• Founded by David Neeleman in 1998
• Reported revenue of 3.8 billion dollars in 2010
• Reported a profit of 97 million dollars in 2010
• Has 4.4 percent of the United States market share for regional domestic airlines
• Headquarters are located in Forest Hills, New
York
• Delivers service daily to 60 destinations in 20 states
• April 11, 2002- Initial Public Offering (IPO)

• Publicly listed (JBLU) Nasdaq
• Fly’s two types of aircrafts (Airbus A320) and
(Embraer 190)
• JetBlue flies to smaller underserved markets and airports, opposed to larger major hubs
• JetBlue is categorized as a focused national carrier with a few international destinations

• Commercial passenger air travel has 4 different segments according to the US department of
Transportation (DOT)
•
•
•
•

Factor Trend
Political
Economic
Government Stimulus to Rail
Unionization
Antitrust laws affecting acquisitions
Price of Oil
Economic Recession
Evaluation Impact
(1=Low,
5= High
Threat
Threat
Threat
Threat
Threat
Social Lost Baggage
Increases in In-flight
Entertainment (TV, Magazines,
Movies)
Increased fear of safety due to
Sept 11 terrorist attacks
Technological Increased use of internet booking
Increased fuel efficiency of aircraft providers (Boeing,
Airbus)
Internet check in
Internet Web conferencing
Threat
Opportunity
Threat
Threat
Opportunity
Opportunity
Threat
5
4
3
3
4
4
4
5
5
2
3
4
Rank in terms of importance
2
1
4
3

• Unionization affecting cost structure and freedom of companies
• Large Government funded stimulus plan to bring high speed rail travel to the United States
• Political unrest in the middle east (major source of oil)
• Safety regulations
• Customer bill of rights to protect consumers

• Price of a barrel of oil continues to rise
• Profitability of airline companies in the industry
• Decreased disposable income of many families through the recession.
• Low economic growth rate

• Customer fear about flying and terrorist attacks
• In-flight entertainment and media devices are becoming expected by customers who like to travel comfortably
• Baggage loss blamed on airlines by customers
• On time arrival percentage
• Internet blogging on social media sites about unsatisfactory travel and delays

• Increased usage of internet ticket booking
• Increased usage of lowest price travel agency websites
(Travelocity, Orbitz, Expedia,
Priceline)
• Technology used to cut labor and check guests in at a quicker pace
• Increased fuel efficiency of newer aircrafts by aircraft manufacturers
• Technology such as Cisco telepresence and internet meetings hurting business travel

• Bargaining Power of Buyer- High
• Threat from Substitutes- High
• Bargaining Power of Suppliers- High
• Threat of New Entrants- Moderate
• Competitive Rivalry- High

• Several airlines for consumers to choose from
• Various travel sites to book the lowest fares (
Orbitz, Priceline, Travelocity)
• Frequent flier programs keep customers loyal to airlines by giving them incentives and rewards to continue flying on a certain airline

• High level of threat as costs can push consumers to use alternative modes of transportation if the cost is high enough
• Convenience of other travel such as wait times and security check points at airports can push people to other forms of travel
• Car, Rail, Bus, boat etc.
• Many business travelers are using technology instead of travel Ex: (Conference calls, Cisco
Telepresence, etc.)

• Only a few major producers of Airplanes,
Boeing, Airbus, Embraer
• Fuel Suppliers have a high level of power because they control the price per gallon of jet fuel
• Economies of scale lowers the cost per airplane ordered when orders are large enough
• Switching costs are high for many airlines who only fly one type of aircraft

• High capital start up costs
• Very low rates of return on investment
• Hard to differentiate your product from the existing competition
• To much competition on price from larger legacy carriers
• Deregulation of the airline industry has made it hard for airlines to become profitable
• High congestion of major airports

• Many other existing airlines
• High Fixed Costs
• Pricing wars between airlines exist at many large hubs.
• When industry growth is slow it attracts low margins as competitors fight for market share.
• The price of oil has a significant impact on travel because the higher oil is, the higher an airline charges for tickets to try and recoup their business operation costs.

• Continue to only fly two types of aircrafts to avoid high switching costs
• Continue to utilize economies of scale when placing orders with Airbus and Embraer for contracts of new aircraft purchases
• Continue to serve smaller secondary airports that are underserved (Ex: Long Beach instead of L.A.)
• Continue to keep your product differentiated by offering entertainment and continually adding to the customer experience
• Continue to avoid internet middlemen to sell empty seat’s that have not been sold

By: Brian Fitzgerald

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Founded
Headquarters
Domestic
Presence
Domestic
Generic Strategy Overall Cost
Leadership
Annual Revenue 12.1 billion
Market Share % 14.1
Profitable ?
Business
Strategy Group
Core Brands
Number of
Aircrafts
Southwest
1967
Dallas, Texas
American
1934
Yes No
Low cost Airline Legacy Carrier
Southwest
537
Fort Worth,
Texas
International
Differentiation
22.17 billion
13.6
American
Airlines,
American Eagle
900
United
1934
Delta
1924
Chicago, Illinois Atlanta, Georgia
International
Differentiation
International
Differentiation
23.23 billion
10.2
Yes
Legacy Carrier
31.8 billion
16.6
Yes
Legacy Carrier
United Airlines
United Express
Continental
Merger Data not complete
Delta
Comair
700

Low Cost Airlines
Low cost airlines typically fly one type of aircraft and enlist a labor force which is non union.
Furthermore low cost airlines attract customers who are willing to sacrifice some comfort and convenience in search of the lowest priced ticket. Often times seating is not assigned, rather it is based on a first come first serve basis. Low cost airlines compete on a domestic level and typically do not compete internationally.
Legacy Carriers
Legacy carriers tend to offer more convenience and service to fliers.
Amenities that legacy carriers have include meal service, first class, and many international and non stop destinations. Also the size of the legacy carrier impacts the smaller markets it may serve in addition to the large markets the legacy carrier may serve. Legacy carriers fly many different model aircrafts

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
Identical target market for United, American,
Delta
Frequent Business Travelers
Wealthy upper middle class
International Travelers
Travelers who need to make it to certain destinations that low cost carriers do not serve

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Cost conscious consumers
Occasional business travelers
Internet/ technology savvy customers
Last minute travelers

•Offering travelers the lowest fair to attract customers
•Price is the most important aspect to travelers
•Rewards programs and frequent flier programs help customers to stay loyal to programs that save customers money and reward loyalty
•Route maps and destinations available are what play into the reason why people chose to fly an airline
• If an airline doesn’t serve a market that a customer wants to fly to, than the customer will chose another airline
•Use of internet middlemen such as Priceline, Orbitz Expedia
•Use of company internet websites to book travel

Additional
Charges
Alliances
•Baggage fees are charged to recoup operating costs on flights, they also decrease the weight on airplanes which lowers the cost of flying
•Fuel surcharges are implemented when jet fuel becomes costly
• Meals, snacks, pillows, alcoholic beverages, and Magazines are all luxuries that most airlines charge for now
•Alliances between competitors exist to help customers reach a destination that the airline company may not serve
• Alliances include (Oneworld, Star, Sky Team)
Entertainment
•In flight movies, beverages, magazines, and internet usage are all used to entertain customers and to add to the comfort of customers on flights. Some of these luxuries are charged for depending on the airline

Customer
Experience
9
Route System 6
JetBlue Southwest American United
7 8 8
8 9 9
Price
Financial
Resources
Airline
Profitability
7
8
Airline Growth 9
Employee
Satisfaction
Total
8
8
55
10
9
9
9
9
61
7
5
0
6
7
42
6
7
6
7
7
50
6
6
7
48
9
6
6
Delta
8

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Southwest
Flying one type of aircraft, empowering employees to make decisions, Promoting a casual laid back atmosphere for employees which promotes a strong loyalty to the company and a commitment to customer satisfaction. furthermore
Southwest does not charge baggage fees
United, Delta, And American
Offering customers nonstop flights to destinations all over the United States and internationally, offering a wide variety of fares and classes on flights. first, business, economy plus, and economy. These airlines use technology and customer rewards programs to keep customers loyal. All three companies use alliances and partners to fly all over the globe

1934-
1978
•Large Growth in industry
• Focus on Customer Experience
1978-
2000
•Deregulation and increases in
Competition and Price Wars
• Trouble with Differentiation and remaining profitable with the threat of startup airlines
2000-
Present
•Focused on switching to an adapted cost leadership model
• Cost cutting to remain profitable
•Attempted cost leadership with the introduction of TED airlines a subsidiary of United which was discontinued in 2008
United Airlines
1934-
1978
•Large growth and increases in travel
• Customer focus, offering the best product and service
1978-
2000
• Deregulation and completion from new airlines
• Differentiation and offering more amenities such as “ more room in economy class”
2000-
Present
•Adding seats back to economy class to increase revenue
• Attempting cost leadership by attempting to imitate low cost rivals
American Airlines

1924-
1978
•Large Growth in industry
• Acquisitions of other airline companies
1978-
2000
•Bankruptcy filings by many airlines including Delta due to post deregulation competition
•Trouble with differentiation and remaining profitable with the threat of startup airlines
2000-
Present
•Attempt at switching to a cost leadership platform, with the introduction of their low cost subsidiary Song Airlines.
• Focusing on more international flights and emerging markets for growth
Delta Airlines
(Song Airlines) a failed attempt at cost Leadership by Delta

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Southwest has always incorporated the low cost low frills, and no assigned seating method to conserve costs
Their method of only flying one type of airplane
(Boeing 737) has helped them to keep costs low and offer customers the lowest fares possible while remaining profitable
Cost leadership has always remained their model with
37 straight years of profitability
Deregulation made it lucrative for Southwest to stay profitable, while their competitors were filing bankruptcy Southwest was expanding operations and continuing to stay profitable
Their low cost model has inspired other low cost startups following deregulation of the airline industry

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Over 300 Million United States citizens
Over 703 million passengers flown in 2009
Growth in the industry has averaged 7% a year in the past decade
Over 6 billion eligible customers across the globe

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Increasing Oil prices causing increased variable costs to all airlines
The switch to more efficient aircrafts, while retiring older less fuel efficient aircrafts
Cutting flights to increase capacity on existing flights
Alliances and mergers are becoming more common
Union wage concessions and decreased power of collective bargaining

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Cost cutting efforts to increase efficiency
Charging customers for baggage to reduce weight on flights, and to increase revenue
Fuel Hedging
Charging for Meal Services that were previously free
Using Internet Middlemen to sell unsold seats

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Middle class to upper middle class families
Vacation Seekers
Business Travelers
Consumers with disposable income to afford travel
Students
Target Market


1.
2.
3.
Product type of airlines can be broken down into three classes
First Class Travelers
Business Class
Economy Class travel
Certain companies only offer one type of class which is economy Class
Product Type

Characteristics of people
Purchase Use/ situation
Users needs and preferences
People who fly are usually of any age from infant to senior citizen. Income is usually of people who come from a middleclass to upper middle class background. Family size can range from small to large. Location of cold weather climates inspires many Users of airline services to vacation in warmer climates when weather becomes unfavorable. The lifestyle of consumers that fly are Vacation seekers, and business travelers. Furthermore holiday travel to visit relatives also factors into lifestyle.
Cost of Airline ticket depends on destination/Time of year and season. The purpose of flying is to arrive somewhere quicker than the alternative of driving or taking a bus, train, or boat.
Brand loyalty exists with frequent flier programs, However the recent trends suggest consumers make decisions on price not brand loyalty.
Users desire quick transportation, They desire aircrafts that have more room, and entertainment. The price preference is the lowest price available. An airline ticket is expensive and consumers do not liking paying more than they have to

United states
•Recovery in passenger traffic from all time highs in 2007 will continue
•5.9% percent increase in passenger volume in 2011, carriers are practicing capacity control to keep flying affordable
International
•Emerging Countries and European countries will see steady growth in the next decade
•Worldwide passenger air travel will see an average of 5.3% a year for the next 20 years
Asia/ Pacific
Rim
•44 % of new aircrafts produced will be delivered to Asia
•Projected Growth rate of 7.1 % a year for the next 20 years

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Free source of marketing and promoting The brand
Satisfied customers offer free word of mouth advertising one these sights
Dissatisfied customers can ruin your reputation ex: ( united breaking a musicians instruments and the artist making a song called “ united breaks guitars”) This song received millions of hits on Youtube

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Airline Industry will see small growth domestically in the coming years
Major growth will be in Asian countries for the next couple of decades
Mergers and alliances will continue to dominate the industry
Without an aggressive switch to a cost leadership platform it may continue to be impossible to achieve profitability
Cost cutting will continue
Customer service is crucial to preserve reputation and avoid negative publicity from the media and social media

 JetBlue's goal is to be the leading low cost passenger airline through offering customers a high quality product and exceptional customer service

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• Flying only two types of aircrafts
Keeping Costs Low
Keeping Customers Happy
• Offering in-flight entertainment to customers such as complimentary DIRECTV programming
Keeping Employees Happy
Avoiding Unionization
• Happy employees perform at higher levels and serve customers better
Maintaining a High Level of Customer Satisfaction
• Happy customers are customers that are more likely to fly JetBlue again
• Non union airline companies have lower costs and better relations with employees
Using Feedback
• Feedback from customers allows JetBlue to continually improve operations and customer satisfaction

273.6 %
84.3%
56.7 %
30.7 %
25.0 %
26.0 %
15.2 %
2.4 %
2.4 %

Year % Growth % Growth
2002
2003
2004
2005
2006
2007
2008
2009
Current
50
52
56
63
Number of
Destinations
19
20
28
32
45
N/A
5.2%
40.0%
14.3%
40.6%
11.1%
4.0%
7.7%
12.5%
121
138
151
160
Number of
Aircrafts
37
50
66
71
103
N/A
35.1%
32.0%
7.6%
45.1%
17.5%
14.0%
9.4%
6.0%

Year Sales
2010 3.78 Billion
2009 3.29 Billion
2008 3.39 Billion
2007 2.84 Billion
2006 2.36 Billion
2005 1.7 Billion
Net Income EPS
97 Million .31
58 Million .22
(85 Million) -.37
(12 Million) .06
(7 Million) -.04
(25 Million) -.16
JetBlue has been one of the most profitable airlines in the United States, however during the 2005-2008 period, rapid expansion and high fuel prices increased costs and hurt profitability. JetBlue's slowing growth model has helped the airline return to profitability as of 2008

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Increased growth in Latin America
Growth of the airline has spread to several new locations
Increased usage of travel booking on their website www.jetblue.com
The implementation of a two aircraft model system opposed to one in the past
Increased usage of the JetBlue “True-blue” rewards program

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Airplanes
Intellectual capital
Brand
Property/Plant/Equipment
Fuel
Gate Contracts
Capital

JetBlue would be categorized as a star because of its higher than industry average growth rate, and a large amount of market share

Source
Inbound Logistics Primary location is the hub at New York's JFK airport which provides a market of potentially 21 million customers in the area
Outbound Logistics Serving their west coast hub at Long Beach Municipal airport which is a secondary airport to Los Angels market. Each aircraft in JetBlue's fleet averaged a flying time of 12.6 hours a day, which is better than any other major airline
Operations 650 daily flights to 63 destinations in 21 states, and 10 countries in the Caribbean and Latin America. Furthermore JetBlue has a strong corporate culture and well developed management team that is committed to keeping costs low and service high
Marketing and sales JetBlue markets their services on the radio, television, newspaper, social media, they also rely heavily on word of mouth advertising by satisfied customers.
Service JetBlue offers DIRECTV in-flight entertainment to better satisfy the customer. JetBlue also schedules minimal ground time on their flights to better utilize the fleet

Technological
Development
• Each Airbus A320 is equipped with 162 all leather seats in a one class layout
• The A320 is fuel efficient and reliable and sports a wider cabin than many competitors who fly the Boeing 737 aircraft
• All of JetBlue's ticketing is ticketless and they heavily advertise booking on their website Jetblue.com
Human
Resource
Management
• JetBlue takes great pride in their corporate culture and trains and equips all employees to serve customers at the highest level
• Many employees who work for JetBlue are part time employees who work from home and are offered work flexibility and customization in their scheduling
General
Administration
• JetBlue's management team and engineers are dedicated to cutting costs while keeping service high
• They fly only two types of aircrafts to keep maintenance and service costs low.
This also allows them to save on training costs

Strengths • Utilization of technology to eliminate tickets which has saved in paper costs and allowed customers greater convenience when flying
• Motivated and happy workforce, many employees at JetBlue take lower pay in favor of better work conditions and happiness
• Having the best accommodations and entertainment as a lowcost airline, usage of in-flight DIRECTV and free snacks and beverages
• Superior cost structure which allows for low competitive ticket pricing
Weaknesses • Weak Frequent Flier program that doesn’t reward as well as other competitors in the industry
• Small route system, while JetBlue has added many destination since opening many potential customers choose other airlines because JetBlue does not fly to their destination

Opportunities • Many competitors cannot match the cost structure that
JetBlue has, this should be seen as an opportunity to expand to new markets and to continue to compete heavily on price with other carriers. This can lead to stealing more market share from competitors
• Expanding the frequent flier program to keep customers loyal
• Large Hispanic population growth within the United
States
Threats • Expansion could start to show new growing pains for JetBlue, such as an increase in operating costs and decreases in corporate culture, as running a larger airline could cause
• Unionization
• Competitive reaction; Price wars could ensue if JetBlue keeps undercutting larger airlines

• Low fares and flying only newer fuel efficient aircrafts
• Flying airplanes for an average of 12.9 hours a day
• Flying point to point instead of hub and spoke
• Low distribution costs because they only offer ticketless travel
Differentiation
• Extra wide leather seats
• Pre assigned seating
• Exceptional customer service
• Free 36 channels of DIRECTV on every flight
• Customer loyalty program

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Differentiation
Keeps JetBlue's product distinguishable
Too many competitors who are an extreme in either direction
Mixing low cost and differentiation gives customers the best of both worlds offering high quality at a low affordable price
Low
Cost
Southwest
JetBlue
American
United
Delta

Organic
Growth
JetBlue is still dedicated to growing the airline by adding more aircrafts and flights every year, their focus over the past decade has been growing without the help of mergers or acquisitions however there are talks about this changing.
Overall JetBlue dedicates their high quality product and customer following to their success
Acquisitions and
Mergers
JetBlue has explored several opportunities of possibly buying out a key competitor to grow the airline

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Currently Serves 10 cities in Latin America and Mexico
JetBlue has seen large success serving these markets from their hub in New York which has a large population of Latin
American citizens who wish to visit friends and family
Although JetBlue has seen success serving these destinations, they do not see any immediate expansion plans further than
Latin America

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Continuing to grow at a steady pace to meet customer demand
Possibility of growth into more foreign markets
Acquisition of another low cost carrier to increase the company size and market share
Continued focus on serving customers and adding to the
JetBlue Experience
Adding more flights to the high growth market of Latin
America

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JetBlue has remained one of the only profitable airlines in the past decade
JetBlue has seen tremendous success as a low-cost differentiated airline
Further expansion could add more cost to the airlines low cost model
High quality service, and customer service has helped the airline grow and prosper
Word of mouth marketing will continue to help the airline
Keeping costs low are key to the profitability of JetBlue