Competitive strategy and differentiation challenges in the discount airline industry

Policy & Strategy

Competitive advantages in emerging industries are first-mover advantages and product development. As the industry begins to grow, more competitors are attracted and thus differentiation becomes important. As the industry matures, the opportunity to improve the bottom line through revenue growth disappears, so cost control becomes the competitive advantage. In declining industries, new revenue streams are required to replace the disappearing ones. Thus the key advantage is the ability to develop and exploit new markets.

Strategic choices in emerging industries involve market development - what to market, where to market it, and how. In growing industries the key strategic choice is the path of expansion. As more competitors emerge and the market stratifies, decisions must be made as to how the company is to be positioned as the market heads towards maturity. In mature industries, the key strategic choice is how to grow - via consolidation or new markets. In declining industries, the key strategy is the development of an exit plan.

As a strategist for JetBlue I would find differentiation to be the most difficult. The discount airline business is highly commoditized and vigorously competitive. Sources of differentiation are scarce. All competitors have almost equal access to the same technology and same routes. Competitors attempt to differentiate based on service levels, yet none of their service initiatives are a source of sustainable competitive advantage.