JetBlue Airways: A SWOT Analysis - Case Study Example

Running head: JetBlue Airways: A SWOT Analysis Introduction about Jet Blue Airways: JetBlue Airways, founded by David Neeleman in 1999, known as the no-frills low cost airlines, is known for rising to success in a short span of time, especially when the economy was low. Their success is attributed to operational strategies, low-cost practices, high customer value and high employee satisfaction practices. Nevertheless, their strategies do face certain challenges; the following section analyzes JetBlue’s course of growth as explained by Dutta and Regani (2003) through their case study, in terms of strengths, weaknesses, opportunities and threats before providing some suitable recommendations to the issues identified during the analysis. Strengths: 1. Innovation: Innovative approaches to cost-cutting like simpler ticketing system, personal TV for every passenger, uniform and efficient flight machines, usage of technology to reduce wastage, time etc have contributed to the successful establishment and sustenance of JetBlue during economic slowdown. Providing work-from-home opportunities for ticket reservations and planning also added to their cost-savings in infrastructure and staff. 2. Standardization: Low and uniform operating costs were an advantage to the then market conditions that demanded short passenger trips. Standardization in their services, like uniform class and trained interchangeable crew members also helped in saving costs and improving efficiency. 3. Competitive advantage: JetBlue’s cost-cutting strategies worked well while providing services better than counterpart low-cost airlines. JetBlue focused on cutting non-value adding costs to provide better quality. They invested higher amounts in equipment that required low maintenance; for example, personalised televisions versus meals; leather seats versus fabric ones. 4. Hiring: Neeleman’s strategy of hiring the best and experienced people in industry, like Dave Barger, and enthusiastic customer service professionals was advantageous of not only acquiring more customers but also in retaining their customers during testing times. 5. Customer focus: Their strong customer focus and genuine service helped increase customer base by word of mouth and also earn customer loyalty. Eventually, JetBlue has established a brand of its own with unique features and services. 6. Marketing strategy: JetBlue’s fun-filled and eye-catching marketing strategies that were supported equally by their practices were visible to and experienced by their customers, which helped improve their brand value. Weaknesses: 1. Firm value and debt: JetBlue’s high debt makes it a weak profile for investors and can pose challenges in fluctuating market and economic trends for further investment; this also means its share value is constantly at risk. 2. Financial commitment: JetBlue’s financial commitment to the leased aircrafts, ground space and airport facilities are an obligation that will continue to increase in future. 3. Strategy: JetBlue’s profits are mostly because of its cost-cutting strategies, which can fluctuate with changes in external conditions rather than because of increase in business and diverse customers. 4. Lack of differentiation: Despite its superior customer service, JetBlue’s market segment focused on economy travellers rather than business or first class travellers. Even if the business class customers chose to fly JetBlue, they may not be pleased with the comfort experienced at JetBlue’s congested spaces, which could affect JetBlue’s image created by word of mouth. Opportunities: 1. Economy: Entry during economic downturn coupled with its discounted pricing and low-cost strategies facilitated the operation and sustenance of JetBlue Airways. Improved economy would mean more travel, which JetBlue can make use of by increasing its flights and services. 2. Market segments: JetBlue entered territories with lesser competition from similar airline services like JFK airport that usually flew more international customers. JetBlue identified routes that had poor air services to increase its customer base, which also cost lesser compared to primary airports and provided larger numbers of terminals and flight slots. Lesser ground time improved their efficiency and also revenues. 3. Meeting diverse customer needs: Increase in short-trip passengers a great opportunity for Jet Blue and their low-cost strategy added an added value. However, it can also explore the needs of customers that seek business class or longer distance travel. 4. Lean strategies: Not serving meals was an opportunity for JetBlue to save costs of making, storage and cleaning as well as crew’s time. 5. Optimum usage of technology also helped them save costs in long-term as well as improve efficiency. Continued focus towards automation and lean methods will further add to their cost saving by using latest technology; their in-house development of technology not only saved costs but also encouraged and engaged employees to innovate and add greater value to the business. Threats: 1. Inevitable competition: Competition would rise in its once-niche market; direct competition was from Delta that flew from all 3 airports in New York unlike JetBlue that flew only from JFK; secondly, Delta was committed to provide better facilities to its customers than JetBlue provided. Competition from other major players was also not too far. 2. Limited flying: More and more entrants would also threaten JetBlue’s efficiency of operating if it continues to fly from same places as more flights would mean lesser ground space, greater air traffic and more waiting time for the flights and passengers. Reduction in JetBlue’s flying efficiency would affect their costs and customer satisfaction. 3. Price fluctuations: Fluctuations in fuel prices also do not guarantee similar profits in future. 4. Employee challenges: Expansion in JetBlue’s business would mean increase in employee base, which will bring challenges to employee management and motivation besides increasing opportunities of labor unrest, which were otherwise under control. Strategy: While JetBlue’s journey to success has been proven, it does not guarantee market sustenance, which necessitates accommodation of wider customer base and continuous innovation to save costs besides strengthening their financial capabilities and focus towards employment relations. Firstly, though JetBlue’s cost-cutting strategies are sound, they can continue to introduce more innovative methods for further reducing costs. For instance, marketing on social media is a low-cost option, which can be explored. Secondly, to increase its customer base, JetBlue will have to include business class travel option for the seekers considering that their overall customer satisfaction and experience is high; moreover, operating from more number of terminals and connecting more locations would also increase its customer base significantly. Thirdly, offering shares and part of profits to lenders would be a better option compared to paying interest and principal for longer terms to the lenders. Next, we recommend JetBlue to manage employee relations through stable employee-friendly policies and practices that also adhere to labour laws and are in line with business strategies in order to avoid any future unrest. References Dutta, S and Regani, S. (2003). Case 20: JetBlue Airways’ Success Story. Wheelen, T.L and Hunger, J.D (Eds.) Strategic Management and Business Policy: Toward Global Sustainability. New Jersey: Pearson Education Inc. Read More