Case Study On Jetblue Airways

Published Date: 02 Nov 2017

JetBlue Airways is an American low-cost airline owned by JetBlue Airways Corporation. The company is headquartered in the Forest Hills neighborhood of the New York City borough of Queens. Its main base is John F. Kennedy International Airport, also in Queens.

In 2001, JetBlue began a focus city operation at Long Beach Airport in Long Beach, California, and another at Boston's Logan International Airport, in 2004. It also has focus city operations at Fort Lauderdale – Hollywood International Airport and Orlando International Airport. The airline mainly serves destinations in the United States, along with flights to the Caribbean, The Bahamas, Bermuda, Colombia, Costa Rica, Jamaica, and Mexico. As of December 31, 2009 JetBlue serves 60 destinations in 20 states, Puerto Rico, and eleven countries in the Caribbean and Latin America.

JetBlue was incorporated in Delaware in August 1998. David Neeleman founded the company in February 1999, under the name "NewAir."Several of JetBlue's executives, including Neeleman, are former Southwest Airlines employees. JetBlue started by following Southwest's approach of offering low-cost travel, but sought to distinguish itself by its amenities, such as in-flight entertainment, TV on every seat and Satellite radio. In Neeleman's words, JetBlue looks "to bring humanity back to air travel."

In September 1999 the airline was awarded 75 initial take off/landing slots at John F. Kennedy International Airport, and received formal U.S. authorization in February 2000. It started operations on February 11, 2000, with service to Buffalo and Ft. Lauderdale. JetBlue's founders had set out to call the airline "Taxi" and therefore have a yellow livery to associate the airline with New York. The idea was dropped, however, for several reasons: the negative connotation behind New York City taxis; the ambiguity of the word taxi with regard to air traffic control; and threats from investor JP Morgan to pull its share ($20 million of the total $128 million) of the airline's initial funding unless the name was changed The airline's founders also considered making its home base in Trenton, New Jersey, but this idea did not gain much support.

JetBlue was one of only a few U.S. airlines that made a profit during the sharp downturn in airline travel following the September 11, 2001 attacks. Since its IPO on the NASDAQ stock exchange in 2002, JetBlue has become one of the most popular airline stocks in history and currently has about two billion dollars in market capitalization. Financial results were strong for the airline throughout the 2002–2004 years, and many analysts and journalists lauded the airline for its success. The airline sector responded to JetBlue's market presence by starting mini-rival carriers: Delta Air Lines started Song, and United Airlines launched another rival called Ted. Song has since been disbanded and is being reabsorbed by Delta Air Lines, and United announced that Ted will be discontinued as a separate brand.[8]

In 2002, JetBlue acquired LiveTV for $41 million in cash and the retirement of $39 million of LiveTV debt. LiveTV equips JetBlue with 36 channels of live DirecTV satellite TV programming at each seat. Two years later, JetBlue announced it would add 100 channels of XM Satellite Radio, Fox TV programs and 20th Century Fox movies to its in-flight entertainment.

JetBlue has not yet attempted to raise money by selling snacks during flights, a move that many larger airlines have made on domestic flights and some international flights. JetBlue has also told customers in commercials and print ads that they "encourage you to use the call button", advertising their devotion to customer service. JetBlue is also known for its "letter ads", for example: "Dear New York", and ending with, "Sincerely, JetBlue".

As the airline continued to make record profits, new planes allowed for additional route opportunities. These included JetBlue's first international service, New York City to the Dominican Republic, on June 10, 2004. Additional service to The Bahamas began on November 1, 2004, and service to Bermuda began May 4, 2006. Service to Aruba began September 15, 2006.

In 2004, JetBlue began flights from New York City's LaGuardia Airport and added service in 2005 to Newark Liberty International Airport in Newark, New Jersey, thereby serving all three major New York City area airports. Also in 2005, the company added service between JFK and Boston's Logan Airport with ten daily flights using its new 100-seat Embraer 190 fixed-wing aircraft. In October 2006 JetBlue announced they would begin service from Stewart International Airport, in Newburgh, New York. Later, the airline announced new service to Westchester County Airport, also known as White Plains, allowing JetBlue access to five of the six New York City area airports.

JetBlue Airways is using its InterviewDirect phone screening solution to qualify job candidates.  Hiring for its reservation, call center, in-flight crew and airport and ground operations teams, JetBlue contracted with Trend Integration in June 2007 and was up-and-running with InterviewDirect within thirty days.

"Within just a few weeks, InterviewDirect significantly improved our HR metrics including the cost-of-hire and time-to-fill.  Screens are typically completed within 48 hours. At the same time, we are able to cut costs and are positioned to redeploy resources to more strategically important areas," said Dean Melonas, Vice President, Recruitment, and JetBlue Airways. "These benefits combined with Trend Integration’s intense commitment to customer satisfaction result in a powerful solution that I would recommend to any organization that values a best practices recruitment process."

Previously, the airline’s recruiters were spending significant amounts of time conducting telephone screens of prospective candidates.  With InterviewDirect, Jet Blue's recruiters are able to focus on qualified candidates, reducing time-to-hire and improving recruiter effectiveness.  

Hal Cohen, CEO of Trend Integration, stated, "JetBlue is heavily focused on the business benefits of technology and InterviewDirect aligns perfectly with their strategic goals.  As a result of using InterviewDirect they can screen more applicants in the same timeframe, qualify them, and construct a readily available talent pipeline.  It’s also a winning proposition for candidates as they are able to progress through the hiring process more quickly."

InterviewDirect eliminates the historical inefficiencies of the manual phone screening process by leveraging telephone, IVR and Web technologies.  Applicants are asked a series of qualifying questions to determine whether or not to advance them in the hiring process.  Hiring companies can standardize and tailor the specific questions asked during the pre-screening process.  Because InterviewDirect is available 24x7, candidates can be screened around the clock, increasing the prospective talent pool.

During the fourth quarter of 2006, JetBlue achieved a completion factor of 99.6% of scheduled flights versus 98.9% in the fourth quarter of 2005. On-time performance, defined by the US Department of Transportation as arrivals within 14 minutes of schedule, was 68.4% in the fourth quarter of 2006 compared to 70.9% for the same period in 2005. For the full year 2006, JetBlue achieved a completion factor of 99.5%, compared to 99.2% in the full year 2005. On-time performance for the full year 2006 was 72.8%, compared to 71.4% for the full year 2005. The company attained a load factor in the fourth quarter of 2006 of 79.7%, a decrease of 1.4 points on a capacity increase of 14.5% over the fourth quarter of 2005. Load factor for the full year 2006 was 81.6%, a decrease of 3.6 points on a capacity increase of 20.6%.

Dave Barger, JetBlue's President and COO, commented, "The JetBlue team, now 11,000 strong, rose to the occasion and met the difficult operational and financial challenges of 2006. The creativity and innovation of our crewmembers positions us well for 2007, a year in which we plan to grow capacity eleven to fourteen percent, while continuing to enhance the JetBlue Experience."

For the fourth quarter, yield per passenger mile was 10.21 cents, up 25.0% compared to 2005. Operating revenue per available seat mile (RASM) increased 24.1% year-over-year to 8.71 cents. Revenue passenger miles increased 12.4% from the fourth quarter of 2005 to 5.8 billion. Available seat miles (ASMs) grew 14.5% to 7.3 billion. Operating expenses for the fourth quarter were $569 million, up 19.1% from the fourth quarter of 2005. Operating expense per ASM (CASM) for the fourth quarter 2006 increased 4.1% year-over-year to 7.82 cents, while average stage length decreased 17.9%. Excluding fuel, CASM increased 2.3% to 5.24 cents. During the quarter, realized fuel price was $1.92 per gallon, a 2.8% increase over fourth quarter 2005 realized fuel price of $1.87. JetBlue ended the fourth quarter and full year with $699 million in cash and investment securities.

Looking ahead, for the first quarter of 2007, JetBlue expects to report an operating margin between two and four percent based on an assumed aircraft fuel cost per gallon of $1.91, net of hedges. Pre-tax margin for the quarter is expected to be between negative four and negative two percent. CASM is expected to increase between six and eight percent over the year-ago period. Excluding fuel, CASM in the first quarter is expected to increase between four and six percent year over year. Capacity is expected to increase between 14 and 16 percent in the first quarter and stage length is expected to decrease roughly 14 percent over the same period last year.

JetBlue competes against many low-cost carriers or low-cost subsidiaries of larger carriers. JetBlue's main low-cost carrier competitors are AirTran Holdings (AAI) and Southwest Airlines Company (LUV). Its other competitors include American Airlines (AMR), Continental (CAL), United (UAUA), and U.S. Air (LCC). JetBlue's CASM of 8.38 cents are the lowest in the airline industry, allowing the company to remain profitable as many competitors struggle. However, due to rising costs and slumping demand, JetBlue joined many competitors in implementing various strategies including cutting food and beverage services and charging customers extra fees for checking in baggage to improve their profitability in 2008.[30] Competitor Southwest remains the only major airline without extra fees as of Q3 2008, although JetBlue's $20 fee for a second checked bag is much less than most airlines- for example, American Airlines charges customers $15 to check-in one bag, and $25 for the second piece of luggage .