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Key Topics
Requirement
Assignment based on Public Budgeting and Finance
Solution
1. Introduction
JetBlue Airways Corporation is an American airline known for its low-cost and is the 5th largest airline in the United States. The company has its headquarters in the Long Island City and has its main base at the John F. Kennedy International Airport and maintains their corporate office in Cottonwood Heights, Utah.
The airlines serves it destination within the United States and also has flight to Bermuda, Colombia, The Bahamas, Costa Rica, Barbados, Dominican Republic, Mexico, Peru, Grenada, Jamaica, Tobago, Trinidad etc. the company serves 97 destinations in the U.S., Mexico, the Caribbean, South America and Central America. JetBlue is one of the two airlines in the United States having four-star rating from Skytrax, another being its competitor Virgin America.
It is the largest carrier in Boston and is also the leading carrier in Hollywood, Los Angeles, Orlando, New York and San Juan. The flight is known to carry around 30 million passengers every year to approximately 80 cities in the United States, Latin America and Caribbean with around 850 flights daily.
The airlines has low fares, new planes, effective business and non-unionized labor, JetBlue has caught the off-guard big carrier. A coherency and consistency has been seen in the brand ideology of the company so as to put a human element back into flying which has helped in resonating with the passengers deeply.
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2. Discussion
2.1 The critical success factors
The critical success factors of the company are indicated as given below:
1. Low-cost advantage – JetBlue is a domestic low-cost carrier flight therefore it is one of the cheapest airlines in the United States. The aim of the company was to create a low fare supporting cost structure without lowering the standards of the services being provided to the customers. This low-cost structure has helped the company to venture in to the territory of big companies in the airlines industry and therefore generates industry leading margins. Various innovative measures have been adopted by the company on their flights in order to become a cost leader. For example, no meals are served on the flight in the trip irrespective of the distance covered and the duration of the routes. For supporting the decision on order to become a cost leader (JetBlue Airways Corporation, 2016). Therefore the low cost advantage has expected JetBlue for delivering leading margins in the near future.
The firm has been exercising the low-cost carrier system when the recent plunge in the crude oil prices had further reduced the cost of the fuel. However, this reduction in fuel prices cannot be considered as a sustainable option for the long run and these prices can shoot up whenever the market recovers (Gittell, J. H., & O'Reilly, C. A, 2001).
Furthermore, various initiatives has been taken by the airlines authorities for controlling the operating cost excluding the cost of the fuel. Therefore the company has decided to invest in the aircraft in a fuel-efficient manner and therefore it has resulted in the improvements of operational performance of the company.
2. Focus on high-value markets – the company has launched its premium services which is widely known as the “mint” for tapping the business travelers who are flying on the transcontinental routes in the US. Since the new services were allowed for the airlines in order to enter high-value locations like San Francisco and Los Angeles, the company gained a competitive advantage. This has helped the airline to cater to the corporate as well as the elite passengers for improving the traffic of their customers. The mint service of the airlines is highly popular recently as it is highly affordable to get high quality services at low range whereas the other flights offer expensive and mediocre services. Higher margins have been earned owing to the premium services offered by the JetBlue and has helped in improving the overall performance of the company. The company is continuing its services in the Caribbean and the Latin America which are one of the most lucrative and high-value market for all the airlines.
Further the ease of travel restrictions between Cuba and United States has led the launching of the first weekly flight between New York and Juba which has resulted in facilitation of travelling (JetBlue Airways Corporation, 2000) in the restricted areas. This particular move has further led to attraction of the traffic and ultimately has resulted in the generation of higher revenue.
Therefore it can be concluded that these two factors has led to immense success of the airlines within the United States by providing customers satisfaction allowing the airlines to start their international business.
2.2 Theory of Constraints
This is a methodology which helps in identifying the most inhibiting factors which are inhibiting the improvement and goals of the organization and therefore helps in improving the constraint until they are no longer characterized as a limiting factor.
When we look in the study of JetBlue it can be seen as the constraint is the incurrence of unnecessary cost. This has helped the management to manage the limiting factor and they came up with various methods for cutting down the cost in form of elimination of food and the innovation in the aircraft which uses the less amount of fuel (Perepu, I, 2010).
Furthermore, the next constraint is to get feedback from almost all the 30 million annual travelers to understand the customer satisfaction. The company needed to serve various internal customers which also included their front-line staff and their management of around 80 airports along with the executive of JetBlue and the customer administration. In order to manage this limiting factor the company has started using tool which can identify all the issues which affect the experiences of the travelers using the customer feedback, transform the data into the actionable insight for JetBlue which ranges from airports, executives and front-line crew members. It further links the goals of the employee for stepping up the journey of the customers. The results were highly beneficial as it helped in empowering the insights of the customer’s insight team along with the platforms and process which will guide the company for holding tenth JD Power awards for the customer satisfaction. This has further helped in improving the experiences of the travelers by increasing the large volume of data into actionable feedback and finally has helped in identifying the action for specific improvements.
2.3 Balanced scorecard
A balanced scorecard is a management system which assists the companies in clarifying their strategy, mission and vision and finally helps them in converting them into actions. Continuous improvement of the strategic performance and results have been seen by usage of the balanced scorecard which helps in providing a structure to the feedback both internally and externally in the business processes. There are four perspectives in the balanced scorecards which are as follows (Wynbrandt, J, 2004): financial results perspective, internal business processes perspective, customer’s perspective and learning and growth perspective. The innovation, targets, margins, objectives, measures and learning are entailed in the balanced scorecard.
2.4 Relevant activities of the value chain
The sequential process of the activities that create the value are termed as the value chain analysis. The value chain analysis assists in gaining an insight to the competitive advantage. JetBlue has entered the market by using various advantages and position of the financial strengths and leadership capability many of which were uncommon previously in the airline industry. The company has very clear mission and vision (Perepu, I, 2010) which were the implementation of a low cost and a differential business level strategy which has helped the airlines to set out as the leading low-cost passenger airline which has unfailingly offered high-quality to the customers with a provision of their geographically diversified flight in the most efficient manner. The following are being discusses below:
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Inbound logistics/ outbound logistics – JetBlue focused on the large metropolitan cities and underserved markets and have fruitfully utilized the underutilized airports using less congestion. This helped the company to add an ability of remaining on the ground for lesser amount of time.
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Operations – JetBlue has started using a single flight aircraft fleet and their A320 airbus has also resulted in increase of its seating capacity. The airline has a reduced training cost and a fuel efficient system making it cheaper than the other competitive flights.
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Ticketless travel or e-ticket – The airlines has provided their customers with a provision of reserving a flight ticket from their home which has resulted in reduced in the office space and further infrastructure cost. Reduction of paper work, quicker turnaround and faster takeoffs long with the higher utilization of the aircraft are the result of a paperless cockpit.
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Service – no overbooking takes place in the airlines which results in no bumping of the customers. For example, no passenger has ever been left behind and no standbys have been seen. Furthermore, the designs and the layout of the plane have been done in such a manner that the customers get leg room and are highly comfortable.
2.5 The concept of customer delivered value
For three consecutive years, the airlines has been the pioneer of the airlines industry in terms of the passenger satisfaction due to the following facts:
The company tries to focus on the culture of the company for creating favorable experiences which help in keeping the customers to attract more. The company has empowered them to makes best decisions when if the company has to do some activities which are apart from the regular protocol. Furthermore, the culture of the company helps in framing the actions as per the embodied values. These values with intense learning help in enhancing the consistency of the company internally and externally by offering personalized and friendly services. JetBlue’s management has been trying to build a friendly and positive environment by interacting with the customers of their company. The employees are very friendly towards their customers and company provides leveraged Wi-Fi, mobile and other tablets for extending their digital experiences.
The company has therefore been able to exceed the expectations of their customers. The company is able to match the low cost with high customer experience and has battled the intense rivalry commendably. The airlines has exceeded all the expectation by cheap cancellations, free luggage, cheap change fee, TV entertainment on the plane and direct flights.
2.6 Cost of controlling quality
No controlling cost have been bear by the airlines as the JetBlue is offering low fares due to the low cost. The passenger traffic has been increased due to the stimulation of high demand by allow fares. High quality services are provided within this low fare and provisions like online booking, award winning website and ticketless travel has been made possible. Therefore the airlines is economical for production and maintenance of the aircraft therefore resulting in low distribution cost and operational cost.(Wynbrandt, J, 2004)
3. Conclusion
The airlines has been seeing a tremendous growth and has held on to its mission and vision very firmly therefore enhancing the customer retention and customer satisfaction. Along with the low fares the airlines has been providing various perks like cheap cancellations, free luggage, cheap change fee, TV entertainment on the plane and direct flights thereby helping customers. The company has contributing success factors like low fare and focus on high market thereby providing high facilities at low cost. The company has further been able to handle all the constraints in an efficient manner.
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Gittell, J. H., & O'Reilly, C. A. (2001). JetBlue Airways: Starting from scratch. Boston, MA: Harvard Business School Pub.
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JetBlue Airways Corporation. (2016).
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Perepu, I. (2010). Recruitment and training at JetBlue Airways.
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Stewart, C. H. (2008). Lessons learned: How JetBlue Airways used apologia and new media to survive a crisis
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Wynbrandt, J. (2004). Flying high: How JetBlue founder and CEO David Neeleman beats the competition --- even in the world's most turbulent industry. Hoboken, N.J: Wiley.
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