Jetblue Weakness the Airline Industry Is One

Jetblue Weakness

The airline industry is one that has rapidly evolved both with regards to technology and product offerings. This paper argues that technological advancements, deregulation and competitive pricing and marketing strategies are what have driven change in regards to JetBlue. The paper goes on to explain how each of these factors affects and drives change in the other three. Deregulation occurred to increase competition; competition in turn affects innovation in marketing and pricing as well as technology. This process however has no specific order with regards to where the change starts as innovation and competition can effect the market at large. One primary weakness of Jetblue is the advent of the Internet. The brick and mortar travel agencies became basically obsolete as more and more passengers began choosing the cheaper online alternative. This new technology cut out the middleman, and also allowed airline industries to diminish their own costs by diminishing personnel, as they developed company websites from which the passengers could purchase flight tickets. The Internet also allowed airline companies to develop dynamic pricing models, where they could monitor their competitors' price and respond with a lower price (Bundagaard, 1996). Brick and mortar travel agencies, which were once an additional cost added to the final ticket price, evolved into online travel agencies. The price of airfare has significantly dropped due to this as travel agencies no longer require a percentage of the final sale, but rather purchase the tickets at lower prices and only sell when demand is at its highest. This allows the low cost producers, Southwest and Spirit Airlines to take valuable market share from Jetblue as the companies have very low cost structures. Innovation has played a massive role in pricing strategy. The presence of innovative individuals such as David Neeleman, founder and CEO of JetBlue, has revolutionized the industry. JetBlue has been extremely influential and has been able to reduce and change fixed and variable costs, while focusing on a good marketing strategy that has ensured brand loyalty. However, the higher cost structure now is a weakness for the company as costs are now increasing in the maintenance of the airlines (Morrison, 1995).