 2016). In this case, the codeshare partner, Emirates Airline is partly owned by the state of United Arab Emirates (UAE) which means that revenue generated from the US government which directly go the UAE government. The contract is, therefore; in violation of the reason the ACT was created which is to protect US airlines from highly competitive foreign carriers. This increased competition from international carriers getting subsidies from their governments results in decreased profitability and loss of customers for the US airlines.

There is a detrimental effect on the future of US airlines in the awarding of this contract to JetBlue Airways and extension the Emirates airline. These airlines are enjoying subsidies flood the industry with excess capacities and further causes a reduction in airfares (Cohen, 2016). The result is US airlines canceling the flights in these routes due to unprofitability and a highly competitive advantage enjoyed by counterparts from the Gulf.

Organizations and Teams

JBLU is comprised of ten individuals on the Board of Directors (JetBlue Airways, 2017). They include Joel Peterson who is also the Chairman, Frank Sica who is also, the Vice Chairman, Thomas Winkelmann, Gen. (Ret.) Stanley McChrystal, Ellen Jewett, Stephan Gemkow, Virginia Gambale, David Checketts, Peter Boneparth and Robin Hayes. These directors are in charge of approval or disapproval of mergers and buyouts as well as providing the long-term direction of the company. It is responsible for providing counseling and direction to the management of the company, establishing cooperate policies and overseeing the management of risks inherent in the operation of the Airline business.

The leadership organization of the airline is as follows:

• Robin Hayes is the President and Chief Executive Officer of the airline. As the CEO he oversees all matters to do with the company at all levels of management. He is responsible for the airline’s commercial and operations areas including airport operations, flight operations, technical operations, system operations, inflight, customer support (reservations), network planning, communications, marketing, and sales.
• Mike Elliot is the Executive Vice President of JetBlue's People Department. He is responsible for inspiring a culture of humanity that reflects its core values of safety, caring, integrity, passion, and fun. Mike's team are accountable for the relationship of crewmembers with their work and other matters that include hiring, corporate social responsibility, benefits, compensations, diversity, employee relations and professional development.
• Joanna Geraghty is the airline's Executive Vice President in charge of customer experience. She is responsible for the airports' reservations, customer support, and the in-flight service. Her team is considered the main customer-facing crews.
• James Hnat is the airline’s Executive Vice president of the corporate affairs, general counsel and corporate secretary. His team is responsible for legal government affairs, compliance and sustainability.
• Jeff Martin is the Executive Vice President in charge of operations in the airline. His team has responsibilities ranging from flight operations, system operations, technical operations, next-gen initiatives, security, safety and the training division at JetBlue University. His department is in charge of the safe and secure operations of over 800 daily flights
• Steve Priest is the Executive Vice President in charge of finance. He is as well the Chief financial officer of the airline. His team is responsible for corporate finance, airline transactions, cash management and execution of JetBlue’s financial strategy. Under his division also falls the responsibility of strategically sourcing units and the company’s real estate.
• Eash Sundaram is an Executive Vice President and Chief Digital and Technology Officer. He is also Chair of JetBlue Technology Ventures which is a wholly owned subsidiary of JetBlue Airways. His team is responsible for system and technology and innovation for the airline. He also has the obligation of overseeing the strategy, vision, and implementation of technology solutions that align with the value airline's business model to offer consistent service and maximize investment.
• Marty St. George is the Executive Vice President in charge of commercial and planning. His team is responsible for the airline’s marketing, e-commerce, sales, revenue management, product and network planning and loyalty and JetBlue gateways. His other responsibilities include overseeing the airline vacation packaging subsidiary and also teaches innovation classes at JetBlue University.

In response to government actions and politics, the CEO is in charge of issuing statements on where the airline stands based on a particular issue. With the help of other departments and their teams, issues relating corporate affairs and legal matters are handled by the Vice President in charge. Pretty much, every department with its team chips in to avert and get ahead of the situation. The CEO defends the airline from outside pressures taking the responsibility of whatever the situation. However, the other departments work and collaborate with each other to ensure his statement is solid.

Stakeholders

Employees – they are the primary internal stakeholders. No company can run without employees, and JetBlue knows that, that why it treats its employees with utmost respect and provide good working conditions. The company also listens to the opinion of its employees such that it has a forum where they are allowed to discourse on matters concerning the company.

The Executives and the Managers – they form part of the internal stakeholders. They are significant in determining the strategy of the airline ("Boundless Management", 2017). They are liable for any decisions made and also, act as a point of contact between the BOD, the shareholders and the airline itself. They make decisions in the interest of the company to generate more profits. They handle all political pressures experienced by the organization.

The owners – they own substantial shares in the airline and are part of the internal stakeholders. They have a role in strategy formulating and accountable for the impacts of the business. They advocate for actions that boost the company's interest to gain continuous success and growth.

Customers – they are external stakeholders. Kokemuller (2017) contends that without customers no business will be successful. JetBlue understands this well, and that's why it is ranked as the best customer satisfaction for a consecutive number of years. The customers' demand for excellent service ensures the airline remain true to its values.

Government and community – they also form the external stakeholders. The government requires the airline to generate revenue so that it can pay taxes and therefore, influence the positive political process for the company. The community needs the airline to impact the society positively by providing jobs and community development programs.

Competitors – they are part of the external stakeholders. Their interest is the business failing and will instigate negative politics to affect the airline operations so that they can capitalize and take advantage of the subsequent poor performance (Kokemuller, 2017).

Business Environment

The financial environment the airline currently operates in can be described as promising. Having recorded growth in its revenue and profits, the company is operating in a stable economic environment. Its high customer satisfaction index score asserts that the company will continue to receive a flow of clients. The new contract by the government means the company will generate revenue from new route introduced in its flights and which will be carried out by its codeshare partner at low airfares hence attracting more customers.

The legal environment of the company is confident that the contract they obtained is not in violation of any ACT. Having received another similar contract last year and executed it well, they are optimistic that the politics surrounding this one will soon die and the airline will perform and fulfill the contract diligently. The carrier was also defended by the US General Service Administration that the contract was in line with the Fly America Act and that the company acquired the contract legally.

The political environment of the airline is now at a crucial place. With its competitors, specifically, Delta and America are campaigning and protesting against them receiving this contract, the airline needs to defend itself from these attacks. The company also has come out to provide clarification that they comply with the Fly America Act and are not violating it in any way. They did this through a statement issued by the CEO Robin Hayes where he accused his competitors of being hypocritical.

The social environment of the airline is well established. It provides social development programs that engage the community and tries to make life better (“JetBlue | Corporate Social Responsibility”, 2017). They are involved in youth and education in the community by partnering with the non-profit organization to provide programs that positively influence the society.

The demographic environment of the airline is proliferating. In two years the company has provided routes to over 20 new destinations totaling over 100 currently. With the promise to add a few more every year, its demographic is expected to grow massively and might even be able to offer transatlantic flights with the acquisition of long-haul aircraft scheduled to arrive from 2020.

Reference

"Boundless Management". (2017). Business Stakeholders | Boundless Management. Courses.lumenlearning.com. Retrieved 13 December 2017, from https://courses.lumenlearning.com/boundless-management/chapter/business-stakeholders/

Bureau of Transportation Statistics. (2017). OST_R | BTS | Transtats. Transtats.bts.gov. Retrieved 13 December 2017, from https://www.transtats.bts.gov/

Cohen, B. (2016). JetBlue Airways Awarded Government Contract for Service to Milan — But Again, There is One Minor Detail… - The Gate. The Gate. Retrieved 13 December 2017, from http://thegate.boardingarea.com/jetblue-airways-awarded-government-contract-for-service-to-milan-but-again-there-is-one-minor-detail/

Dalavagas, I. (2015). SWOT Analysis: JetBlue Airways Corporation. Valueline.com. Retrieved 13 December 2017, from http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__JetBlue_Airways_Corporation.aspx#.WjRZct-WaM8

JetBlue Airways. (2017). Leadership. Blueir.investproductions.com. Retrieved 13 December 2017, from http://blueir.investproductions.com/investor-relations/corporate-governance/

JetBlue | Corporate Social Responsibility. (2017). Jetblue.com. Retrieved 16 December 2017, from https://www.jetblue.com/corporate-social-responsibility/

Kokemuller, N. (2017). Who are the External Stakeholders of a Company? Smallbusiness.chron.com. Retrieved 13 December 2017, from http://smallbusiness.chron.com/external-stakeholders-company-64041.html

Nunes, A. (2016). Forbes Welcome. Forbes.com. Retrieved 13 December 2017, from https://www.forbes.com/sites/realspin/2016/11/17/government-airline-subsidies-so-what/#3feffa411f5f

Statista.com. (2017). JetBlue Airways. www.statista.com. Retrieved 13 December 2017, from https://www.statista.com/topics/2829/facts-and-figures-about-jetblue-airways/