The paper "JetBlue Airways Strategic Management" is a perfect example of a management case study. With the increase of airline companies in the market, competition has increased steadily prompting business managers to try to rethink strategies to take market advancement. However, in recent years, airlines have faced tough times as a result of economic difficulties. Particularly, the industry was affected by the economic global crisis of 2008 which reduced disposable income thus reducing the cost of travelling (Namukasa, 2013, p. 523). In reaction to weakening demand in 2008, market players reduced the cost of traveling.
The situation also forced both domestic and international airlines to use airlines with reduced capacity, to abandon less performing routes so as to match supply with reduced demand. IBISWorld (2014) claims that technology also played the part as some businessmen dumped air travel in favor of technological communication such as teleconferences. Such situations have forced many airline companies to venture into low-cost segment. Pressure has put on companies that started as low-cost companies. One of such companies that have felt the pressure is JetBlue Airways. According to JetBlue Airways website (2014), JetBlue is a low-cost airline of American, based in New York, US.
The company was established in 1998 and has since grown and served destinations including the US, Caribbean, Bermuda, Bahamas, Costa Rica Barbados, Colombia, Jamaica, Dominican Republic, Peru, Puerto Rico and Mexico by 2009. The number has since increased to 84 in 2013 (JetBlue Airways, 2014). The fleet of this company is supplied by two companies including Airbus and Embraer. JetBlue Airways (2014) contend that so far the company has 110 Airbus A-320 and 43 Embraer 190 aircrafts.
Due to competition in the low-cost industry, more so from Southwest Airline, the company differentiated its product by having leather seats on its all airlines, in-flight entertainment, DirectTV on all seat, and XM satellite radio (Crain, 2009, p. 34). Another factor that made the company stand out during its operations is the fact that it has the youngest fleets with 5.1 years on average (JetBlue Airways, 2014). Just like many low-cost companies in the US airline industry, JetBlue Airlines is facing several challenges and its distinctive dynamics such as strict federal regulations, customers who are driven majorly by disposable income, price, and heavy capital costs and monopolistic practices (Fung & Massey, 2009).
The situation led to a drop in profits in the mid-2000s. According to JetBlue Airways (2014) in 2005, the company announced a loss in the first quarter of the year from US$8.2 million to $2.8illion mainly because of the rising cost of fuel. It also claimed that low fares and operational issues were the key issues dropping its financial performance. Some of the operational cost mentioned is branding and differentiation.
The loss was reported in the entire 2005 and 2006. JetBlue Airways (2014) claimed buying of new fleets, inefficient operation and high fuel cost led to the loss. Besides that, the company brand image has been tarnished by various accidents it has faced. For instance, the JetBlue had an accident emergency landing at Los Angeles International Airport. Also in early in August 4th 2014, one of JetBlue aircraft had a mechanical problem during landing and on both cases, there were no injuries (JetBlue Airways, 2014). Despite all these challenges, the company has grown under the stewardship of its founder David Neeleman and CEO David Barger.
As such, this paper will discuss how David Neeleman's started the company and what inspired him. The research will also identify and explain all strategies used by JetBlue, as well as horizontal growth and integration.