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So, in a few words, differentiation ranged from quality to comfort and to responsiveness to customer. Combined with the fact that all these services are offered at extremely competitive prices, the company has a strong position on the market.
2. It is quite obvious that the company managed to implement a unique strategy which allowed it to prosper on the market and to fight the large airline companies. The question we need to ask, however, is whether it actually has a competitive advantage. In my opinion, it does.
I am asserting this provided with the elements we have so far. In the beginning, the company was able to implement its differentiation- low cost strategy in order to attract its first customers and to build the brand's credibility. This was done using strong investments in the company's fleet and in innovations.
However, that period is gone now and the company has…
1. Nucifora, Alf. Why JetBlue Went From Take-Off to High Flier. On the Internet at http://www.nucifora.com/art_241.html
Nucifora, Alf. Why JetBlue Went From Take-Off to High Flier. On the Internet at
ith slim margins, JetBlue and other airlines must discover and capture market share in the most profitable routes. Not only does this serve the route-building strategy of JetBlue, but it allows the company to be more profitable than its rivals. Thus, there needs to be good external information gathering capabilities in addition to internal information systems.
3. Unit-level activities are those that are conducted at the unit or work group level. JetBlue is essentially a one-service company, but it does have different units. The company has a finance department and the role of this arm is to contain costs, especially those pertaining to financing, leasing and fuel costs. An example of an activity for this unit would be negotiating the lease of new airplanes. Other unit activities that JetBlue has include operations, training, accounting and marketing.
A marketing campaign would be another unit-level activity that JetBlue has. The campaign would…
Angelis, D. (2001). Implementing activity-based management in an acquisition organization. Acquisition Review Quarterly. Retrieved February 28, 2011 from http://findarticles.com/p/articles/mi_m0JZX/is_1_8/ai_81763208/pg_5/
Crosson, S. & Needles, B. (2007). Managerial Accounting. Boston: Cengage.
JetBlue 2004 Annual Report. Retrieved February 28, 2011 from http://library.corporate-ir.net/library/13/131/131045/items/211507/200410k.pdf
Treacy, M. & Wiersma, F. (1993). Customer intimacy and other value disciplines. Harvard Business Review. January/February 1993, 84-93.
Review of strategies and a recommendation for the best strategy for the organization
Milestones and Deadline
Key success factors
Budget and forecasted financials
Risk management plan
Contingency plans for identified risks
JetBlue is one of the leading airline carriers in the United States. The airline company has long been at the forefront of ensuring that passengers are exposed to quality service and products. Since the advent of the company in 1998 there has been a marked increase in the growth of the airline. This growth has caused the company to carefully evaluate all aspects of the business and carefully develop strategies that aim at meeting the needs and the goals of the company. To this end an implementation plan was developed to assist the company has it continues to grow…
Annual Report, 2010. Retrieved from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDE3Mzg3fENoaWxkSUQ9NDMwMDAzfFR5cGU9MQ==&t=1
Academic Earth. (n.d.). JetBlue: Organizational Culture and Values. Retrieved from http://academicearth.org/courses/jetblue-organizational-culture-and-values
"Company Profile." Retrieved from
1c) JetBlue struggled through the events in the case to manage its capacity to align with the demand. The airline service is perishable, such that when flights are unable to fly, that reduces the total capacity in the system. The nature of flight also makes it difficult to make up that capacity loss later -- if there are 30 seats left on a flight to Little Rock, that does not help make up for a capacity shortage of 15 customers on a flight to Orlando. This is where the service failure escalated for JetBlue. With a lack of excess capacity in aircraft, pilots and crew, JetBlue found itself having to pre-cancel flights to give it the opportunity to restore capacity and demand equilibrium.
JetBlue also struggled with the integrated communication mix. The company in particular had problems managing the public relations side of the business. While it has a…
" Certainly, this is the essence of the question, as it is the heart of the company's corporate culture. What exactly is the HP Way? How do employees communicate with each other? If this is to be analyzed, there needs to be a clear description of the issues involved in this culture (HPPA, 2011).
Another issue is the discussion of "weaknesses" revealed by Carly Fiorina's involvement. Again, while the author quite clearly describes her shortcomings in terms of her actions and integration with the corporate culture, there is no focus on which elements of HP's culture itself were weak or inadequate to deal with this challenge. Why was the culture not strong enough to survive Ms. Fiorina's lack of good management skills? Instead, the description here focuses rather upon the fact that Fiorina ultimately did not adhere to the corporate culture of the company, as indicated by Dobuzinskis (2010).
Business Consulting Buzz (2009, May 23). Creating a Public Relations Crisis Communication Plan. Retrieved from: http://www.consulting-business.com/public-relations-crisis-communication-plan.html
Dobuzinskis, a. (2010, Aug. 9). Fiorina, Hurd: no practitioners of "The HP Way"? Reuters. Retrieved from: http://www.reuters.com/ article/2010/08/09/us-hp-theway-idUSTRE6781EN20100809
HPPA (2011). The HP Way. HP Alumni. Retrieved from: http://www.hpalumni.org/hp_way.htm
Pattison, K. (2008, Nov 17). Building Trust with Transparency. Fast Company. Retrieved from: http://www.fastcompany.com/articles/2008/11/interview-john-havens.html
Mission and Vision
A company's mission statement should reflect its "unique purpose and reason for being" (Zain Books, 2014) Now, realistically, companies exist to earn their shareholders a return, and the mission of the company is therefore to increase shareholder wealth (Friedman, 1970). But this is not something that can be sold to the other stakeholders of a business, especially not the employees. They need to feel that they are contributing to something greater than themselves, as part of their motivation. JetBlue is an airline, and the work it does is to fly people around the country. The best understanding of the company's mission is:
JetBlue has a mission to transform air travel for Americans, bringing dignity back to American skies.
Consider the nine characteristics of a good mission statement. The above statement is broad is scope, encompassing the sum total of the company's business. It does not generate…
Chatman, J. & Jehn, K. (1994). Assessing the relationship between industry characteristics and organizational culture: How different can you be? Academy of Management Journal. Vol. 37 (3) 522-553.
Friedman, M. (1970). The social responsibility of business is to increase shareholder wealth. New York Times Magazine. Retrieved April 8, 2015 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Hazel, B., Stalmaker, T., Taylor, A., & Usman, K. (2014). Airline economic analysis. Oliver Wyman. In possession of the author.
Kotter (2013). Your company vision: If it's complicated, it shouldn't be. Forbes. Retrieved April 8, 2015 from http://www.forbes.com/sites/johnkotter/2013/10/14/the-reason-most-company-vision-statements-arent-effective/
many of its rivals. Its high debt load contributes to its cost disadvantage. he corporate culture does not give it a competitive advantage. JetBlue's culture is easily replicated by any other airline and provides no particular benefit that the customer appreciates. hey lag Southwest in this regard. he human resource practices work to make the firm functional, but again JetBlue does not do anything unique that adds sustainable value to the firm.
JetBlue's six strategies for 2008 were to "reevaluate the ways the company was using its assets; reduce capacity and cut costs; raise fares and grow in select markets; offer improved service to corporate travelers; form strategic partnerships; and increase ancillary revenues.
he company was able to make ground in strategic partnerships via its equity sale to Lufthansa, which required them to bring a Lufthansa executive on their board. his also represented a move towards redeploying key assets, including…
The company was able to make ground in strategic partnerships via its equity sale to Lufthansa, which required them to bring a Lufthansa executive on their board. This also represented a move towards redeploying key assets, including the JFK hub. The firm also was able to utilize its LiveTV asset better as well. The company reduced its routes and began to focus on Orlando and other vacation cities. Fares increased as well, although in the early part of the year the cost of jet fuel rose significantly as well. Other new service fees were introduced.
JetBlue has successfully implemented most of its six strategies. Whether these strategies will have a positive impact on the firm or not remains to be seen. The changes bring JetBlue's operations more in line with those of a legacy carrier, especially with regards to increasing both fares and ancillary costs to the customer. Beyond the massive increase in fuel prices, the company was unable to contain other costs in early 2008. Marketing, maintenance and "other" operating expenses all skyrocketed. This reduced their operating margin. Operating expenses overall increased 28% while revenues only increased 25%. The company's move towards a higher cost structure was met with lower load factors. The airline industry is subject to high price elasticity of demand, which makes it difficult for airlines to increase their prices, even when they themselves are subject to higher fuel costs.
Over the long-term, it seems that JetBlue will have difficulty sustaining their success. The company does not appear to have the pricing power that its management believed it to have. This means that margins will continue to be squeezed. The airline's poor performance in 2008 was also a direct result of their lack of fuel hedging for that year. The financial figures for late 2008, however, will show a declining fuel price environment and therefore may be healthier. However, JetBlue's overall strategy is that of a differentiated provider and they are finding it difficult to maintain either that or a low cost strategy. They appear to have committed the mistake -- especially with their 2008 strategic changes -- of being neither differentiated nor low cost. Their partnership with Lufthansa marks a move towards the former but not a particularly definitive move. JetBlue's strategies failed in part because the firm is unwilling to choose a definitive strategic direction.
JetBlue Airlines Case Analysis
JetBlue Case Analysis
Discuss the trends in the U.S. airline industry and how these trends might impact a company's strategy.
The time period the case study covers and the ensuing years have proven to be among the most turbulent ever for the airline industry on a global scale. Beginning with the reduced availability of capital and the lack of liquidity for expansion and the slowing rate of economic growth for business and leisure travel the latest global recession has been particularly difficult for the airline industry and its participants to navigate. The following are the key financial factors that the case study indicates as being the most responsible for the turbulence in this industry over the long-term. Continually escalating fuel and operating costs which fluctuate significantly over time force fuel hedging or the practice of purchasing large quantities of fuel on speculation of price increases or…
Fuel hedging is also being used by JetBlue to support its primary strategic intent or vision of being a highly differentiated, high-end airline at a Southwest Airlines price point. All the elements related to underscoring an exceptional experience from the leather passenger seats to the in-flight television service are deliberately designed to support the strategic intent of being a premier airline and a competitive price. JetBlue is attempting to create an defend a very unique place in the industry by concentrating on delivering exceptional customer experience sat a very competitive price, while also earning the loyalty of business and leisure travelers.
Discuss Jet Blue's financial objectives and whether or not the company has been successful in achieving these objectives.
JetBlue has exceptionally high financial and operational objectives, as is evident in the case study that is the basis of this analysis. Please see the Appendix for Table 3: JetBlue Ratio Analysis, for a five-year analysis of their performance across five different series of ratios. As of the fiscal year ending December 2010 the company had seen improvements in activity and profit-related financial ratios. The unfortunate events of the 2007 Valentines' Day (Waite, 2007) proved to be so difficult to manage at the organizational level given the pressure from citizens, the media and the customers and their attorneys, the CEO had to step. Further, it was becoming apparent that the cost reduction strategies designed around fuel hedging initiatives, combined with lean production and process workflows, was not going to be enough to offset the rapidly rising fuel prices JetBlue was contending with at the time. Due to these factors the company's
etBlue: Fighting for a Bigger Slice of the Pie in the Sky
In the highly competitive commercial air travel business, earning a profit and earning the loyalty of customers generally go hand in glove. And as to profit, airlines that offer the most destinations and the most customer perks, snacks, and promotions are not necessarily the most profitable. etBlue has a mountain to climb to be able to compete head-to-head with the dominant companies -- American Airlines, Delta, and Southwest -- but the #5-ranked airline is gearing up to expand its services, its destinations, and it is launching strategies that could place it higher in the airline pecking order. This paper reviews etBlue's merger options and potential partners, its entrance into the retail apparel market, its expansion opportunities, its quest to find and train highly skilled marketing talent, and its crusade to transcend the ordinary commercial flight into a uniquely…
JetBlue's operations revolve around 15,000 employees and an average of 800 flights daily. The company currently services 82 cities, 25 states, and 15 countries, including Latin America and the Caribbean. JetBlue's fleet contains Airbus A321, Airbus A320 and EMBRAER 190. These chosen aircraft provide more seats and larger cabins than competing airlines. JetBlue is the only airline in the United States to offer the "The Customer Bill of Rights." This document provides for customer's compensation in particular situations that involve the irregularities of air travel. The company is diligently working towards finding new ways to maintain a low cost structure, expansion and providing the customers with exceptional amenities and service (SEC Form 10-K, 2013).
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…
Foremost, they must be offered numerous training programs, which are both for the benefit of the employee (increases his confidence) as well as for the organization, which, through investing in its human resource, will be able to offer services at superior quality standards.
However an affective culture is not desirable within a professional business environment, the employees should be encouraged to address any complaints or dissatisfactions. In addition, the company should offer specialized assistance and counselling to those who need it. The counselling sessions could be addressed to employees facing personal difficulties or those which have been traumatized by an unfortunate airplane event.
All the human resource strategies are aimed at increasing employees' satisfaction on the job, unifying their individual goals with the organizational goals, motivating them to increase their performances and support JetBlue in reaching its overall objectives.
In regard to their customers, the airline company must improve the…
Case Study: JetBlue Headquarters, Forest Hills, New York
Monin, N., 2004, Management Theory: A Critical Reading, Taylor and Francis Inc.
JetBlue's strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?
The strategy for JetBlue's success in the marketplace is described in the company's 10-K/A filling. Their goal is to 3 establish JetBlue as a leading low-fare, low-cost passenger airline by offering customer's high-quality customer service and a differentiated product.' (JetBlue,2005) By doing this, they are trying to 3 stimulate market demand while maintaining a continuous focus on cost-containment and operation efficiencies.' (JetBlue, 2005) Based on the filing, JetBlue relies on product leadership customer value proposition. The four key elements to their strategy are:
Stimulate demand with low fares
Emphasize low operation costs
Offer point to point flights to underserved and/or overpriced large markets
Differentiate our product and service (JetBlue, 2005)
Due to the strategies, JetBlue has been able to grow largely…
CliffsNotes.com. Activity-Based Costing Activities. Retrieved on January 11, 2013 from Noreen, E.W., Brewer, P.B., Garrison R.H. (2011).
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Principles of Accounting. Process Costing and Activity-Based Costing. Retrieved on January 11,2013 from http://www.principlesofaccounting.com/chapter%2020.htm
JetBlue's attempts manage strategic change. 2) I'm APPLICATION theory company. Therefore, advised start answer definitions/theories/concepts/models apply company concerned. This work referenced a .
JetBlue's attempts to manage strategic change
JetBlue's business model was innovative from its inception. It was a budget airline which streamlined virtually all conventional amenities from flights. The airline chose to focus on the U.S., rather than challenge the major existing premium international airlines' routes. "The airline mainly serves destinations in the United States, along with flights to the Caribbean, the Bahamas, Bermuda, and Mexico" (Jet Blue Airlines, 2011, Aviation Explorer). JetBlue, partially because of its willingness to break the mold but also because of demographic changes in the U.S., became extremely successful as a result of its business model. Its low-cost, high-volume, specialized, yet broad-ranging target demographic matched the profile of an increasingly cost-conscious recessionary America. The Internet also allowed budget-conscious travelers to have more autonomy…
Bomkamp, Samantha. (2011). JetBlue brings back 'All You Can Jet' passes. AP. Retrieved
August 18, 2011 at http://travel.yahoo.com/p-interests-35555827
JetBlue Airlines. (2011). Aviation Explorer. Retrieved August 18, 2011 at http://www.aviationexplorer.com/jet_blue_airways.htm
JetBlue Airways strategies
Economical, social moral impact strategies jetblue airways.
JetBlue Airways is an airline company that has its' headquarters located in the city of New York from where it operates an approximately six hundred and fifty daily flights going in and out of sixty one different United States' cities. According to a recent survey conducted by J.D. Power and Associates, the airline has been able to maintain its' reputation for six years consecutively as one of the low-cost carriers which offers highest customer satisfaction in terms of its' service, another survey also ranked JetBlue Airways as the most Eco-friendly Airline both in 2008 and 2009 (igas, 2001, 12-23).
This essay intends to spell out the economical, social and moral impact of strategies for JetBlue Airways.
JetBlue Airways is most revered for the impact it brought to the economy with its' reduced airfares and great customer services. Before…
Davies, R., (2004), A history of the world's airlines, Oxford U.P, 56
Hudson, K., and Julian P., (1979) Diamonds in the Sky: A Social History of Air Travel. London: Bodley Head, p 23-34
Myron J.S., (2002), the airline encyclopedia, 1909 -- 2000, Scarecrow Press, 34-36
Rigas, D., (2002) Flying off Course: The Economics of International Airlines, Routledge, New York
Vision, Mission, Competition
The new mission statement for JetBlue is "To become a top 4 airline in the United States, differentiated by exceptional customer service."
The new vision statement will be "JetBlue will lead the renaissance in American air travel, restoring the industry to the days when people looked forward to flying."
The mission statement is specific with respect to market share, and geographic scope, and it also provides a pathway for how JetBlue hopes to get there. Service is one area where an airline can be truly differentiated, and while JetBlue is also a low cost airline, it knows that delivering great customer service improves brand loyalty, and often does not cost that much extra.
The vision statement is bold -- and visionary -- and can be inspirational in nature. By tapping into the forgotten romance of air travel, both customers and employees can be inspired by this vision.…
Hazel, B., Stalnaker, T., Taylor, A. & Usman, K. (2014). Airline economic analysis. Oliver Wyman. In possession of the author.
JetBlue 2013 Annual Report. In possession of the author.
Southwest vs. JetBlue
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 both Southwest airlines and JetBlue. Segmentation, targeting and positioning have also played a profound role within the evolution of the industry. Many companies, particular those that are broad-based have experienced difficulties from more niche players. Low cost producers such as JetBlue and Southwest have developed targeted strategies that cater to a specific market. 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, yet this process has no specific order with regards to where the change starts as innovation and competition, can…
Finally, the consumer is now becoming more leisure oriented. Currently, the middle class in emerging markets is growing exponentially. Countries such as China, India, Brazil and Russia are experiencing robust economic growth. As such, consumers from these countries are willing to travel leisurely to tourist destinations. Due in parts to the worldwide appeal of travel, many airlines are well positioned to take advantage of this impending trend. China in particular, is experiencing a robust increase in consumer discretionary income. More consumers are now willing to purchase products tied more closely to leisure activity as oppose to necessities in life. Globalization in regards to economic activity has created this wealth effect within emerging markets. Emerging markets are now demanding many American products, goods, and services. This demand has increased foreign direct investment in many emerging markets. Many industries from auto makers, to financial institutions are now conducting business in emerging markets. This increase in business activity has created more job opportunities with emerging markets which directly translates into discretionary income. This is a direct result of the growth many of these countries are experiencing. As niche players however, both Southwest and JetBlue have concentrated flight plans and routes. A deviation from this strategy would ultimately require more flights with overseas tourist destinations. Larger players such as United or the now bankrupt American Airlines have a competitive advantage in regards to economies of scale that Southwest and JetBlue do not have.
Rising costs and price competition
Events such as 9/11 have had devastating events on the industry causing losses well into the billions of dollars. The effect of such a cataclysmic event cannot even be quantified, as many still today avoid air travel due to the fear that has been instilled in them. Security, and the cost of security, has increased as a response to the 2001 attacks. The increased expense has been incurred by the airlines themselves, which in turn have no choice but to put the burden on the passengers. The global recession has also caused unquantifiable losses in the industry, especially when coupled with the rise of jet fuel prices and the 2010 climatic events that prevented thousands of airplanes from departing, or landing in their proper destination. Whether an airplane departs or is cancelled does not change the fixed costs of the airline, yet it does directly affect the airline's profits. Also landing in a different airport does require compensation to passengers. Environmental policies that limit CO2 emissions also increase the
JetBlue is an airline based in New York City, operating both domestic and international routes. JetBlue was founded in 1999 by David Neeleman, a former Southwest Airlines executive, using much the same business model. The company received 75 landing slots at JFK later that year, and by December had taken delivery of its first aircraft from Airbus. The first flight was on February 11th between JFK and FLL (JetBlue.com, 2015). The company has since expanded significantly. It has been profitable since at least 2009 (MSN Moneycentral, 2015). According to the Bureau of Transportation Statistics, JetBlue is the #5 airline in the United States, with a 5.2% share (BTS, 2015). It is concentrated along the Eastern seaboard, so it is the largest among the major regional airlines.
The model that JetBlue uses, theoretically at least, is a discounter model, which is focused on competing on popular routes with a low cost.…
SeatGuru (2015). Spirit baggage. SeatGuru. Retrieve June 9, 2015 from http://www.seatguru.com/airlines/Spirit_Airlines/baggage.php
Trefis (2014). Airline industry will have to maintain capacity discipline to remain profitable. Forbes. Retrieved June 9, 2015 from http://www.forbes.com/sites/greatspeculations/2014/06/20/airline-industry-will-have-to-maintain-capacity-discipline-to-remain-profitable/
JetBlue.com (2015). Our company: History. JetBlue.com. Retrieved June 9, 2015 from http://www.jetblue.com/ about/ourcompany/history.aspx
MSN Moneycentral (2015). JetBlue. MSN Moneycentral. Retrieved June 9, 2015 from http://www.msn.com/en-us/money/stockdetails/financials/fi-JBLU?ocid=qbeb
Jetlue's main competitors can be considered Southwest in the United States, together with Ryanair and Easyjet in Europe and AirAsia in Asia. However, we need to mention from the very beginning that the international issues we need to address are at most continental or regional.
Indeed, the most important low-cost flyers have split the influence zones between them, with Easyjet being the market leader in Europe and covering exclusively this zone and AirAsia doing the same in Asia. As for Jetlue, it covers the Untied States, as well as smaller states in the Caribbean, such as the Dominican Republic and Puerto Rico. In my opinion, I don't think that Jetlue can become, in the short run, a significant competitor on the international market, mainly because it does not presently have the necessary infrastructure and logistics that are needed for a global player.
The legal issues we need to…
1. Jiang, Hongwell. Can Customer-Centric E-Business System Achieve Competitive Advantage for Airline Industry?. School of Aerospace, Mechanical, and Manufacture Engineering. On the Internet at http://ausweb.scu.edu.au/aw03/papers/jiang____/paper.html
2. Cooper, Alan. Ethical Pricing. Number 28: Autumn 2004. On the Internet at http://www.poolonline.com/archive/issue28/iss28fea4.html
Jet Blue Case Study
One of the prime examples of the new paradigm in the airline industry is Jet Blue, an American low-cost, no-frills airline. Its main base is JFK international airport in Queens, NY. The airline's main destinations are U.S. hubs, flights to the Caribbean and Bahamas, and some to Central and South America. It is a non-union airline with a fleet of just under 200 craft, with another 50 ordered. The primary strategy for Jet Blue is the customer value proposition. The airline is not fancy, does not try to offer a number of amenities, only has a few routes, and is primarily trying to base ridership on low-cost fares.
Business Risks and Controls- Airlines, particularly smaller airlines, are faced with a larger number of competitors and sensitivity to economic conditions. With the global economic downturn, increased fuel prices, and weak travel demand, all airlines face stresses. This…
One can call Jet lue an airline with a vision, and in terms of pricing, the only airline that it can be compared with is Southwest Airlines. The founder of this airline had the confidence to take on the entrenched airlines and he had only one desire to prepare and that was to create a low-cost, high-service airline that passengers wanted to fly in. One of the aims of this airline was to fly in areas where the service was poor, and that is part of the reason why he came to New York as there was no low cost airline there. This has permitted the airline to grow very fast, and make profits. It is also planning to add another 14 cities in its service range and these include oston, Denver and Salt Lake City during the next two years. (SMM's best of Sales and Marketing)…
Dicarlo, Lisa. January, 31, 2001 "Jet Blue Skies" Management and Trends. Retrieved at http://www.forbes.com/2001/01/31/0131jetblue.html . Accessed on 03/24/2003
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JetBlue Airways" Yale School of Management. October 9, 2002 Retrieved at http://www.som.yale.edu/AnalystReports/dyn/download.php?reportid=196 Accessed on 03/24/2003
Jet lue Airways
Jetlue Airways Corporation, incorporated in August 1998, is a low-cost passenger airline that provides customer service at low-fares mainly on point-to-point routes (Yahoo, 2005). As of February 10, 2005, the airline operated a total of 280 daily flights. Jetlue focuses on serving markets that have long been underserved and large metropolitan areas that have had high average fares. The airline serves 30 destinations in 12 states, Puerto Rico, the Dominican Republic and The ahamas.
Jetlue's low fares aim to stimulate demand, especially from fare-conscious leisure and business travelers who might otherwise have used alternative forms of transportation or not have traveled at all (Yahoo, 2005). The airline also offers customers a differentiated product, including new aircraft, low fares, leather seats, free television at every seat, pre-assigned seating and reliable operating performance.
. Major Challenges
One of Jetlue's major strengths is that it understands the importance…
Yahoo. (2005). JetBlue. Retrieved from the Internet at:
http://finance.yahoo.com /q/h?s=JBLU& t=2005-04-14.
WorldVest Base Inc. (2004). Jet Blue Financial Summary. Retrieved from the Internet at: http://www.shibuimarkets.com/perl/company.pl?cid=170253& page=Discussion.
Heffernan, Ryan. (February 11, 2003). Jet Blue looks to expand. The Heights.
This came as result of the firm's cost-cutting efforts after it lost $85 million in 2008 amid the start of the downturn and skyrocketing fuel prices. The company had also turned a profit in 2007 (MSN Moneycentral, 2010). Clearly, the company has been able to adapt to its circumstances and meet its financial objectives. Revenues, however, shrunk in 2009, no doubt as the result of cutting routes in order to trim costs.
JetBlue does not derive a competitive advantage from its cost structure. The reason is not that JetBlue has poor control over its costs, because it does. The reason is that other discount airlines follow the same policies and achieve the same results -- the competitive advantage JetBlue may once of have on cost was not sustainable and now other airlines match their cost-cutting efforts. Organizational structure does provide JetBlue with some advantages. The firm is able to control…
MSN Moneycentral: JetBlue. (2010). Retrieved April 16, 2010 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=JBLU
Jet Blue Airlines: Cost Management
The objective of this work in writing is to review the case study on Jet Blue Airlines and to analyze their system of cost management.
Price variance of fuel is noted by Jet Blue Airlines to be a critical matter in business operations as it was reported in 2007 that fuel costs were the largest operating expense for Jet Blue Airlines due to high average prices of fuel. The report specifically states "fuel prices and availability are subject to wide price fluctuations based on geopolitical factors and supply and demand. These facts provide strong incentives for highly accurate and comprehensive fuel inventory management -- particularly conservation." (Jet Blue Airlines, 2007)
Jet Blue Airlines reports focusing on a "disciplined fleet management strategy to control the growth, size and age" of the Airlines' fleet. It is reported to be due mainly to "higher fuel prices…
Jet Responsibly: Improving Our Communities and Our World (2007) Environmental and Social Report. Retrieved from: http://www.jetblue.com/ green
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."
Susan Carey (2007, June 21). Boss Talk: Changing the Course of JetBlue; New CEO Dave Barger eviews Discount Carrier's Strategy, Seeks Calmer Approach to Growth. Wall Street Journal (Eastern Edition), p. B.1. etrieved April 10,…
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).
g. Lufthansa); partners with Blackberry and Yahoo for in flight conveniences.
Early aggressive additions to fleet and service did, as analysts predicted, negatively impact the company.
Company will need to carefully evaluate routes, new service, new equipment, and new technology in order to maintain growth potential.
Fairly stable and industry respected; replaced CEO in May 2007.
Needed a new managerial focus after 2004.
Optimistic, keep tight rein on overly aggressive expansion.
Jet Blue University, compensates better than most airlines, rewards loyalty for service
Unsuccessful attempt at unionizing
Ensure mission is translated to consumers; empower local employees to make better decisions so clients are not left sitting on tarmac.
Huge and rapid growth spurt in early 21st century
Became a model for other carriers; major carriers copied model and took away share
Continued energy and fiscal focus on consumers and next generation of airline ideas.
Air Transportation Safety and System Stabilization Act, Public Law 107-42. (2001, September 22). Retrieved October 2010, from Office of Transportation - U.S. Government: http://ostpxweb.ost.dot.gov/aviation/Data/stabilizationact.pdf
Jet Blue Press Release - Names Dave Barger President and CEO. (2007, May 10). Retrieved October 2010, from JetBlue.com: http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=998672&highlight=))
Air Travel Report: Dip in Delays, Spike in Complaints. (2010, October 12). Retrieved October 2010, from CNN Travel: http://www.cnn.com/2010/TRAVEL/10/12/air.travel.consumer.report
Jet Blue Shareholder Information. (2010, October 12). Retrieved October 2010, from Jet Blue: http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-irhome
7). To bring this program into action, JetBlue has implemented an interesting employee structure. JetBlue has a home-based reservation system, where agents are allowed to work from their home via a remote connection with the central base. These employees are also committed to the company because of the particularly pleasant circumstances of their work. This type of empowerment allows for employee loyalty to the company, as well as keeping labor costs lower. Labor costs are also kept lower by lower than average salaries for the industry. Nonetheless, because of the corporate culture, many more applications are received by JetBlue than other airlines (p. 10). The company makes up for this by high job security, overtime pay, and a high probability for promotion. In this way, the company gains loyalty from both…
The strategy has helped a limitation and a better control over the costs and it was subscribed by Neeleman himself, who only makes $200,000 a year in wages - quite low in comparison to other executives at international corporations.
The second feature in the successful corporate culture implemented by David Neeleman was that of an increased focus onto the full satisfaction of the customers' needs and wants. Instead of prospecting the market to identify the strategies implemented by the competition and trying to top them, the founder researched the market in order to identify the needs of the customers. "So instead of trying to beat the other airlines, he took a different angle. He's not in the aviation industry, Neeleman says, "e're in the customer service business" (Mount, 2007).
As such, by cutting costs while satisfying both his staff and his employees, David Neeleman was able to find a perfect…
Mount, I., 2007, America's 25 Most Fascinating Entrepreneurs, Inc.com, http://www.inc.com/magazine/20040401/25neeleman.htmllast accessed on May 20, 2008
However, in the abstract idea that all limitations are overcome and the top management succeeds in creating the boundaryless organisations, the company would be met with several advantages. For instance, the staff members would be more ingenious and more eager to help the employer resolve any impending problems. he company would benefit from more dedicated staff, which is free to come up with strategies and solutions and which in the end add more value to the entity.
JetBlue has taken the first steps in becoming a boundaryless organization when they encouraged the employees to become more involved in the decision making process. he HR strategy could carry on retrieving the most beneficial outcomes. he control over the staff members is however a boundary that is difficult to eliminate as the corporate success directly depends on how the staff interacts with the customers; and these interactions must be clearly supervised and…
The concept is rather fruitful in theory, but its practical application is quite difficult to achieve due to various limitations. For instance, there is a risk that the employees will increase procrastination and will decrease the quality of their operations; then, the control and supervision of the staff would be reduced and this would also negatively impact the organization. However, in the abstract idea that all limitations are overcome and the top management succeeds in creating the boundaryless organisations, the company would be met with several advantages. For instance, the staff members would be more ingenious and more eager to help the employer resolve any impending problems. The company would benefit from more dedicated staff, which is free to come up with strategies and solutions and which in the end add more value to the entity.
JetBlue has taken the first steps in becoming a boundaryless organization when they encouraged the employees to become more involved in the decision making process. The HR strategy could carry on retrieving the most beneficial outcomes. The control over the staff members is however a boundary that is difficult to eliminate as the corporate success directly depends on how the staff interacts with the customers; and these interactions must be clearly supervised and improved as to achieve the organizational goals.
2008, 25 Lessons from Jack Welch, 1000 Ventures, http://www.1000ventures.com/business_guide/mgmt_new-model_25lessons-welch.html#Boundarylessness , last accessed on May 26, 2008
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. Furthermore, differentiation is not the main driver of profitability in this sector. Cost control is, but many of the major costs such as airplane leases, landing fees and fuel prices are relatively fixed so acute focus must be placed on the more controllable areas, including those which affect the same service levels upon which differentiation is built.
Sandberg, Kirsten. (2005). inning Customers Through People and Technology: A Conversation with Jeffrey Rayport. Harvard Business School Press. Retrieved April 8, 2008 at http://www.bestfaceforward.info/DocumentDisplayServlet.srv?url=%2FUploadDocumentDisplayServlet.srv%3Fid%3D31157.
Sandberg, Kirsten. (2005). Winning Customers Through People and Technology: A Conversation with Jeffrey Rayport. Harvard Business School Press. Retrieved April 8, 2008 at http://www.bestfaceforward.info/DocumentDisplayServlet.srv?url=%2FUploadDocumentDisplayServlet.srv%3Fid%3D31157.
Southwest Airlines has been a highly successful airline, it has been one of the most successful airlines in U.S. history with the low cost carrier model created by Southwest emulated successfully by many other airlines across the world. Today it is the largest domestic carrier in the U.S. And has a history of consistent profits, with on a few quarters in the recent recession showing losses (Southwest Airlines, 2013). There are numerous reasons behind the success, the main reason are the leadership and the way that the firms ability to gain and maintain effective competitive advantages. These will provide a good basis from which to consider the future of the firm.
Effectiveness of Leadership
Southwest Airlines was founded by ollin King and Herb Kelleher, having seen successful interstate airline operating out of California it was believed that Texas could also support an interstate airline (Barratt, 2008).…
Barrett, C, (2008), Southwest Airlines' Colleen Barrett on 'Servant Leadership', [online] accessed 27th September 2013 from http://www.youtube.com/watch?v=6TgR95vnM0c
Bryant, E, (2008, Dec), Leadership Southwest Style, T+D, p36-39
Mintzberg Henry, Ahlstrand Bruce, Lampel Joseph B. (2011), Strategy Safari: The Complete Guide Through the Wilds of Strategic Management, Financial Times / Prentice Hall
Southwest Airlines, (2013), homepage, [online] www.Southwest.com
As the Bible says, out of the abundance of the heart, the mouth speaks," which means that you will know a person's thoughts and what they hold dear by how they speak. This is a critical lesson for JetBlue management. They cannot just gloss over this with the promise of better performance because that will immediately make them even less credible. The fact that no one stood up for the customers in the first place is an excellent case in point as to how flawed the culture is (McGregor, 2007). The Corporate Advertising program needs to instead concentrate on cultural change. It needs to show how JetBlue is rewarding employees for taking initiative, and explain how employees who go beyond get recognized -- and those that ignore customers are gone. JetBlue needs to embrace the Golden ule and use that as the basis of their advertising, taking the high road…
Holland, M.. (2008). PASSENGER BILL of RIGHTS. Defense Counsel Journal, 75(1), 109-111.
Thomas a. Kochan. (2006). Taking the High Road. MIT Sloan Management Review, 47(4), 16-19.
Jena McGregor. (2007, March). An Extraordinary Stumble at JetBlue. Business Week,(4024), 58.
Waite, M.. (2007). Managing Under Crisis: The Source of Atonement at JetBlue Airways. The Business Review, Cambridge, 9(1), 187-191.
Only a small percentage of flights are booked using travel agents. The primary means for customers to purchase tickets is directly from the airline over the phone or online at the company's website http://www.southwest.com/. Using this method, customers have access to offers that are only available on the web.
Southwest's marketing campaign is based on setting itself apart through branding. For instance, Southwest uses a "cattle call" method of seating. Customers are not assigned seats, but board in three groups according to arrival time. This allows the airlines to board passengers more quickly. In addition to this key difference, Southwest allows passenger to change reservations without incurring any additional costs, as with other airlines. However, Southwest does not offer same-day standby on a different flight. This service is usually free on other airlines without upgrading.
Southwest is the bare bones carrier. They offer Snack Packs of prepacked goods instead of…
American Airways. General Feed. Accessed June 11, 2010 from http://twitter.com/search?q=Continental#search?q=American%20Airways
American Eagle Airlines. General Feed. Accessed June 11, 2010 from http://twitter.com/search?q=Continental#search?q=American%20Eagle%20Airlines
Continental Airlines. Facebook page. Accessed June 11, 2010 from
Target's chart, however, shows that the company has tracked the market and GDP fairly closely, indicating that perhaps it does not trade the way a discount retailer should.
Johnson & Johnson
JNJ is a pharmaceutical and consumer products company. It competes in pharmaceuticals, consumer products in the health and beauty segment and in medical devices. The company was founded in 1886 and today is a multinational conglomerate with operations in 57 countries and with approximately 250 subsidiaries.
To a certain extent, JNJ's product line is price inelastic. Pharmaceutical demand is tied to overall consumer demand and the state of the economy, but not to the same extent that many other consumer products are. As a result, JNJ would be expected to have less significant swings in its stock price relative to the GDP, other macroeconomic indicators, or the Dow Jones. The stock, however, has traded roughly in line with the…
Yahoo! Finance, various pages. (2009). Retrieved November 25, 2009 from http://finance.yahoo.com
Federal Reserve. (2009). Money Stock Measures. Federal Reserve. Retrieved November 25, 2009 from http://www.federalreserve.gov/releases/h6/Current/
Bureau of Economic Analysis. (2009). National Economic Accounts. BEA. Retrieved November 25, 2009 from http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Bureau of Labor Statistics. (2009). Employment Situation Summary. BLS. Retrieved November 25, 2009 from
Customers complain of smaller cramped seats and hence an uncomfortable flight experience. This is because Southwest wants to accommodate as many passengers as it can in one flight and its seats are thus smaller than those found in other airlines. This is especially uncomfortable for those who need extra space due to physical challenges.
The other weakness of Southwest is its customer on-plane experience. Owing to the cost concern, Southwest put as many seats as possible in the planes and only single class seat, economic. It means that the size of a seat in Southwest's airplanes is smaller than a seat in other airlines' aircrafts. Thus, there are some customers could feel uncomfortable with the smaller seats because those customers' physical issues, like the football players. Therefore, the Southwest might loses the business of those customers with special issues.
The threats always come from external environment. And external environment…
 "Southwest Airlines 2005 Form 10-K." Retrieved December 2, 2009. p 1
 "The Mission of Southwest Airlines."
The price of oil is a significant concern, however, as this impacts on the price of jet fuel (though they are not perfectly correlated). Airlines typically rely on sophisticated hedging strategies in order to control fuel costs, as rapidly rising fuel costs can be devastating for business (McAllister, 2010).
The technological environment is one characterized by changes in plane configurations and models, in order to capitalize on the latest trends in the airline industry. As airline manufacturers become more responsive to the market needs, this will benefit Pet Airways, as our company will need to have specialized cargo holds to handle our star passengers. The political and legal environment is generally favorable. hile laws regulating airlines are strict, they are universally applied. The biggest challenge will be when tighter security regulations reduce demand for flights, as most flights are within a few passengers of being unprofitable. The cultural and social…
ATA. (2010). When America flies, it works. Air Transport Association. Retrieved May 17, 2011 from http://www.airlines.org/Economics/ReviewOutlook/Documents/2010AnnualReport.pdf
CBO. (2011). CBO's economic projections. Congressional Budget Office. Retrieved May 17, 2011 from http://www.cbo.gov/ftpdocs/120xx/doc12039/EconomicTables%5B1%5D.pdf
McAllister, E. (2010). U.S. airlines more cautious on '10 fuel hedges. Reuters. Retrieved May 17, 2011 from http://www.reuters.com/ article/2010/02/25/us-travel-leisure-summit-fuel-hedging-idUSTRE61O59Z20100225
Negroni, C. (2011). For many carriers, business class is the premium choice. New York Times. Retrieved May 17, 2011 from http://www.nytimes.com/2011/05/05/business/05LUXE.html
Another issue is the legal/political power that Southwest has (or does not have, in relation to its rivals). Ultimately, the company has suffered as the result of the right Amendment, and it needs to leverage its current size to fight back against American Airlines over this legislation. Not only should Southwest fight for the amendment to be repealed in its entirety and immediately, but it should fight for punitive action against American Airlines and DF airport. A civil suit against these parties for the financial harm caused to Southwest could prevent them from undertaking such illegal and unethical actions in the future and could help Southwest to put AA out of its misery. Lastly, Southwest has had problems with its maintenance. The company spends a lot less than any of its rivals on maintenance, and while its accident in Chicago was ruled the result of pilot error, concerns over the…
Chang, K. (2011). How Southwest Airlines beat the Wright Amendment. CNBC. Retrieved March 12, 2012 from http://www.cnbc.com/id/43714139/How_Southwest_Airlines_Beat_the_Wright_Amendment
Jacksonville Business Journal. (2012). Union slowing AirTran, Southwest merger. Jacksonville Business Journal. Retrieved March 12, 2012 from http://www.bizjournals.com/jacksonville/news/2012/02/27/union-slowing-airtran-southwest-merger.html
MSN Moneycentral. (2012). Southwest Airlines. Retrieved March 12, 2012 from http://investing.money.msn.com/investments/stock-balance-sheet/?symbol=us%3ALUV&stmtView=Ann
Mutzabaugh, B. (2012). Southwest's new routes begin to blend in AirTran cities. USA Today. Retrieved March 12, 2012 from http://travel.usatoday.com/flights/post/2012/01/southwest-new-routes/610164/1
In a 2001 inteview with Judy Vofield XE "Vofield, Judy" of Web Builde XE "Web Builde" ezine, he noted that by Januay 2002, ezboad would be the clea leade in thei niche, not only in tems of maket shae, but also in peception and in tems of that, it would become a model fo collaboative community development that othe companies emulate.
In the ecession XE "ecession, ezboad.com XE "ezboad" had some ough times, but its management was able to evese the tend and continuing gowing. In an inteview with Jim Cashell XE "Cashell, Jim" (Cashell, 2002), Vanchau emaks:
18 months ago, we ealized that we wee on the oad to bankuptcy and we needed to change couse. We did that. In a shot yea, we shifted ou evenue model fom puely advetising XE "web sites:advetising" to almost entiely subsciption. We also doubled ou numbe of communities ceated to ove 1…
references by introducing a low cost subscription option - providing the service, ad free - beginning in July of 2002.
A jetBlue is a low-fare, low-cost passenger airline, which provides high-quality customer service. jetBlue, which started
Having progressed from the foundational four elements of product, price, promotion and place or distribution, marketing today is more multifaceted in its dependence on other departments, functions and stakeholders to succeed. These dependencies have been made more complex by the immediate, instantly visible aspects of every marketing campaign in social media (Bernoff, Li, 2008). No longer can a marketing strategy be executed in a vacuum; today every aspects of a campaign is immediately visible to the public, often immediately communicated through social media on a global scale. The challenge for marketers is to move beyond the four foundational elements of what marketing had been in the 20th century into what it has become today. The intent of this analysis is to compare two definitions of marketing, in addition to a personal definition as well. The importance of marketing to organizational success is also discussed, in addition to…
Bernoff, J., & Li, C. (2008). Harnessing the power of the oh-so-social web. MIT Sloan Management Review, 49(3), 36-42.
Gronroos, C. (1989). Defining marketing: A market-oriented approach. European Journal of Marketing, 23(1), 52.
Lusch, R.F. (2007). Marketing's evolving identity: Defining our future. Journal of Public Policy & Marketing, 26(2), 261.
Webster, Frederick E.,,Jr. (1994). Defining the new marketing concept (part 1). Marketing Management, 2(4), 22.
start an analysis of Southwest Airlines and its success story is the company's mission statement. According to the company's website, the company's mission is "dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit"
If we take a brief look at this mission statement, we may find that, differently from many of today's companies, Southwest's mission is not profit maximization, but achieving customer satisfaction through the quality of the services provided. Additionally, the mission statement refers to the joint collaboration and mixture of Company Service and Company Spirit, in the sense that one cannot truly operate and exist without the other. A friendly and efficient working environment is, in Southwest's opinion, a key towards achieving the highest level of customer satisfaction.
The generic strategy for Southwest relies on several important pillars, some of them deriving from the mission statement. The…
1. The Mission of Southwest Airlines. On the Internet at http://www.southwest.com/ about_swa/mission.html
2. Zelner, Wendy, and Arndt, Michael. Southwest Airlines is Holding Steady. BusinessWeek Online. February 3, 2003. On the Internet at http://www.businessweek.com/magazine/content/03_05/b3818085.htm
The Mission of Southwest Airlines. On the Internet at
session long project. Thank ! Case 1 Let's start assignments class examining structure passenger airline market. Market structure analysis requires a supply demand side market, case, airline passengers airline companies.
Identify key external factors that affect the passenger airline industry and explain how that impact occurs
The airline industry is affected by a number of cultural and economic factors. The price of fuel has an obvious impact upon the input costs of airlines, and will affect their ability to slash prices. Cultural factors include the fears about travel after 9/11 and also seasonal variation in demand, such as the sharp upturn in travel during holidays and vacations vs. slow seasons. Other cultural factors include changes in technology: business travelers are traveling less because they can often conduct their operations online, versus in face-to-face meetings. Environmental factors like major weather events also affect the airlines. Internal factors such as…
Rothman, A., & Jasper, C. (2011). The unbearable heaviness of business class. Business Week
Structure of the airline industry (n.d.). Avjobs. Retrieved:
FedEx Express Airlines (Case Study)
In this case study, we will be looking at FedEx Express's hub airports. The airports will include Memphis International Airport (MEM) and Indianapolis International Airport. The focus will be mainly on capacity, traffic, and what is planned for the future of these airports.
FedEx Corporation is one of the largest companies in the courier industry. The company is renowned not just nationally in the United States, but internationally. FedEx Corporation belongs to the parcel service industry segment. The size of the industry segment is quite large in the sense that in the past fifteen years or so, consumers in America have spent beyond fifty billion dollars in shipping packages, parcels and also letters. Also referred to as Federal Express, the company is a big player in the segment and is positioned as one of the trailblazers in the industry segment (FedEx Corporation, 2014). The following…
CAPA. (2015). Prospects for Indianapolis International Airport look promising after good 2014 passenger growth. Retrieved 21 April 2016 from: http://centreforaviation.com/analysis/prospects-for-indianapolis-international-airport-look-promising-after-good-2014-passenger-growth-220204
Cosmas, A., Martini, B. (2007). UPS and FedEx Air Hubs: Comparing Louisville and Memphis Cargo Hub Operations.
FedEx Corporation. (2014). Annual Report. Retrieved from: http://investors.FedEx.com/files/doc_financials/annual/FedEx_2014_Annual_Report_v001_a00492.pdf
Hao, E. (2015). Overview of the Cargo Industry and Airports: A Case Study of Memphis International Airport. Retrieved 21 April 2016 from: https://www.wsiz.rzeszow.pl/pl/Uczelnia/kadra/klysenko/Documents/Case%20study%202.pdf
For short haul routes, customers have the option of driving or even taking the train. There are often low switching costs associated with driving. As the hassles associated with flying have increased, switching has increased as well. hile flights on longer routes are faster, there is often a price-performance tradeoff. The longer the flight, the lower the threat of substitutes.
The intensity of rivalry is high in the airline industry. There is little to differentiate airlines. Each airline has high fixed costs. Exit costs are high, as each airline has high fixed costs and only operates in the airline industry. In addition, the industry is subject to intermittent overcapacity. In addition, the service is highly perishable -- an empty seat cannot be resold later. This spurs intense competition to fill airplanes. ith low switching costs and a low diversity of rivals, there is a high degree of rivalry.
FRBSF. (2002). Competition and regulation in the airline industry. Federal Reserve Bank of San Francisco. Retrieved May 1, 2010 from http://www.u.arizona.edu/~gowrisan/pdf_papers/airline_competition.pdf
Grant, R. (2005). Contemporary strategy analysis. Malden, MA: Blackwell Publishing
McCormick, G. (2010). U.S. airlines more cautious on '10 fuel hedges. Reuters. Retrieved May 1, 2010 from http://www.reuters.com/ article/idUSTRE61O59Z20100225
Porter, M. (1980). Porter's five forces. QuickMBA. Retrieved May 1, 2010 from http://www.quickmba.com/strategy/porter.shtml
On the price dimension of the marketing mix, the company continues to compete with low-end and state-funded carriers, who arguably have a competitive advantage due to their funding source. Nonetheless, 1 Time is fighting the good fight of customer service and delivering value at their price points (Mantshantsha, 2007).
Of all aspects of the company's marketing mix, this one is struggling the most as it strives to capture more of the business traveller market. The promotional strategies are tied to the company's website and to limited direct marketing through social networks, yet is weak at defining a connection between the extensive MO strengths the company has and the ability to translate that into customer value. The lack of connection between the reliability base the company has and the success of its business travellers is a major weakness in the promotional strategy.
On the place dimension of the marketing mix, the…
Josh Bernoff & Ted Schadler. (2010, July). Empowered. Harvard Business Review, 88(7, 8).
Kristina Heinonen, Tore Strandvik, Karl-Jacob Mickelsson, Bo Edvardsson, Erik Sundstrom, & Per Andersson. (2010). A customer-dominant logic of service. Journal of Service Management, 21(4), 531-548.
Kelly, B. (2008). LIFT OFF. Finweek, 18. Retrieved from Business Source Complete database.
Liou, J., Yen, L., & Tzeng, G.. (2010). Using decision rules to achieve mass customization of airline services. European Journal of Operational Research, 205(3), 680.
By the turn of the century, though, these low-costs carriers had become profitable or at least had significantly reduced their losses due in large part to concomitant increases by major carriers that were increasing their prices in response to decreasing yields and higher energy prices (Doganis 2001).
By and large, passenger traffic across the board increased significantly prior to September 11, 2001 and all signs indicated it was continue to increase for the foreseeable future. For example, according to Janda, Flouris and Oum (2005), global air passenger traffic increased from 1.573 trillion revenue-passenger-kilometers (RPK) in 1985 to 3.394 trillion in 2000, representing a 116% increase during this decade-and-a-half period, or an average annual compounded growth of 5.26%. Furthermore, between 1985 and 2000, air freight traffic grew at even faster rate than passenger traffic (Janda et al. 2005). These authors also emphasize airlines are directly affected by the larger economy in…
Network." 2010, October 7 Canada NewsWire Group. [online]. available:
Port Everglades is a predominantly industrial area, with a container port and cruise ship port. Overall, however, noise levels at FLL for all airlines are below the federal standards.
The effort to manage noise pollution at FLL is ongoing. The airport authorities have submitted Noise Mitigation Principles to the FAA and are awaiting feedback on a preferred alternative for noise mitigation. The Broward County Board of County Commissioners also has a consultant to implement the noise mitigation program forthcoming.
The growth of FLL has mirrored growth in the region. The population of South Florida is expected to grow a further 25% by 2020. This will increase the strain on FLL. The lands adjacent to the airport are all developed, so there is little room for expansion. The 9R/27L runway, for example, cannot be expanded to accommodate jet traffic because of the course of I-95. Therefore, flights on the 9L/27R…
No author. (no date). FLL International: Building a Green Airport. Clean Airport Partnership. Retrieved November 8, 2008 at http://www.cleanairports.com/reports/gai_fllforweb.pdf
No author. (2008). Noise Information. Broward County. Retrieved November 8, 2008 at http://www.broward.org/airport/community_noise.htm ; http://www.broward.org/airport/pdfs/fll_pqs_q22008.pdf
Andrus, Katherine (2006) ATA Comments on FAA Noise Analysis for Fort Lauderdale-Hollywood International Airport. Air Transportation Association. Retrieved November 8, 2008 at http://www.airlines.org/NR/exeres/2E3BE77B-86CF-41E2-BADD-1936AC6250FB.htm no author). (2000). Aviation and the environment: airport operations and future growth present environmental challenges United States General Accounting Office. Retrieved November 8, 2008 at http://books.google.com/books?id=1yTVCGk7DfMC&printsec=frontcover&dq=fll+environment+noise&source=gbs_summary_r&cad=0
No author. (no date). FLL International: Building a Green Airport. Clean Airport Partnership.
" (Traventec, Ltd., 2005) Market saturation is possible according to Traventec, Ltd., due to the constant "influx of new entrants into the low cost carrier and regional space and continued expansion of existing players. When and whether market saturation is actually reached in specific regions of the world depends on how mature regional and low cost air transport is in the first place and the size of the yet under-served demographic area." (Traventec, Ltd., 2005) There is stated to be a potentially huge regional aviation market in South East Asia yet untapped with more than half of the population of the entire world within six hours flying radiuses from "Kuala Lumpur and a five hour flying radius from angkok." (Traventec, Ltd., 2005) the airports in this area have only recently been liberalized with the "international bilateral agreements and vested in the development of airport capacity." (Traventec, Ltd., 2005) When this…
The Impact of Low Cost Carriers in Europe (2003) Online available at http://www.icao.int/icao/en/atb/ecp/CaseStudies/Europe_LowCost_En.pdf .
The Inevitable Convergence of Regional and Low Cost Carriers (2005) Traventec - the Travel Technology People. July-August 2005. Traventec Ltd. Galway Business Park, Dangan, Ireland Online available at http://www.sourceit-travel.com/directory/downloads/traventec/trav entec_publication_july2005.pdf
Sean D. Barrett (2004) the sustainability of the Ryanair model 1 Dec 2004. International Journal of Transport Management Volume 2, Issue 2, 2004, Pages 89-98. Online available at http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W83-4FHJYDN-1&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=6c4406b7409fa7b9f01b15b1ae584273
Europe's Airports (2006) Mintel International Group Ltd. Published: Feb. 1, 2006 - Online available at http://www.marketresearch.com/map/prod/1224216.html
Instead, IM began to falter after a series of product failures. As a result, many companies gained market share against IM with some even over taking it; an efficient market took care of the issue.
Yet, another example of why government should not interfere with market structures is the airline industry. After 1978, the airline industry was quickly transformed into an oligopoly market structure where only a half dozen or so companies controlled 90% of U.S. travel. Airlines such as American mostly enjoyed high profits until 2000, taking advantage of limited competition and their ability to price discriminate to increase profit margins for those customers who were willing and able to pay higher prices. eginning in 2000, everything came crashing down for the airlines (pardon the pun). American airlines lost money from 2000 until it finally reaped a small net profit in 2005. The oligopoly market structure that once fueled…
America's Airlines, Flying on Empty (2005, September 6). The Economist. 6 Sept. 2005.
Conigliaro, A., Elman, J., Schreiber, J. And Small, T. "The Danger of Corporate Monopolies." http://cse.stanford.edu/class/cs201/Projects/corporate-monopolies/index.html
Conigliaro, A., Elman, J., Schreiber, J. And Small, T. "The Danger of Corporate Monopolies." http://cse.stanford.edu/class/cs201/Projects/corporate-monopolies/index.html
S. Air hub in Phoenix is nearby the Delta hub in Salt Lake City. Typically, airlines seeking out acquisition targets seek to fill voids in hub locations rather than select airlines with lots of hubs close to their own. For example, critics of the .S. Air offer state that nited would have been a far better suitor for Delta because of the synergies between nited's tran-Pacific routes and international networking and Delta's Atlantic and Latin American routes. And, critics believe that .S. Airlines should have targeted bankrupt Northwest as an acquisition target rather than Delta. Most experts expect nited to make a counter bid for Delta
The need for mergers in the airlines industry is compelling and combing airlines can have many synergies. But, has .S. Airways selected the right company to merge with? The answer appears to be no. Being number one does not necessary guarantee being profitable. There…
US Airways Bids $8 Billion for Delta." The New York Times 15 Nov. 2006. Retrieved from Web site: http://www.nytimes.com/2006/11/15/business/15cnd-delta.html?ei=5088&en=a63b326c5606fc28&ex=1321246800&adxnnl=1&partner=rssnyt&emc=rss&adxnnlx=1164136047-uG899hrCso+gtPp1Ap10pw
Isidore, Chris. "U.S. Air Makes $8 Billion Bid for Delta." CNNMoney.com 15 Nov. 2006. Retrieved from Web site: http://money.cnn.com/2006/11/15/news/companies/us_airways_delta/index.htm?eref=rss_topstories
US Airways Makes Hostile Offer for Delta." ABC News 15 Nov. 2006. Retrieved from Web site: http://www.abcnews.go.com/Business/wireStory?id=2654543&page=4
Southwest has the lowest prices per seat of any other airline. Moreover their pricing structure is simple and relatively transparent to passengers, with few classes of fares and few ticket reservations. They are able to do this due to providing frequent point-to-point service between secondary airports that are on average only 515 miles apart. They offer more direct, non-stop flights than the traditional hub and spoke system, and have quick turn around times (of 25 minutes compared to an hour or more for most major airlines). It ranks high on-time performance, baggage handling, and least customer complaints.
They do not offer meals, only peanuts and drinks. They have no major frills. Huge competition.
Major airlines have pared down flight schedules, and deferred or cancelled new aircraft deliveries, whilst some have also retired approximately 5% of their older planes. This leaves greater opportunity for low-cost startups…
Classic Airlines has the reputation of being the world's fifth largest airline, which commands a fleet of more than 375 jets that serve 240 cities with over 2,300 daily flights. Classic, around for more than 25 years, employs more than 23,000 employees and the year before this report earned $10 million on $8.7 billion in sales.
Classic also has a glorious reputation for its integrity with Labor Unions due to the fact that it accords fair wages to employees and pilots -- ranging on the high-end of the spectrum -- and catering to comfort of employees.
Unfortunately, whilst employees are content, consumers are not. The disaster of the recession coupled with terrorist scares has caused reduction in consumers flying the airlines with increasingly more of their former passengers selecting other flights.
Their top competitors are airlines such as United Airlines, Northwest Airlines, and British Airways who, although facing general threats…
Brown, A. The politics of airline deregulation Knoxville: University of Tennessee Press, c1987.
Bowler, G.M., Jr. (2010). Netnography: A method specifically designed to study cultures and communities online. The Qualitative Report, 15(5), 1270-1275.
Bunce. D (1997). What factors are associated with the outcome of individual-focused worksite stress management interventions? Journal of Occupational and Organizational Psychology, 1, 70, 1-17. Retrieved August 1, 2010, from ABI/INFORM Global. (Document ID: 11554203).
Freiberg, K. Nuts!: Southwest Airlines' crazy recipe for business and personal success Austin, Tex.: Bard Books, 1996.
for Delta Airlines
The situation in the airline industry was already in trouble long before September 11, 2001. Major airlines like Delta was pursuing bankruptcy as an option to fight off organizational collapse caused by reduced traffic, skyrocketing expenses and potential pilot strikes for both the wholly owned subsidiary Comair and Delta's own pilots. Since deregulation, one of the only alternatives for the major airlines was bankruptcy. The terrorist hijackings on 9/11/2001, was simply added salt in Delta's wounds. This research paper is about a real-life negotiation for Delta Airlines and Comair. The report will do the following:
Identify the parties involved in the negotiation
Identify the central and secondary issues of the negotiation
Identify the interests of each party and why they care
Identify the opening positions of the parties and how they presented themselves
Identify the final position of the parties and how they evolved.
Collins, Michael, & Dias, Monica (2/3/2001). Delta Pilot Vote Sets Up Showdown. The Cincinnati Post.
Fonti, Nancy (6/21/2001). It's Official: Delta Pilots OK Contract 70% Vote Yes; Pay To Become Industry's Best. The Atlanta Constitution.
M2 Communications Ltd. (2001). Delta President discusses Comair pilot strike in Cincinnati. M2 Presswire, 5/11/2001.
Sirius and XM Satellite Radio
Satellite radio has emerged in the past few years as the hot new trend in broadcasting. Operating similar to DirecTV, satellite radio companies bounce their signals off satellites to beam high-quality digital service coast-to-coast, offering exclusive ad-free programming. Satellite radio offers listeners the opportunity to hear any show anywhere in the United States, combining the benefits of premium quality sound and convenience when traveling on the road. Research indicates that similar to the way FM radio grew against dominant AM radio, satellite radio is becoming known for "edgier" alternative programming (McCarthy, at http://www.usatoday.com/money/media/2004-10-6-radio-compare_x.htm). The entire satellite radio industry is currently made up only two companies, XM Radio, which started broadcasting in 2001 and has 2.5 million customers, and Sirius, with 600,000 subscribers since going live in 2002. This paper will offer a comparative analysis of the two companies and a general overview of the satellite…
Deitz, C. "A Step-by-step Comparison of XM and Sirius Satellite Radio Features." Radio.
2005. About. < http://radio.about.com/od/satelliteradio/ss/blsatstepbystep.htm >.
Gustafson, C.J. "Sirius Satellite Radio vs. XM Satellite Radio- Which Streams Should You
Choose?" Ezine Articles. 2005. Ezine Articles. 21 Mar. 2005
Economics of Southwest Airlines
A Brief Economic Analysis of Southwest Airlines Today
Southwest Airlines was incorporated in 1967 and has its headquarters in Dallas. It is a U.S. airline that offers domestic point-to-point service; as of December 31, 2004, the company operated 417 Boeing 737 aircraft, with service to 60 airports in 59 cities in 31 states (Southwest 2); the company also has at least another 261 Boeing 737-700s on order (Comerford 1). Today, Southwest has six reservations centers (one each in Albuquerque, Chicago, Houston, Oklahoma City, Phoenix, and San Antonio); in addition, the company sells credits to its business partners (these include credit card companies, hotels, telecommunications companies, and car rental agencies) (Southwest 3).
Economic Performance and Discussion
hile much of the aviation industry was devastated by the terrorist attacks of September 11, 2001, Southwest has managed to maintain an even keel due in large part to the progressive…
Macroeconomic Impact on Business Operations
Monetary and fiscal tools are used by the government to control economic conditions in the country. Monetary policy usually targets money supply in the market in order to control inflation. In some countries such as ussia and Brazil, governments may often force the mints to print extra currency to meet various expenses. This results in higher flow of money in the market which is unsubstantiated by gold reserves of that country. That leads to inflation and causes several problems due to macroeconomic instability.
However when inflation is kept in check, prices stay within consumer's reach, money market remains stable and other areas such as employment, interest rates etc. However while monetary policy is more dependent on market forces and consumer behavior, fiscal policies include governmental spending, taxation and interest rates. We must understand that fiscal measures are normally utilized in capitalist countries when economic conditions…
1) Brock, James (2000) "Industry Update: Airlines," Review of Industrial Organization, 16: 41-51.
2) Transportation Research Board (1999), "Entry and Competition in the U.S. Airline Industry: Issues and Opportunities," National Research Council, Special Report 255. Washington D.C., National Academy Press.
3) U.S. Department of Transportation (2000) "International Aviation Developments: Transatlantic Deregulation (Second Report)," Office of the Secretary.
4) U.S. Vs. AMR Corporation, Case number 99-1180-JTM, U.S. District Court for the District of Kansas.
United Continental does not have a mission statement or a vision statement, either on its website or in its annual report (10-K). Cochran, David and Gibson (2008) argue that the mission statement is a critical first step in the strategic management process. It sets the framework for what the firm's strategies are supposed to accomplish, especially in conjunction with the vision statement. hen a company lacks these things, it can lack strategic focus. Elements of the strategy can lack coherence, and be a poor fit with one another. A mission statement is also the most visible and public element of the strategic plan, so without it the company is not communicating its plan to the public. Nor is the mission communicated to employees, when there is not one.
A mission or vision statement can be simple and vague, but provide a sense of direction. It can also be…
BRS. (2012). Mission statement. Business Resource Software. Retrieved March 16, 2012 from http://www.businessplans.org/mission.html
Cochran, D., David, F. & Gibson, C. (2008). A framework for developing an effective mission statement. Journal of Business Strategies. Vol. 25 (2)
MSN Moneycentral. (2012). United Continental Holdings. Retrieved March 16, 2012 from http://investing.money.msn.com/investments/key-ratios?symbol=UAL
QuickMBA. (2010). Porter's five forces. QuickMBA.com. Retrieved March 16, 2012 from http://www.quickmba.com/strategy/porter.shtml
ervice (Porter's value chain):
Best low-fare carrier
(a) High capacity usage (few unfilled seats), and is, therefore, one of the most profitable airlines, while many other airlines are unprofitable. (b) It can maintain focus on cutting frills.
Best low-fare carrier by standardization of fleet
(a) Few unfilled seats. WA has only one basic type of aircraft. This reduces training times (b) it can continue this direction.
Price and great staff relationship
(a) Employees work very well as a team (b) Employees are encouraged to have and show their sense of humor. This should continue though within bounds
Flexible as well as unionized.
tep 4: (a) Maintains very good relationships with its unions (b) may need to set conditions with its flexibility
Operations (Porter's value chain):
Mainly operates its own booking service
tep 4: (a) Booking flights is not available except directly through outhwest Airlines…
Southwest Airlines Co. (2009). Southwest Airlines -- A Brief History.
Mutzabaugh, B (March 1, 2012). Southwest, AirTran now single carrier in FAA's eyes. USA Today.
capitalize on a new opportunity was Microsoft. The company with the world's most dominant operating system completely failed to gain any traction for its mobile operating system, and is essentially a non-factor in smartphones and tablets as a result. Its longtime operating system competitor Apple is one leader, while new entrant Google is another.
Microsoft failed to recognize the opportunity presented to it in mobile, despite operating systems being its core business. As a result, Microsoft now faces a serious threat to its business. The company essentially relies on Windows for the bulk of its cash flow. If it loses dominance in PCs, Microsoft is going to struggle mightily. Thus, the failure of the company to address the opportunity in mobile has morphed into a threat. Additionally, its failure in mobile was the result of failing to recognize a major threat -- the lousy reputation of Windows. Microsoft perhaps took…
External Analysis of Southwest Airlines
External Analysis Southwest Airlines
Will Southwest Airline's strategic plan continue to bring success in the new airline industry landscape? This paper sought to answer this question by examining the external increasingly consolidated environment in which Southwest competes. The review was conducted through application of Porter's Five Forces, a PEAT analysis, and a SWOT analysis.
The report concludes that Southwest has gained ground and maintained stability, changing only as much as it needed in order to remain the friendly domestic budget airline it started out as, and to compete effectively but with fidelity to its vision and values.
This paper will present a brief analysis of the competitive landscape for Southwest Airlines based in order to assess the airline's future capabilities in an environment in which other airlines are increasingly co-opting Southwest's successful and innovative strategies. This deductive exploration of the landscape will continue at the…
Airlines Industry Profile, First Research. (2011). [Web]. http://www.firstresearch.com/industry-research/Airlines.html
Domestic Airlines, U.S. Industry Report, IBIS World. (2011). [Web]. Retrieved http://www.ibisworld.com/industry/default.aspx?indid=1125
Huettel, S. (2011). Tampa International Airport votes to give airlines incentives for adding flights, St. Petersburg Times. Retrieved http://www.tampabay.com/news / business/airlines/article1176335.ece
Porter's Five Forces, Strategic Management, Quick MBA. (2011). [Web]. Retrieved http://www.quickmba.com/strategy/porter.shtml
Southwest Airlines is a discount airline in the United States, and is one of the industry leaders as the #3 in market share (Portillo, 2012). The company has a large network of flights around the U.S. Recently, it is has turned its back on the discount carrier model and begun to price more in line with industry norms (Martin, 2013). The company faces the same supply chain issues as any other airline. As a service entity, staffing is a major input. The company's biggest commodity worry is fuel, which is a major cost driver. There have also been recent issues with respect to parts and maintenance, which are also elements of the company's supply chain, especially with respect to the procurement of good parts (Ferrari, 2009).
Business Strategy and Structure
As noted, Southwest operates as a discount carrier in the airline business. It has recently shifted…
Ferrari, B. (2009). Southwest Airlines again tests maintenance standards. Supply Chain Matters. Retrieved April 21, 2013 from http://www.theferrarigroup.com/supply-chain-matters/tag/southwest-airlines/
Portillo, E. (2012). Southwest Airlines to begin CLT service in 2013. Charlotte Observer Retrieved April 21, 2013 from http://www.charlotteobserver.com/2012/10/23/3614327/southwest-airlines-to-begin-clt.html
Martin, H. (2013).Is Southwest Airlines losing the luv? Los Angeles Times. Retrieved April 21, 2013 from http://articles.latimes.com/2013/feb/09/business/la-fi-southwest-airlines-20130210
Velotta, R. (2010). Fuel hedging leads Southwest Airlines to profitable 1st quarter. Las Vegas Sun. Retrieved April 21, 2013 from http://www.lasvegassun.com/news/2012/apr/19/fuel-hedging-leads-southwest-airlines-profitable-1/
Classic Airlines Case
In the early 20th century two young men by the names of Orville and Wilbur Wright made what some argue as the greatest transportation invention ever discovered outside of the automobile. This 50 pound glider with a wingspan of approximately 17 feet would revolutionize the manner in which humans across the world would travel. In fact, this 12 second flight was so instrumental, that the Wright brothers will be forever remembered for their contributions to both aviation and society (Wright Brothers - First Flight of an Airplane, 2011). Now, fast forward 100 years into the future and a very different era has risen in the aviation industry. This era has been marred by excessive bankruptcies, mass consolidation, and national security concerns. ecently the issue of airport security has risen to the forefront. During the aftermath of the September 11th attacks and constant concern regarding Middle Eastern regimes…
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2) Airline Industry Profile from First Research." Industry Statistics, Trends and Analysis from First Research, a D&B Company. Web. 30 Nov. 2011. .http://www.usnews.com/usnews/biztech/articles/030915/15airlines.htm
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4) Traffic and Capacity Analysis." Home. Web. 30 Nov. 2011. .