Table of Contents 1. 0 Introduction 3 2. 0 External Environment Analysis3 2. 1 Porter’s Five Forces Analysis 3 2. 2 SWOT Analysis 5 3. 0 Marketing Strategy Analysis 6….
Jet Blue Airways Strategy
Civil aviation is one of the most dynamic segments of the world economy. The international industry has become an interesting amalgam of established network and regional carriers, with a slew of new low cost operators. Jet Blue Airways Corporation (Jet Blue hereafter) is a relatively new entrant in the U. S. regional air travel market. This NASDAQ listed company has made a quick mark in a mature market with a highly competitive environment. Jet Blue has made significant investments to double its seat capacity in the next 5 years.
This document examines facets of the company’s strategy and its functional operations, with conclusions about its future prospects. External Environment The major opportunity which Jet Blue seeks to exploit in its external environment relates to unfulfilled passenger needs in some under-served destinations, as well as metro areas which command relatively high fares (Form 10 K, 2005). Deregulation of civil aviation (Delfmann, 2005) has spawned the emergence of low cost carriers such as Jet Blue.
The low cost carrier segment growth (Delfmann, 2005) is an important niche opportunity, which continues to take shares away from traditional network carriers. However, these new entrants such as Jet Blue need to excel in labor cost management in order to succeed (Delfmann, 2005). All airlines remain vulnerable to escalations in fuel costs, so it is important to raise general seat prices in concert in order to remain viable in financial terms. It is a major challenge for companies such as Jet Blue to hold on to the cost edge, because the external environment for civil aviation in the United States is highly competitive (Form 10 K, 2005).
Powerful alliances between large and established competitors can take back market shares that carriers such as Jet Blue may forge. The business is highly vulnerable to high fuel prices (Form 10 K, 2005). Congestion in airports threatens on-time performance and the critical aircraft utilization factor (Form 10 K, 2005). Overall, the external environment does present a distinct opportunity for low cost carriers such as Jet Blue, but leaves them vulnerable to competitive pressures, input costs and infrastructure threats as well.
Successful companies have to be highly flexible and professional managed to exploit opportunities, while avoiding serious risks at the same time. The Jet Blue market entry has come at a time when a number of established competitors have become financially unviable. Objectives and Company Mission Jet Blue has a concerted and well devised approach in response to the environment in which it operates. The company management has carved a creative niche within the overall market place.
The Mission is “To bring humanity back to air travel (About Jet Blue, 2007). This aim sets it apart from other low cost carriers. The company seeks to fill gaps in high fare metros, underserved areas, and the space between low cost fares and full service airlines (Form 10 K, 2005). The management has done its homework well to locate new potentials in a market which appears to be overly competitive at first glance. Jet Blue has also adopted an objective of controlled growth with focus on point to point services between destinations (Form 10 K, 2005).
This approach should serve to protect the fledgling airline against the perils of uncontrolled expansion. However, the company also has ambitious long term plans and has invested to double capacity by 2011 (Form 10 K, 2005). It has ordered new aircraft in such a manner than pilot training and maintenance costs will be held down. Internal Analysis Resources and capabilities determine the analysis of the internal environment (Hitt, Duane Ireland, and Hoskisson, 2005).
Jet Blue has made a loss in 2005 after a profit in 2004 (Form 10 K, 2005); this has happened even after 86% capacity utilization. The inability of the airline to generate cash even with such high capacity utilization makes it highly vulnerable. Coming at a juncture when the company is heavily leveraged in new capacity, there is a possibility of it becoming bankrupt. Jet Blue has failed to generate financial resources in proportion to its objectives, and seems to lack core competencies to survive in dense competition.