Jet Blue

JetBlue Cost Leadership Opportunities

JetBlue was founded in 1998 and quickly established itself as a uniquely differentiated provider of low-cost airfares. Its founders stressed operational efficiencies achieved internally through the use of collaborative processes, systems and techniques to enrich employee's ability to contribute to the company's growth (Kochan, 2006). This approach worked very well also in the areas of cost control and revenue management processes, from the gate agent through the consolidation of income statements. JetBlue was able to take the collaborative lessons learned from teaching its employees how to serve customers and incorporate them into their approach to managing cost controls and revenue management, creating systems and processes that can be used to track down to the flight level profitability levels (Kochan, 2006). What the company has struggled with is their ability to take these collaborative processes and transform them into an effective customer service function, which was severely tested during Valentine's Day 2007 when an ice storm grounded one of their flights yet the plane sat on the tarmac at La Guardia airport waiting clearance for take-off for over 14 hours. Clearly the collaboration lessons learned from employee training and development, also used to create a more cohesive financial reporting system, did not get implemented within customer service. As a result, JetBlue in 2007 had the worst financial year of performance ever and eventually replaced their CEO (Carey, 2007). The implications from the Valentine's Day 20007 fiasco for JetBlue at La Guardia Airport shows that when systems, processes and people are integrated together through collaborative processes, there also needs to be an orientation to the end customer, a painful lesson learned by JetBlue last year that the incoming CEO remarked in a recent interview with the Wall Street Journal that "hope is not a strategy."

References

Susan Carey (2007, June 21). Boss Talk: Changing the Course of JetBlue; New CEO Dave Barger Reviews Discount Carrier's Strategy, Seeks Calmer Approach to Growth. Wall Street Journal (Eastern Edition), p. B.1. Retrieved April 10, 2008, from ABI/INFORM Global database. (Document ID: 1292138691).

Thomas a. Kochan (2006). Taking the High Road. MIT Sloan Management Review, 47(4), 16-19. Retrieved April 11, 2008, from ABI/INFORM Global database. (Document ID: 1143181061).