JetBlue Airways: How They Returned to Profitability

The airline industry is one of the most competitive in the United States. Dozens of carriers compete for a share of the American market. It is true that traditionally dominant airlines have managed to maintain a firm grip on their market share. However, with the entry of low cost carriers, the once-dominant airlines have been forced to re-examine their strategies. Jet Blue is among the low cost carries whose entry into the industry caused massive disruptions. Offering fares at low prices, this firm managed to undercut its rivals. JetBlue enjoyed enviable success as a result of its focus on offering passengers unparalleled value for their money. However, a series of missteps and serious mistakes halted JetBlue’s growth. Recognizing the damage that the mistakes had done to its reputation and performance, the leadership of JetBlue implemented a number of inspired strategies aimed at returning the company to profitability. A critical analysis of the case of JetBlue reveals that this is an airline that has mastered how to leverage opportunities and strengths to minimize the impact of threats and weaknesses to fuel its growth and influence in the airline industry.

Current Situation 

Performance 

The case JetBlue Airways, Growing Pains, provides details regarding JetBlue’s operations as of 2007. In 2007, JetBlue was in the process of return to profitability after years of disappointing financial performance. In the previous years, the company had reported losses in successive quarters (Wheelen & Hunger, 2012). For example, facing rising fuel costs, the firm recorded millions in losses from 2004-2006 (Wheelen & Hunger, 2012). These losses stood in sharp contrast to the impressive performance that the firm had posted in previous years. Since its establishment, JetBlue had consistently satisfied its investors with strong financial performance. This performance was the result of the company’s aggressive expansion campaign that enabled it to establish a presence in routes that other airlines had neglected. Under the leadership of David Barger who replaced David Neeleman as the Chief Executive Officer, JetBlue embarked on an initiative to restore its solid financial performance (Wheelen & Hunger, 2012). It appears that this initiative delivered the desired outcomes as evidenced by the company’s financial reports. For example, in 2017, JetBlue’s served over 40 million passengers, expanded its network, enhanced its fleet and renewed its commitment to excellent customer service (“2017 Annual Report”, 2018). As a result of these programs, the company posted over $7 billion in operating revenues and a profit margin of 14.3% (“2017 Annual Report”, 2018). These figures reveal that the reforms undertaken since 2007 have enabled the firm to re-establish itself as a key player in the low cost airline industry.

It is true that JetBlue has been successful in its return to profitability. However, this does not distract from the many financial and operational challenges that the company faced in the period covered in the case study. As a result of the financial hardships that the firm encountered, it was forced to freeze recruiting of non-operational staff, lower the capacity of its aircraft to minimize fuel consumption and withdraw from certain routes where it faced intense competition (Wheelen & Hunger, 2012). Moreover, due to the financial challenges, the company also introduced new charges designed to pass the increase in fuel costs on to passengers. For example, the average ticket price increased from $349 to $399 (Wheelen & Hunger, 2012). In past years, the company offered various amenities at no charge. However, as its financial health came under threat, the company began to charge for these amenities. Overall, the financial hardships had a devastating effect on JetBlue and forced the company to change its strategy. Historically, the firm focused on low-cost services. While its commitment to low cost services remained unchanged, JetBlue was forced to share the burden of financial hardships with its customers.

Strategic Posture 

To gain a full understanding of JetBlue’s position and operations, it is necessary to conduct an analysis of its strategic posture. This analysis is provided in the discussion below.

Mission 

The mission of an organization captures its goals and the purpose that it wishes to achieve. By aligning its operations with its mission, a firm is able to ensure that the operations facilitate the accomplishment of strategic goals and objectives (Allison & Kaye, 2011). JetBlue recognizes the importance of developing an inspired mission. Its mission statement reads as follows: “to inspire humanity-both in the air and on the ground” (“JetBlue for Good”, n.d). Through this statement, JetBlue declares that its operations are designed to enhance the wellbeing of the communities that it serves. An examination of its strategies and operations reveals that the company upholds its mission statement. For example, the company cares deeply about its customers. Through its customer policy, it strives to minimize inconvenience by providing customers with an online booking platform and notifying them of the status of their flight (Wheelen & Hunger, 2012). The firm has also demonstrated a deep commitment to its employees who are treated like family.

Objectives 

In all its operations and functions, JetBlue is guided by a set of objectives. One of the firm’s main objectives is to “optimize our fare mix to increase our overall average fare while continuing to provide our customers with competitive fares” (“2017 Annual Report”, 2018, p. 27). This objective captures JetBlue’s desire for excellent customer service without compromising its financial health. Another goal that drives the company’s processes and functions is “optimizing and modernizing our fleet” (“2017 Annual Report”, 2018, p. 3). This objective shows that JetBlue acknowledges that to compete effectively, it needs to innovate and stay ahead of its rivals. JetBlue develops objectives that are in line with the strategies that it wishes to pursue. For example, corporate social responsibility is among the key areas where the company has invested heavily. In line with this area, the firm aims to “identify and then select a short list of business partners that could provide reliable carbon offset alternatives to customers” (“Jet Responsibly”, 2007, p. 18). Basically, all of the objectives that JetBlue seeks to accomplish are tied to its overall strategies and mission.

Strategies 

The role that strategies play in defining the direction and success of a firm cannot be overstated. An analysis of JetBlue reveals that there are various strategies that have allowed it to compete effectively. Keeping ticket prices low is one of these strategies. Without compromising the quality of the experience that it offers its customers, JetBlue has managed to charge low prices for its tickets (Wheelen & Hunger, 2012). As a result of this strategy, it has gained the trust and loyalty of its millions of customers. This strategy is both a strength and a weakness. What makes it a strong point is that by charging low prices, the company is able to attract customers. However, the company also earns lower revenues per ticket compared to other airlines. Serving routes that are neglected is another strategy that JetBlue has adopted. For example, the company uses secondary airports and serves destinations that other airlines have shied away from (Wheelen & Hunger, 2012). Through this strategy, the company has enjoyed incentives offered by the secondary airports and has tapped into the immense potential held by the neglected destinations. Placing customers at the center of all of its operations is yet another strategy that has fueled JetBlue’s success. The firm goes extreme lengths to ensure that its customers experience the highest levels of comfort (Wheelen & Hunger, 2012). Overall, for the most part, JetBlue’s strategies continue to have a positive effect on its operations.

Policies 

Policies stipulate the behaviors and practices that a company expects its stakeholders to uphold. Refraining from cancelling flights is one of the policies that JetBlue adopted. Even when it is impossible to fly owing to unfavorable weather conditions, JetBlue refuses to cancel flights. Thanks to this policy, the company has been able to offer guarantees and convenience to its customers. However, this policy has also seen the company keep its customers waiting for long hours instead of simply cancelling flights (Wheelen & Hunger, 2012). Another policy that defines JetBlue’s operations regards refusing to overbook flights. Unlike other airlines which tend to overbook, JetBlue only books its passengers on flights with room (Wheelen & Hunger, 2012). Recently, United Airlines was embroiled in a controversy where one of its passengers was dragged out of an overbooked flight. The company’s image suffered as a result of this incident. The incident highlights the wisdom in JetBlue’s policy regarding overbooking.

Corporate Governance 

Board of Directors 

The primary mandate of a firm’s board of directors is to offer oversight and guidance. When one examines the composition of JetBlue’s board of directors, one of the issues that become clear is the lack of gender balance. The board is composed of 11 directors and only two are women (“Board of Directors”, n.d). Today, American companies are facing criticisms for failing to ensure gender balance in their top leadership. The lack of diversity is especially rife in top companies. By failing to include more women in its board, JetBlue essentially states that empowering women is not a top priority. While it lacks gender balance, the board is well-constituted with regard to expertise and experience. Joel Peterson serves as the board’s chairman and has been with the company since 1999. Peterson brings his experience as the founder of Peterson Partners. This company is involved in investment management. Frank Sica, Stephen Gemkow, and Peter Boneparth are other members of the board. The expertise and experience that they possess range from aviation and data communications to equity management (“JetBlue Airways Corp”, n.d). JetBlue understands the need to inject fresh blood into its board. This is evidenced by the fact that Ben Baldanza and Sarah O’Hagan joined the board in 2018. These new members infuse the board with new insights and ideas.

Top Management 

The board of directors does not function alone. It works closely with the top management to ensure positive performance. At the time when JetBlue’s case study was written, David Barger was the CEO. Many welcomed Barger’s appointment as he represented a new direction for the company. Under the leadership of David Neeleman, Barger’s immediate predecessor, JetBlue had given too much focus to strategies at the expense of operational issues. With Barger at the helm, the company renewed its focus on operations. Thanks to Barger’s leadership, JetBlue managed to address the operational inefficiencies and blunders that hurt its performance. Today, JetBlue is under the management of a different team. Robin Hayes is the CEO. Other members of the top management include Andres Barry, Alex Battaglia and Joanna Geraghty (“Leadership", n.d). Unlike the board which lacks gender balance, the firm has taken steps to increase the representation of women. Four women are part of the top management. While it is commendable that the firm has more women in its top leadership team, more needs to be done since men are still over-represented.

External Environment 

Societal 

Overall, the societal environment has had a damaging effect on JetBlue’s performance. In fact, as will be revealed below, such societal factors as harsh economic conditions are responsible for the hardships that JetBlue experienced.

Sociocultural 

Sociocultural forces have had significant effects on JetBlue’s operations. The increasing preference for air travel is the main sociocultural factor shaping the airline industry. More and more Americans are flying. In response to this trend, airlines like JetBlue have established new routes and expanded their fleet. The increase in demand for air travel presents JetBlue with an opportunity for growth.

Economic 

Harsh economic realities are among the forces to blame for the poor performance that JetBlue posted. In particular, the airline industry witnessed an increase in the price of fuel. As a result, they were forced to increase ticket prices. As an airline raised the price of its tickets, it lost customers to rivals who offered better deals (Wheelen & Hunger, 2012). For example, JetBlue was forced to charge higher prices and eliminate some amenities that it had offered for free in previous years. In response to these changes, customers lost faith in the airline and explored alternatives.

Political-Legal 

The political and legal environment influences the direction and performance of companies. Generally, the political environment in the US had adverse effects on the industry. The security situation is among the political factors that affected the industry. In 2001, the US suffered a devastating terrorist attack. In addition to leading to thousands of deaths, this attack also dampened confidence in flying (Wheelen & Hunger, 2012). In the weeks and months following the attack, JetBlue and other airlines registered drastic declines in passenger numbers. In fact, most of the flights that JetBlue operated were nearly empty as Americans grew fearful of air travel. While it is true that the political and legal environment was generally unfavorable, there were some policies that helped to strengthen JetBlue and other airlines. For example, the government introduced a law requiring airlines to improve the safety of their fleet (Wheelen & Hunger, 2012). Bulletproofing the cockpit door is among the measures that the airlines were required to implement. As a result of this new policy, JetBlue was able to regain the confidence of its passengers. It is worth noting that JetBlue had adopted enhanced safety measures well before it was mandated by law.

Technological 

Technological advancements generally improve the operations of companies. JetBlue registered tremendous growth as a result of its adoption of technology. Creating a website through which passengers could book flights is among the technological innovations that JetBlue embraced (Wheelen & Hunger, 2012). The company was also among the first airlines to modernize its cockpit by eliminating papers and providing its pilots with laptops. Thanks to this innovation, the firm managed to reduce the amount of time it took pilots to take off. Another impact that technology had on JetBlue is that it provided it with tools and equipment to entertain its passengers. For example, passengers were provided with entertainment systems that they could use to watch videos (Wheelen & Hunger, 2012). The technological amenities that JetBlue provided allowed it to set itself apart from its rivals, thereby attracting more customers. Overall, the technological environment had a positive influence on JetBlue’s performance.

Task (Industry) 

Thanks to the various strategies that it implemented, JetBlue was successful in insulating its operations against hazards and threats in the airline industry.

Stage of development 

An examination of the development process of the airline industry allows one to understand the competitive dynamics of the industry. This industry can be regarded as mature and intensely competitive. There are numerous players who are striving to outperform one another. For example, such low cost carriers as JetBlue struggle to rob dominant players of their market share. The desperate moves that the airlines have adopted underscore the highly competitive nature of the industry. For instance, the companies in the industry engaged in brutal price wars as part of their efforts to attract customers.

Threat of new entrants 

Given its maturity, the American airline industry makes it difficult for new firms to enter. The existing companies have established a solid presence and have gained dominance (Wheelen & Hunger, 2012). A new entrant would face hardships in its quest to attract customers and build confidence in its products. While it is true that new entrants would encounter challenges, that a firm promising ridiculously low ticket prices could enter the industry cannot be ruled out. However, this firm would probably suffer massive losses since there are already low cost carriers such as JetBlue that offer competitively low prices.

Bargaining power of buyers 

Buyers in the airline industry are passengers. They wield immense power and to succeed, firms must attend to the needs and address all concerns that the passengers raise. For example, in the wake of the 2001 terrorist attacks, many passengers refused to fly (Wheelen & Hunger, 2012). Airlines had to wait until the passengers were ready to fly again. This incident points to the significant influence that passengers wield. The high bargaining power of buyers poses a serious threat to JetBlue and other airlines. This firm cannot increase ticket prices without suffering a decline in passenger numbers. Essentially, it is at the mercy of its customers and all policies and strategies that it develops must serve the needs of its customers.

Threat of substitutes 

JetBlue is not the only player in the airline industry and the services that it offers are not unique. This means that the threat of substitutes is real and significant. To distinguish itself, JetBlue relies heavily on its low ticket price strategy. While this strategy has allowed it to attack customers, it cannot be relied on to sustainably promote its growth. Such other airlines as Virgin Atlantic also attempt to attract passengers with their low ticket prices (Wheelen & Hunger, 2012). Basically, the strategies and products that have driven JetBlue’s growth can be replicated fairly easily. The threat of substitutes is indeed significant and should be a cause for concern for JetBlue.

Bargaining power of suppliers 

Suppliers are yet another stakeholder with significant influence on how airlines like JetBlue operate. They provide the airlines with such tools as aircraft that they use to deliver services. Despite the fact that such suppliers as makers of aircraft are few, they have low bargaining power. This can be seen in the ability of the airlines to demand customized aircraft and switch from one supplier to another (Wheelen & Hunger, 2012). The low power of suppliers is an opportunity for airlines. They can leverage this opportunity to push for lower prices and take part in the design process to ensure that the aircraft delivered meet the needs of the airlines.

Rivalry 

Generally, intense rivalry has a depressing effect on the performance of a company. As noted earlier, the airline industry experiences cut-throat competition. Established airlines are struggling to maintain their dominance. In fact, they have been forced to adopt some of the strategies used by such budget carriers as JetBlue. For instance, Delta Airlines created a low-cost subsidiary to compete directly with other budget airlines like JetBlue (Wheelen & Hunger, 2012). The competition in the industry is so intense that some airlines have sought chapter 11 bankruptcy protections and dropped their ticket prices to unimaginably low levels. The intense rivalry is a threat to JetBlue.

Internal Environment 

Structure 

Organizational structure captures the distribution of authority and functions in a firm. To function effectively and seamlessly, firms should be structured such that communication flows smoothly. JetBlue has adopted the hierarchal type of structure. Essentially, there is a CEO who is the overall boss. Below the CEO are other officers who vary in rank and perform different functions. JetBlue’s structure can be regarded as a weakness. The challenges that the company faced can be blamed on the failures of David Neeleman who had served as its head since its establishment. As already noted Neeleman gave too much emphasis to strategies. The hierarchal structure must have made it difficult for other members of the leadership team to highlight the error in Neeleman’s approach. The same hierarchal structure is still in place today.

Culture 

The culture of an organization concerns such issues as beliefs and practices. One of the critical elements of JetBlue’s culture involves how it treats its employees. Instead of relying on labor unions to represent employee interests, the company has created a culture through which it attends to the needs of its employees. Moreover, the culture challenges the employees to regard one another as family. Owing to this culture, the employees are able to treat customers with warmth and enthusiasm (Wheelen & Hunger, 2012). The focus that it places on excellent customer services is another element of JetBlue’s culture. This firm assures customers that it will take all necessary and practical steps to provide them with the best experience possible. Most customers have remained loyal to the company due to the level of service that they receive. JetBlue’s culture is undoubtedly a key strength and resource.

Resources 

Funding organizational operations is a costly undertaking. In order to succeed, firms need to be endowed with massive resources. As the discussion below reveals, JetBlue has leveraged its resources to maintain its position in the airline industry.

Marketing 

Marketing resources allow a firm to engage its customers and to promote its products. Instead of aggressive advertising campaigns, JetBlue relies on the quality of its services as its main marketing tool. In addition to offering the services at low prices, the company also provides its customers with such conveniences as leather seats and complimentary snacks (Wheelen & Hunger, 2012). Through these marketing initiatives, JetBlue has managed to keep costs low while retaining the confidence and loyalty of its customers. The firm’s marketing resources are a strength.

Finance 

However well designed a firm’s marketing strategies are, they are not adequate to fuel growth. These strategies must be combined with financial resources to boost performance. Over the years, JetBlue’s financial resources have fluctuated. In the years when it suffered hardships, the company reported losses and disappointingly low revenues. However, following the various interventions that it implemented, the company witnessed an increase in revenues. These revenues provided it with the financial resources it needed to win back its customers. For instance, 2004, JetBlue’s revenues stood at an impressive $1.2 billion (Wheelen & Hunger, 2012). In addition to the revenue from its operations, the sale of shares and the amount received as part of a government bailout program added to the firm’s financial resources. Using these resources, JetBlue successful returned to profitability.

R&D 

Research and development (R&D) enable firms to create products that match the needs and preferences of their customers. JetBlue has developed a robust R&D program. It is true that the case study makes no mention of the firm’s R&D program. However, an examination of the strategies that it has pursued indicates that JetBlue has an effective R&D initiative. For example, in deciding to offer complimentary snacks, the firm must have conducted research that led it to conclude that charging passengers for meals turns them away. The decision to use cover its seats with leather instead of cloth and the choice of plying neglected routes must also have been informed by insights gained through research. JetBlue also eliminated rows in its aircraft and established an online booking platform. It is reasonable to argue that all these decisions were driven by data derived through R&D.

Operations 

The operations of JetBlue are among its key strengths. As opposed to other airlines which ply popular routes, JetBlue has established operations on routes that had remained neglected. By focusing on these routes, JetBlue has lowered competition and expanded its network (Wheelen & Hunger, 2012). Another element of the company’s operations concerns efficiency. As noted above, it has eliminated rows in its planes with the goal of enhancing passenger comfort and minimizing fuel consumption. Overall, the efficient and unconventional approach that JetBlue has adopted continues to drive its successful operations.

Human resource management 

How a firm treats its employees determines the level of employee productivity, satisfaction and engagement. It is true that JetBlue’s employees do not belong to unions. One would expect that since they do not have a union that agitates for their rights, JetBlue’s employees suffer poor treatment. This is not the case. The firm has taken steps to promote the welfare of its employees. These steps include offering bonuses and profit sharing programs (Wheelen & Hunger, 2012). Furthermore, the firm’s employees are treated like family. It is little wonder that the employees approach their mandates with enthusiasm and commitment.

Info systems 

In the case, it is indicated that JetBlue has integrated information systems into its operations. Specifically, the company has created an online platform from where passengers can book flights (Wheelen & Hunger, 2012). Thanks to this platform, passengers are able to avoid delays and enjoy a seamless experience. The company has also developed a policy through which it notifies its passengers of such issues as delays and cancellation of flights (Wheelen & Hunger, 2012). Essentially, JetBlue has demonstrated that transparency is at the heart of its operations. While more can be done, JetBlue’s investment in info systems will secure its future in the intensely competitive airline industry.

Analysis of Strategic Factors 

The discussion above has identified the dynamics in JetBlue’s internal and external environment. Among the issues evident from the discussion is that there are strengths and opportunities that drive the firm’s growth and weaknesses and threats which threaten performance. Its excellent customer service, the effective employee management strategies and the low-cost approach that it has adopted are some of JetBlue’s strengths. The adoption of technology and investment in research and development are other strengths. As it builds these strengths further, the firm will witness accelerated growth. The support from the American government, the low threat of new entrants, the fact that suppliers wield low levels of influence and the increasing demand for air travel are just some of the opportunities that exist in the airline marketing. By leveraging these opportunities, JetBlue will manage to protect its market share and compete effectively.

The strengths and opportunities above promise to insulate JetBlue against the cut-throat competition that defines the airline industry. However, there are some internal weaknesses and threats that could compromise the company’s performance if it fails to take action. Among the weaknesses is its hierarchal structure which hampers the smooth flow of communication is the main weakness of which JetBlue needs to be wary. Left unresolved, this weakness could cause a recurrence of the problems that the company faced. Some of the threats that could compound the firm’s problems include the competition in the industry and tighter government regulation. In particular, as airlines offer cheaper tickets, JetBlue will be stripped of the very feature that makes it unique and appealing to passengers.

Strategic Alternatives and Recommended Strategy 

Strategic Alternatives 

In the case, JetBlue faces a serious problem. The problem involves slow growth after years of impressive financial performance. To address this problem, there are various strategies that the companies could pursue. Each of these strategies is explored in detail below.

Further Price Cuts 

The problems that JetBlue faced saw it lose customers who turned to other airlines that offered better service at lower prices. In response to the high fuel costs, JetBlue increased the prices of its tickets. This was a blunder that is responsible for the low passenger traffic. To win back its customers, the company should lower price tickets further. There are various advantages that the implementation of this strategy will offer. One, the company will witness an increase in the number of its customers. Two, the firm will regain the confidence of customers who felt betrayed when JetBlue hiked ticket prices. Whereas this strategy is largely beneficial, it should be noted that it has drawbacks. One of these is that by charging lower prices, the firm will suffer a drop in revenue. Moreover, the company may be forced to make cuts in other areas such as employee compensation. This will have a damaging impact on employee morale and engagement.

Charge even Higher Prices 

The drawbacks associated with the proposal offered above indicate that JetBlue should explore other alternatives. Making its customers pay even more for tickets and other services is among the alternatives. The key benefit of this strategy is that it will enable the company to keep its revenues at levels that can sustain its operations. Another benefit is that as it charges higher prices, the firm will be able to re-introduce certain conveniences. For example, it could offer meals and snacks at subsidized prices. Through these extra services, JetBlue will succeed in appealing to customers who are willing to pay more for an enhanced experience. This alternative is not perfect as it also suffers various shortcomings. That the implementation of the strategy will be a betrayal of JetBlue’s philosophy is one of the drawbacks. When it charges more, JetBlue will be going against its commitment to value and low cost. Another potential negative impact of the proposal is that JetBlue could suffer further declines in passenger numbers.

Pull Back 

One of the factors that caused JetBlue’s problems is that the company grew too fast. It expanded its fleet and network. Since the accelerated growth is to blame for the problem, it appears intuitive that the firm should scale down its operations. Specifically, the firm should pull out of routes that are performing poorly and focus its efforts on its most profitable routes. Various benefits will come with this alternative. As it implements this recommendation, the company will be able to keep costs low. Additionally, this alternative will offer it the opportunity to offer excellent services on the fewer routes that it plies. However, this strategy also has its limitations. One, the strategy will reduce JetBlue’s presence. Essentially, if it adopts the strategy, the firm will be undoing years of investment and hardwork. Another negative outcome that could result from this strategy is that the firm will lose relevance and suffer even more intense competition.

Recommendation 

The three alternatives discussed above promise to fix the issues with which JetBlue grapples. However, the firm cannot adopt all the alternatives given cost and practicality constraints. It is therefore recommended that the firm should increase the prices of its tickets. There is a solid rationale for this recommendation. By increasing ticket prices, JetBlue will earn higher revenues. However, this will only occur if the company does not suffer a massive loss of customers. Another reason why the company should increase ticket prices is that other airlines are implementing the same strategy. For example, legacy airlines have remained successful despite the fact that they charge more for their tickets. Their success shows that higher prices do not necessarily scare away passengers. It is true that as it increases prices, JetBlue may lose customers. This should indeed worry the company. However, the firm can rely on its years of dedication to offering unrivalled customer service to persuade its customers to remain loyal. There are thousands of customers who would readily fly with JetBlue despite the higher prices. These customers have become loyal because JetBlue is known for its reliability and commitment to customer experiences. Therefore, while the implementation carries some risk of poor financial performance resulting from lower passenger numbers, JetBlue should proceed with the price increases and expect to witness a massive spike in revenues.

Implementation 

The recommendation offered above promises to transform how JetBlue operates. In particular, if it implements the strategy, JetBlue will experience changes in its relations with customers. Initially, the firm will probably experience a backlash from budget conscious passengers. These passengers constitute a significant portion of the company’s customer base and their concerns cannot be dismissed. It is advised that JetBlue should accompany the implementation process with a public relations campaign. The focus of the campaign should be to assure customers that the price increases are a necessary cost that the customers must shoulder to continue enjoying the same level of service. For the implementation process to occur smoothly, all the firm’s stakeholders should be on board. The top leadership and the board of directors should spearhead efforts to draft the new prices. As these stakeholders perform this function, they should ensure that the prices reflect the need to secure profitability while remaining affordable for a majority of the firm’s passengers. Employees such as crew will also have an important role to play. They should be involved in improving the level of customer service. When it offers excellent customer service, JetBlue will essentially provide its passengers with reason to stay loyal.

The implementation of the price hikes is likely to have implications for the larger airline industry. JetBlue should anticipate that its competitors will respond to this strategy. It is likely that other airlines will launch marketing campaigns designed to highlight their cheaper prices. In response to these campaigns, JetBlue should remind its customers that its services are unrivalled. To accompany the implementation of the price hikes, JetBlue should also reform such aspects of its operations as information systems, culture, R&D and marketing. Through greater investment in R&D, the firm should identify novel approaches that it can use to quell the concerns resulting from the higher prices. For example, the firm could offer innovative services and solutions so as to appease customers left disappointed by the price hike. Overall, if the implementation process is to occur without hitches, all aspects of JetBlue’s operations must be involved in the process.

Evaluation and Control 

After implementing the price hike, JetBlue should establish a mechanism for evaluating the effectiveness of this strategy. The mechanism should also allow the firm’s stakeholders to control the implementation process for success. In the following section, details of the evaluation and control of the strategy are provided.

Who sets it up? 

The mandate of setting up the evaluation and control is assigned JetBlue’s top leadership. By overseeing the implementation process and assessing progress, the leaders will ensure that all outcomes are being accomplished. Another reason why the involvement of the top leadership is needed is that it possesses the insights and expertise needed to ensure successful implementation. For example, the board of directors is made up of experts and professionals who have a deep understanding of how the airline industry operates. JetBlue should leverage their experience, skill and wisdom to implement the strategy effectively. The top leadership will not work alone. Employees will also be involved in the evaluation and control. For example, crew members could obtain feedback from passengers regarding how they feel about the price increase. This feedback can then be used to better understand and perhaps modify the strategy so that it is more in line with the needs and wishes of customers.

Who reviews? 

With the evaluation and control mechanism set up, the next phase is to conduct a review. The review will allow for the success of the implementation process to be established. Employees should be charged with the responsibility of reviewing the process. This is because they possess intimate knowledge regarding how the implementation is being conducted and its impact on the firm’s operations.

How often? 

As it conducts its evaluation, JetBlue should answer the question of how often the evaluation should be performed. It is recommended that the firm should review the implementation process every three months. This period seems appropriate as it will enable the firm to effect any changes before it is too late. For example, suppose that customer response to the price hike is extremely hostile. By conducting a review every three months, the firm can revisit its strategy and make any changes so as to protect its performance.

What is reviewed? 

There are various metrics on which JetBlue should focus while conducting its evaluation. Passenger traffic is among these metrics. When the firm does not suffer a significant reduction in customers, it can conclude that the strategy has been effective. On the other hand, if the company loses many of its customers to rivals who offer better prices, the company may need to revisit the strategy. Revenue figures are another metric that the firm should review. These figures will enable it to determine how the strategy has been received. An increase in revenue would suggest that the strategy has worked. Employee sentiment is yet another metric that can guide JetBlue as it establishes the effectiveness of the strategy. It is possible that the employees will find that the increase in prices violates the firm’s philosophy and culture.

Conclusion 

The case of JetBlue underscores the complexities that shape the airline industry. With a focus on low-cost services, this company has won the hearts of many budget-conscious passengers. However, it has faced various challenges that threatened its growth. These challenges included a decline in passenger numbers and a fall in revenue. To solve these challenges, the company needed to leverage its strengths and the opportunities in the market while fixing its weaknesses and insulating its operations against threats in the industry. The culture of customer excellence and investment in employee wellbeing and its cheap tickets are some of JetBlue’s main strengths. These strengths are overshadowed by such weaknesses as its inefficient structure. Three alternative strategies are available to JetBlue to address the problems that it faces. Cutting prices further, hiking the prices and scaling back its operations are these strategies. The firm should increase the prices as this strategy promises to improve its revenue and solidify its competitiveness. As it adopts this strategy, it should monitor its sales figures and passenger numbers so as to ensure that the strategy has been effective.

Exhibits 

Porter’s Five Forces 

Competitive Rivalry: High

Supplier Power: Low

Buyer Power: High

Threat of Substitution: High

Threat of New Entry: Low

SWOT Analysis 

References

Allison, M., & Kaye, J. (2011). Strategic planning for nonprofit organizations: a practical guide and workbook. Hoboken, NJ: Wiley

Board of directors. (n.d). JetBlue. Retrieved October 17, 2018 from http://blueir.investproductions.com/investor-relations/corporate-governance/board-of-directors

2017 annual report. (2018). JetBlue. Retrieved October 17, 2018 from http://investor.jetblue.com/~/media/Files/J/Jetblue-IR-V2/Annual-Reports/jetblue-2017-annual-report.pdf

JetBlue Airways Corp JBLU. (n.d). Morningstar. Retrieved October 17, 2018 from http://insiders.morningstar.com/trading/board-of-directors.action?t=JBLU

JetBlue for good. (n.d). JetBlue. Retrieved October 17, 2018 from https://www.jetblue.com/jetblue-for-good/

Jet responsibly. (2007). JetBlue. Retrieved October 17, 2018 from https://www.jetblue.com/p/ERR-071210.pdf

Leadership. (n.d). JetBlue. Retrieved October 17, 2018 from http://blueir.investproductions.com/investor-relations/corporate-governance/leadership

Wheelen, T. L., & Hunger, D. J. (2012). Strategic management and business policy. Toward global sustainability. 13 th Edition. London: Pearson.