Jet Blue Analysis Essay

Jet Blue is now a major U.S. airline that has established itself as a leading low-fare, low cost passenger airline by offering customers high quality customer service and a differentiated product according to Jet Blue 10-K/A pg . Their steps to achieve their goals in the market place are to stimulate demand with low fares. Jet Blue offers a wide variety of low fares that target those leisure travelers and business persons that would have sought out alternative travel options. They emphasize low operating costs. They are fully utilizing technology with incentivized and productive workforces. They excel at maintaining high aircraft utilization by operating a single aircraft type with a single class of service as described in the Jet Blue 10-K/A pg 2. Jet Blue offers point to point flights to underserved and/or overpriced large markets. There is a great deal of demand for these types of services, customers are looking for direct flights and a cheaper price, the additional benefit of Jet Blue travels is the accommodations provided. Customers have free access to DirectTV, larger leather seats, extra legroom compared to other airlines. Lastly, Jet Blue believes their long term success with be because of a how they differentiate their products and services. Jet Blue’s flying experience for customers is more of a pleasure rather than a burden or what sometimes feels like an obstacle getting from point A to point B. Jet Blue does not overbook their flights and they are proactive and honest about any delays especially related to weather. Jet Blue is an organization that primarily relies on operational excellence. Jet Blue does not offer a wide variety of products; they only have one type of aircraft with a single class of service (Jet Blue 10-K/A). They are very interested in customer feedback to continuously improve their services to stand out from the rest of the airlines. They truly take out the hassle in flying. Jet Blue does have its own business risks that may threaten the company’s ability to satisfy stockholder expectations. The airline industry in itself is an extremely competitive industry. There is competition in every city that has more financial resources and a more known brand name. Failure to successfully increase the frequency of flights in their current markets could harm their business. There is a new aircraft being introduced and failure to meet the obligation of ordering the minimum 100 aircraft plus an additional 100 aircrafts will harm the business. These new aircrafts have to be ready for servicing flight schedules they need to be properly financed and meet the necessary certifications. Jet Blue uses the following techniques that could help to reduce the risks of providing a return to their shareholders. Through marketing and distribution Jet Blue has created a customer loyalty program that will reward and recognize the most valuable customers. The people that are hired to work for Jet Blue are considered crewmembers; these crewmembers treat the passengers as they would want to be treated. Jet Blue passengers do not return just because of the low fares, the employees of Jet Blue provide high quality service that keeps people coming back. Jet Blue’s tiered pricing helps the ease of carrying fare that have higher fares with more restrictions Individual fares that are sold for the flights is an example of unit-level activities. These fares will help determine the profitability of a flight and determine their load factor and breakeven load figures. Another unit-level activity that could apply to an airline would be individual salaries of the employees for each flight. If a flight is not completely full, that will limit the number of employees needed to assist in the plane. These activities are monitored and evaluated for top efficiencies by offering low fares in high demand markets and by employing productive and incentive motivated employees. One example of batch-level activities would be fuel. The fuel is a cost per flight no matter how many passengers are aboard. Another example would be the total of aircraft owned and leased by the company. An airline will need to fully utilize all aircraft that is in working condition to collect revenue towards any rents and loans. If an airline owns 44 planes and only can book 40 of those planes for business, they are still paying on the full 44 planes, thus being a batch-level activity of the airline. Jet Blue has taken many steps to utilize the fuel purchased for use and the efficiency of booking their flights with a single service. There is a new aircraft that is replacing the current aircrafts that is equipped with larger leather seats, entertainment, and added comfort. Jet Blue is working tirelessly to make sure this aircraft is financed in the most efficient way as well as passing all certifications required for flying. As described by Noreen, Brewer, & Garrison (2011) a customer-level activity is one that includes sales calls, catalog mailings, and general technical support that is not related to any particular product (pg. 238). Jet Blue utilizes its customer-level activities through advertising and promotions through newspapers, magazines, television, radio and outdoor billboards and through targeted public relations and promotional efforts (Jet Blue 10-K/A). An organization-sustaining activity for Jet Blue would be regular maintenance of aircraft and buildings. An airline has plenty of behind the scenes support systems such as regular maintenance of their aircraft and the buildings that support the aircraft. References Jet Blue 10-K/A financial data Noreen, E. W., Brewer, P. C., & Garrison, R. H. (2011). Managerial Accounting for Managers (2nd ed.). New York, NY: McGraw-Hill.