JetBlue Cost Leadership and the 2007 Valentine's Day Crisis
This paper analyzes JetBlue Airways' founding philosophy and cost leadership strategy, focusing on how the airline used collaborative internal processes to achieve operational efficiency and financial control. It traces how those same collaborative principles that shaped employee development and financial reporting systems failed to translate into effective customer service protocols. The 2007 Valentine's Day ice storm incident — in which passengers sat on a grounded aircraft at LaGuardia Airport for over 14 hours — exposed this gap, leading to JetBlue's worst financial year and the replacement of its CEO. The paper concludes that systems and people must be oriented toward the end customer, not just internal efficiency.
- JetBlue's Founding Philosophy and Cost Leadership: JetBlue founded on collaboration and low-cost efficiency
- Collaborative Processes in Financial and Operational Management: Internal processes strengthened cost control and reporting
- The 2007 Valentine's Day Tarmac Incident: Ice storm exposed gap in customer service systems
- Lessons Learned and Leadership Response: CEO replaced; customer orientation identified as missing link
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What makes this paper effective
- It uses a concrete real-world crisis — the 2007 Valentine's Day tarmac incident — to ground an abstract argument about organizational process alignment.
- It draws a clear causal chain: the same collaborative philosophy that succeeded internally failed because it was never extended to customer-facing functions.
- It incorporates a direct executive quote ("hope is not a strategy") to add credibility and a memorable conclusion.
Key academic technique demonstrated
The paper demonstrates applied case analysis: it takes a theoretical business concept (cost leadership and collaborative process design) and tests it against an empirical failure event. Rather than simply describing what happened, it explains why it happened by tracing internal organizational logic, a technique common in business strategy writing.
Structure breakdown
The paper opens by establishing JetBlue's founding strategy and operational strengths, then shows how those strengths were applied to financial management. It pivots to the Valentine's Day crisis as a counterexample, demonstrating where the strategy broke down. It closes with a leadership-level reflection that reframes the crisis as a strategic lesson about customer orientation. The argument flows from success to failure to insight.
JetBlue's Founding Philosophy and Cost Leadership
JetBlue Airways 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 designed to enrich employees' ability to contribute to the company's growth (Kochan, 2006). This approach proved highly effective not only in building a strong organizational culture but also in driving measurable cost control across the airline's operations.
Collaborative Processes in Financial and Operational Management
JetBlue's collaborative approach worked very well in the areas of cost control and revenue management, from the gate agent through the consolidation of income statements. The airline was able to take the collaborative lessons learned from teaching its employees how to serve customers and incorporate them into its approach to managing cost controls and revenue management, creating systems and processes that could track profitability down to the individual flight level (Kochan, 2006).
References
Carey, S. (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.
Kochan, T. A. (2006). Taking the high road. MIT Sloan Management Review, 47(4), 16–19. Retrieved April 11, 2008, from ABI/INFORM Global database.
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