JetBlue Management Case Study Essay

JetBlue Managing the FutureIn the airline business industry, few players get managed to relieve oneself a unique brand identity and achieve brand differentiation. JetBlue, however, has done so by taking up the niche position of a cheap provider that excessively offers a pass along-notch experience that legacy airlines dont salve. JetBlue allow maximize prospect by maintaining its hypothesis of the business and incorporating innovation as a core value by means of with(predicate) entrepreneurial management of options resulting in new st locategy. David Neelemans vision is to create a new kind of airline one that would leverage applied science for safety, efficiency and a commitment to their nodes. Neeleman was convinced that his commitment to innovation in management, policies, and technology would keep the monotonics full and moving. JetBlues determination is to give customers incisively what they want in the form of an innovative product delivered by friendly crew m embers that believe in high quality operate.Neeleman earths in trailblazers DNA that his strengths, is an ability to look at a process or a practice that has been in place for a broad time and ask myself, Why dont they do it this other way? And some times I find myself thinking the answer is so obvious that I wonder, Why has no one else ever thought of this before? (Dyer, Gregersen, Christensen 76). Neeleman is convinced that commitment to innovation regarding management, policies, and technology would keep airplanes full and moving. It is the theory of the business to provide high-class, convenient, and efficient service to their customers and an enjoyable, productive environment for JetBlues employees. Neelemans innovative personality as CEO has enabled JetBlue to create brilliant ideas such(prenominal)(prenominal) as the e-ticket arrangement that provides consumers with incentives to reserve and purchase tickets from the partnerships website. JetBlue knows that changes byo ut the industry occur continuously due to competitive imitation from other companies and through proficient advances. Collis and Montgomery mention that history is replete with examples of how technology has ruined companies and corporate strategies by substituting alternative resources for those on which a sustainable corporate advantage had been built. (Collis, Montgomery 237). Neelman learned from the Southwest airline standard nevertheless knew in himself that he could improve theprocess.He understood that it was not just copious to just charge low priced fares since competitors could easily match on price. David Neeleman challenges the status quo in the experience of air travel and demonstrates his passion as an innovator by observing customer behavior, products/services, technologies and other air travel corporations. Neeleman spent a lot of time and energy discovering and testing ideas through a diverse net profit of individuals who were able to do the job well, while a t the same time experimenting with fresh ideas. As stated in Innovators DNA, interviews and observations revealed that innovative companies crap the code for innovation right into the systems people, process and guiding philosophies. (Dyer, Gregersen and Christensen 170). JetBlues schema is to combine common sense with innovation and technology to bring humanity gumption to air travel ***cite*** through incorporating innovation and creativity into their core values. JetBlue adopts a route structure that is a hybrid between the hub-and spoke system used by most legacy carriers, and the point-to-point systems used by many discount airlines. JetBlue has utilized Druckers theory of fustest with the mostest with a unique business model and by becoming the first paperless airline, substituting computer and information technology for everything from flight planning to aircraft guardianship to the sole use of e-tickets.Drucker explains, the last of these innovative strategies deliver what is value to the customer quite than what is product to manufacturer. It is rattling only one step beyond the strategy of accepting the customers reality as part of the product and part of what the customer buys and pays for. (Drucker 395). David Neeleman believes JetBlue should focus on stimulating demand in under-served food markets with low fares because he understood that his attach to is in the service industry, which is only enabled by the highly productive use of employees, aircrafts and strategic competitive pricing. By doing this JetBlue go outing improve the passenger experience with technology and would use technology to maturation employee and aircraft productivity beyond those achieved by competitors. The theory and technology already hold up been tested and proven to be a competitive advantage as David Neelemans first airlines, Morris Air, became a pioneer in ticketless travel in 1993 and was acquired by low-fare leaders at the time Southwest Airlines for $ 129 million.***(un trusted if this last part of the reprove regarding $129 million isnecessary)**** To keep this competitive advantage, JetBlue has planned for the eagle-eyed term by buying out LiveTV in 2002 for $ 41 million from the lodge that supplied JetBlue with the cable television set capabilities. This is why JetBlue chose the Airbus A320 because it was larger, more than reliable and send away-efficient than most aircrafts.By operating just one model of aircraft at the time, JetBlue was allowed to increase cost savings by simplifying maintenance issues, reducing spare-parts-inventory requirements, lowering training cost and increasing scheduling efficiency. Utilizing the Airbus as a sole aircraft type, JetBlue was able to standardize its training and service processes around the aircraft and also gain flexibility in scheduling and capacity management. For example, at JetBlue to each one pilot was provided with a laptop computer, which possessed all the flight plans tha t allow JetBlue pilots to perpetrate pre-flight check themselves more efficiently. JetBlue began passenger flights in 2000, soon after becoming juicy the following year with a net income of $39 million and was profitable for the next triplet years until 2005. When the company reported a $20 million loss mainly due to the 52% increase in fuel price from the previous year, it resulted in $167 million in increased operational cost. Through proper management, JetBlue initiated a Return to Profitability program that involved improving capacity management, revenue optimization and cost reductions. While suffering a loss in the first quarter of 2006, the company was profitable for the remainder of the year, inform a full-year loss of just $1 million and carried that success all the way into 2009 where the company reported $58 million in net income in spite of a $76 million loss the year before.All that did was reaffirm JetBlues confidence in committing itself in the JetBlue Experien ce. Managers are agents of transformation who rely on knowledge for the humanities, social sciences, and technology to perform his or her task of managing people to be capable of joint performance through common goals, values, and the right structure with proper training and development. By linking human resource practices to the companys values and behaviors, JetBlue was able to ensure that its employees were productive, safe and customer-oriented. Aircraft utilization is also achieved through quick efficient turnarounds at the gate averaging 35 minutes, while utilizing its aircrafts more efficiently than any other airline by keeping each plane in the air for an average of 13 hours a dayand keeping the fleet productive by operating red-eye flights. This practice allows JetBlue to keep costs low by spreading its fixed cost over a great number of flights and available-seat-miles. Sustaining low operating costs enabled JetBlue to offer low rate fares to its customers, a quality that J etBlue prides itself in. JetBlue will be able to accomplish the goal of adding simplicity, technology, design, entertainment, and friendly people through its utilization of their top management teams experience, (Dave Garger, John Owens and Ann Rhoades) who have all worked with competitive companies during its rapid harvest-feast years. The experience of top managers allowed management to take qualities from other airlines and apply those lessons in building a wagerer JetBlue.By taking the five core values as a guide ***(what are the five core values)****, JetBlue will make sure that the right people with integrity are hired. JetBlue strives for simplicity in their computer technology, but also pay attention to cultural fit because it plays into the companys theory of the business, that happy employees are a great source for recruiting their friends from competing airlines. JetBlue understands the importance of giving their consumers what they want and are able to continually adap t to the ever ever-changing needs of their customers. JetBlue knows that by focusing on point-to point service to large metropolitan areas, it will be able to attract JetBlues target market that are, fare-conscious travelers who might otherwise have used alternate forms of transportation or would not have traveled at all. However, the company recognizes that high-quality service differentiates themselves from their competitors and that was the key to speech their customers back. However, JetBlue is increasingly courting a higher class of passengers who have the resources to pay a higher price for a business or first-class ticket, but appreciate a lower fare without sacrificing high-class customer service, especially when corporations are looking to reduce business travel due to tough sparing conditions.Neeleman noted that one of the interesting things about the airline industry is that virtually all numbers about operations are in the public range that allows JetBlue to research t he demand for air travel in different market and at different prices. JetBlue uses their own online customer survey so they can reply rapidly to customer feedback. JetBlue needs to maintain innovation by continuing its strategy of using new airplanes, offering great personal service, creating a state of the artrevenue management system and single class service with competitive prices lower than the competition. JetBlue has a clear feeling of honesty, care and concern for customer satisfaction, not just corporate lip service to service. There will always be customer dissatisfaction, despite the companys beat efforts, but one the greatest differences between JetBlue and other airlines was the formers proactive approach to correcting any wrongs that happened on flights. By centralizing the transfer of passengers during long journeys across the country, such structures allowed passenger to travel between numerous destinations without changing airlines.Despite the advantage of a hub-an d-spoke model, this kind of centralization proved repugn if weather, maintenance problems or air traffic delays interfere with schedules. There was a demand after 2001 for smaller regional routes expanded as many airlines get laid longer routes as a way to reduce costs. As JetBlue continued to adapt its product to meet the changing demands of it consumers, it decided to change its policy of a one model standard by adding the Embraers E190 to test and efficiently serve the potential medium sized market by offerings passengers a more comfortable flight than typical regional jets. In 2003 JetBlue demonstrated their ability to adapt their product by playing a significant role in designing the interior of the E190 to improve passengers comfort and increasing the range of choices available to JetBlue passengers by feeding customer to connecting A320 flights at focused cities. The synergy between the E190 and A320 enabled the A320 to feed into E190 flights as well, resulting in higher lo ads and improved economics for JetBlue. JetBlue rule booked a net income of $103.9 million and the company achieved a record stock price at $30 per share in 2003.Transfers at focus cities (New York/JFK, Boston, Orlando, Fort Lauderdale and Long Beach) would improve the utilization of alert airport facilities, increase productivity and reduce downtime for airport crewmembers. The diversification of aircrafts causes changes in pilot compensation, which leads to a lot of unhappy/ highly influential employees who are looking for higher pay. Steven Predmore, offense President and Chief Safety Officer, notes that once the innovation of using non-skid flooring on the cargo bins of the E190 were used, it became a safety feature preventing baggage handlers from slipping on the floor. The issue was that loading procedures established with the A320 was to slide bags along the floor ofthe bins, which resulted in increased loading time and the chances of an employee harming themselves with ba ck sprains. In addition, the E190 also required changes in behavior and expectation for JetBlues existing customer. For example, overhead storage bins on the E190 were smaller than the A320, causing many passengers to be surprised and disappointed when asked to check their baggage at the gate. JetBlue is existence asked to do too much in for a short period of time and the companys human or technological resources are being stretched out too much, causing internal inconsistency that transform into bigger, external issues with the companys strategy.The company now has to tell their customers to do two different things which at the time they did not have the internal/communication infrastructure nor have the correct operations procedures in place to actually execute the complexity of the operations being run. Drucker states, Innovative efforts that take the existing business out of its own field are rarely successful. Innovation had better not be diversification. Whatever the benefits of diversification, it does not mix with entrepreneurship and innovation (Drucker 363). An existing business innovates where it has expertise, knowledge of the market or knowledge of technology. Anything new will predictively be met with trouble and therefore, one must build entrepreneurial management to match that business. In JetBlues case, they were growing too quickly for them to manage as demonstrated on the February 12, 2007 ice storm (Valentines Day Massacre) when JetBlue eventually cancelled 1,195 flights over a six day period due to the companys cancellation policy, costing the company roughly $41 million. JetBlues development is based off the understanding of the conditions leading to the problems of February 2007 incident and taking initiatives.This was done through the IROP Integrity program that not only change the way JetBlue addresses disruptive events/ irregular operation (IROPs), but establishing a model for large-scale change in the company and installing confiden ce among employees that can work together to solve the most challenging problems. The IROP Integrity project was not intended to provide a static, permanent solution to the problem of cancellation, communication, recovery from disruptions within the industry. However, the aviation industry was constantly changing and the way Jetblue deals with IROPs would also need to evolve. The standardization of the cancellation desk effectively communicatemany of the problems posed by IROPs such as communication overload, prompt notification of crews, and dedicated focus on process. Crewmembers had previously believed that technology limitations restricted them from efficiently dealing with IROPs. The companys ability to adapt is what saved itself after incidences like in 2007 as JetBlue hired the right person, Russell Chew, in 2008 who brought in go through managers from other airlines, particularly those with an expertise in operations.The company began to change its focus from reacting to p roblems and overcoming them by heroic efforts, preparing for disruptions and focusing on pre-event rather than post-event. JetBlue displays care for their customers as they have issued a Bill of Rights in 2010, promising to compensate customers for inconveniences within the companys control. Diversification itself rarely works because it has to adopt policies that create, throughout the entire organization, the want to innovate and the habits of entrepreneurship and innovation. Through the IROP Integrity project, we now look at ways crew services could improve their processes, even with technology limitations. In fact 90% of IROs Integrity projects involved no technology improvements but processes, policies or training, all at relatively low cost. Many other small changes, such as adding groups to e-mail distribution, had been immediately implemented, but still other improvements have occurred simply as the result of people from different parts of the organization acquire to know e ach other and understanding their responsibilities. The IROP Integrity model has become a JetBlue model for any large-scale change by bringing front-line crewmembers into the process of designing operation change and this is how JetBlue creates synergy. By building cross-departmental relationships through cross-functional/cross-level working teams and also building internal capabilities for project management and process improvement with (LEAN tools) to identifying sources of thieve and inefficiency.The problems require more study, such as evaluation technology, working with other parts of the company, or analyzing what other companies do. By providing crew members and crew leaders the guidance, tools and opportunity to learn by doing, it created a collaborative, supportive, and corporate sponsored program. The changes came in many forms in technology, communication, and process flow some involve the physical layout of critical facilities such as the System Operation Center (SOC). Thegoal is to expand the wisdom of crowds philosophy, and tap all crewmembers experiences to find solutions to the inconvenient problems as seen in 2010 when the company installed a new reservation system, a major cross-function change that it accomplished using some of the tools it had mastered during IROP Integrity. Companies tend to overestimate the value of very general resources in creating a competitive advantage in a new market. In JetBlues case there is too much expansion within the company that led to problems in human resources. As Drucker states, by and large, big companies have been successful as entrepreneurs only if they use their own people to build the venture.They have been successful only when they use people whom thy understand an who understand them, people whom they trust and who in turn know how to get tings done in the existing business people, in other words, with whom one can work as partners. (Drucker 363). JetBlue has experience most of its success through the understanding the importance of well clever employees that fit with the companys core values of safety, caring, integrity, fun, and passion. Unlike mission statements that could be seen as hot air, values represents the bedrock for the development of human resource policies, practices and management style. JetBlue has talent in leveraging human resources by demonstrating quality care for their customers from one end to another and keeping the company union free. A great deal of this is accomplished through the company establishing its five core values that represent the characteristics of the company Safety, Caring, Integrity, Fun, and Passion.JetBlue needs to continue to establish itself as a value-based company that is built on the principle to be extraordinary on the outside, as well as extraordinary on the interior. Hiring the best people and treating them exactly the way Jetblue expects their customers to be treated is essential to this goal of synergy throughout the who le company with fair compensation, benefits programs, accurate two-way communication, exquisite training, opportunities for career growth and a safe, enjoyable environment. JetBlue understands that above all, an airline is a bewildering array of teams, systems, and complex logistics. By coming together across work groups, JetBlue crewmembers discover efficiencies, learn from each other, and develop a corporate culture of team cooperation and team support. By customizing pay employment benefits packages, JetBlue creates incentives for employees to perform wellin the long run by working happy and efficiently or as Rhoades would say, people dont complain when they have choices. In Corporate Strategy, Collis and Montgomery state, Inefficiencies arise inside the corporate hierarchy because individuals do not receive all the profit they generate. They therefore, do not have the incentive to maximize corporate profits, but rather to maximize their own welfare. As a result, levels of abilit y, effort and investment may be lower inside the corporation than in sole proprietorships. (Collis, Montgomery 121).JetBlue utilizes the strategy of symbolic actions to maintain internal consistency by leading by example. The symbolic actions have little impact, but sends a visible and powerful messages to the employees of the organization that a change is necessary in order to commit similar mistakes like outgrowing its operation infrastructure to a point that it became unmanageable with very simple operating systems in place. As for the future, JetBlue remains one of the most responsive companies on Twitter and Facebook. Some might say they need to be, given the make out of confusion and concern their customers face on a daily basis. The reality is that air travel is unavoidably subject to delays, malfunctions and errors. So why would a company step into the fight, knowing it going to face a bit of a firestorm? Since companies like JetBlue earn a tremendous amount of customer sa tisfaction for being to step up and solve issues, they are able to help customers become more open and responsive to their marketing efforts. By leveraging social media to check into cost and differentiation, and leveraging an integrated customer service system to build a target marketing program that tailors messages to customer, it enables JetBlue to increase their effectiveness. JetBlue will also extend targeting business travelers because JetBlue is in a unique situation given the current economic times. As a discount provider, who also focuses on customer service, JetBlue will be able to appeal to cost-sensitive business people that need to cut travel costs but dont want to sacrifice comfort, convenience, and modernity.JetBlue should check up on opportunities to increase corporate travel partnerships because as Drucker states, as the corporation moves toward a confederation or a syndicate, it will increasingly need a top management that is separate, powerful, and accountable . This top managements responsibilities will cover the entire organizations direction, planning, strategy, values and principles itsstructure, its relationship, its research, design and innovation. Top management will have to take charge of the management of the two resources common to all units of the organization key people and money. (Drucker 58). It is vital that JetBlue maintain balance in the three dimensions of a corporation as an economic and socially responsible organization.Work CitedKazemi, Colleen. 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