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JetBlue Airways: Managing Growth Teaching Note - Case Study Example

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Name of the of the Professor Course Number Date JetBlue Airways: Managing Growth Teaching Note Table of Contents Table of Contents 2 Study and Preparation Questions 3 Answer 1 3 Answer 2 4 Answer 3 5 Answer 4 5 Questions to Solve 6 Answer 1 6 Answer 2 7 Works Cited 9 Study and Preparation Questions Answer 1 With the development of aviation transportation, the global aviation industry has been able to cover almost every nation of the world…
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JetBlue Airways: Managing Growth Teaching Note
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Download file to see previous pages The airline industry is judged to be an integral part of the national economy, as it is one of the prime economic forces of manufacturing, transportation, technology and several other sectors. However, the industry is experiencing a decline since the last couple of years in terms of profit generation. According to the reports of International Air Transport Association (IATA), the profit of global airline industry fell by $4 billion in the year 2011 (“Airline Industry 2011 Profit Outlook slashed to $4 Billion”). As a result of that the industry is witnessing a turbulent situation. The competition within the airline industry is stringent due to the presence of large numbers of established players. However, there are hardly any viable substitutes for this industry, when it comes to long route trips. Nevertheless, trains, long route busses and ships often serve as substitutes, but again the price/performance ratio is unappealing to a mass population. The buyers of this industry are extremely price sensitive and they are ready to renounce brand or amenities in lieu of low price. Hence, the bargaining power is high. The supplier issues in this industry encompass both equipments provider and labor. Reports have suggested that Southwest and legacy airlines have a unionized workforce. The labor cost of these airlines is significantly high in comparison with non-unionized airlines. Although, the equipment manufacturers are less in numbers, but their bargaining power is low as most of the airline companies have entered into agreements with suppliers. The threat of a new player is also low as the start-up cost is extremely high and there are several issues pertaining to license obtaining from the government. The analyses above clearly make it evident that the industry is moderately attractive for a new entrant, but for an existing player it is fairly attractive. Answer 2 JetBlue operates in a number of routes in the US. However, to compare the prices being offered by the company and its competitors, two routes have been chosen. The routes chosen for this purpose are New York (John F. Kennedy International Airport) to Washington (Washington DC Airport DCA) and Seattle (Tacoma International Airport) to Austin (Bergstrom International Airport). Fare Comparison of New York (John F. Kennedy International Airport) to Washington (Washington DC Airport DCA) Name of the Airline Price Offered (in $)( round trip per person) Delta Airlines $123.80 United Airlines $133.80 JetBlue Airways $149.80 American Airlines $155.81 (Source: “Select your departure to Washington DC”) Fare Comparison of Seattle (Tacoma International Airport) to Austin (Bergstrom International Airport) Name of the Airline Price Offered (in $) Delta Airlines $241.60 United Airlines $238.60 JetBlue Airways $296.60 American Airlines $241.60 (Source: “Select your departure to Austin”) The comparison of the prices offered by different players in the same routes provides insights into the severe price-war among the airline service providers. However, it has been discovered that despite positioning themselves as low-cost offering company, JetBlue actually charges a bit high from its counterparts. Answer 3 The consumers of the airline industry are highly price sensitive. The price sensitivity is not constrained only to the US market but ...Download file to see next pagesRead More
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