Case #3 Jet Blue Airways

Case #3 Jet Blue Airways

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Case #3 Jet Blue Airways

Introduction

Jet Blue, an American Airline, which was started by David Neeleman, is the eighth biggest American airline. It has also won a number of awards such as “Best Domestic Airline”, “Best Overall Airline” for onboard services and “Best Domestic Airline 4 Value. Many flight delays and cancellations take place due to bad weather. However, JFK policy is to make the passengers reach their destinations at the end of the day. That is why they prefer delaying the flights rather than cancelling them in such times. However, there are cases that have led the business to earn a bad reputation from the people by the way it has handled its challenges (Thompson, Strickland & Gamble, 2010).

Trends used and their Impartation in a Company

On cutting down costs, the company used two types of jets and used an Embraer when it was an off-peak season. It also offered passengers light snacks as compared to other airlines. The employees were given a much lower pay as compared to other airlines. However, this was compensated by giving them insurance cover, profit sharing and retirement plans. The profit trend was implemented by ensuring that many customers were attracted and good services were offered. The low fares attracted many passengers thus becoming eighth in the American airlines (Jackson & Mathis, 2008).

Strategic Intent

One of the aims of Jet Blue was to offer the desired comfort at a very low price. The starting fare was $25 from Bufallo to New York, which later shifted to $ 98 round trip. This was much cheaper than most of the other airlines that were in business. Having been in the airline business for many years, Neeleman had the experience to know what to or not to apply in the business in order to ensure that the business stayed on top. The employment of staff members who not only had the experience needed but had also done something else for the community was a step to creating a good company. As to adhere to the airline industry on cutting costs, the airline deviated to using online bookings rather than using direct tickets. This saves the amount of money used by the company in the production of tickets and the hectic procedure of booking the old way (Witzel, 2005).

Blue Jet also hired full time reservation tickets to sell the tickets over the telephone. This was before it fully went online. These employees worked at home but had the resources supplied by the company. This increased the number of customers. As mentioned earlier, it has secured an eighth position in the airline industry. Blue Jet paid and continues to pay attention to the small details that customers find special. They offered flight yoga cards, which described a number of ways that one could do yoga with the seat belt on. They collaborated with Oasis Day spa in 2007 in order to offer private beauty care. They put the big screen at the children’s play area.

The company’s values of safety, integrity, fun and passion have propelled the airline to great heights. To provide safety, the company signed an agreement with Medaire Inc. To provide care, the employees are well taken care of and their needs outside work meant. For example, Neeleman gave part of his salary to take care of an employees’ wife who was sick in cancer or building a house that burnt down. In integrity, the employees are encouraged do the right thing. A friendly working environment makes work fun and they perform their tasks with a passion. One of the company’s policies is to hire the best. Training is constantly given to the employees. The compensation plan is also very attractive hence, the employees stay longer and offer the best they can to the passengers (Jackson & Mathis, 2008).

Financial Objectives and their Success

One of any company’s objectives is to maximize the revenue on minimum costs. The airline used only two types of aircrafts. It also offered discounts on the tickets, operated point-to-point and had constant turnaround times at the airport. This attracted many customers who generated a lot of revenue. The passengers were only served snacks thus cutting down on the costs. By the first quarter of 2008, its total operating expenses had dropped to 12.77 cents per revenue passenger mile as compared to other airlines like Delta and southwest, which were at 20.95 and 13.85 cents per revenue passenger mile respectively.

During the off-peak times, the company used 100- sitter Embraer. This minimized the costs in all aspects i.e. fuel used, crew on board amongst others. In the year 2007, the company attained 75% of its passengers from online bookings. It also employed agents who worked from home. These employees’ work was to book tickets through telephone calls. They were paid $8 per employee hour instead of $10 per employee hour. This saved on the costs and more passengers were acquired.

Strategic Elements of Cost, organizational Culture and Human Resource Practices

The high prices of fuel led to many changes in many airline businesses. Ways to gain more revenue were implemented in order to cater for the extra cost incurred. The fares were increased were increased by almost double their original price. Extra was charged on the first baggage. Light snacks were also offered during the flight. Jet Blue has a strong organizational culture. The first human resource manager instilled these values for she felt that this would build a good foundation for the company. The values of safety, care, integrity, fun and passion, have acted as the company’s driving force. The manager also urged the other managers to be creative as they recruit new employees. It was not only about the experience one had in their professional field. It was important for the recruits to have had participated in the other social works like helping someone or made any other contribution to the society (Thompson, Strickland & Gamble, 2010).

Another step taken was to make sure that the company exceeded the employee and the customers’ expectation. This was made a possibility by listening to the complaints, suggestions and comments made. The pilots received immediate profit sharing and other benefits in their first year of service. The training of the staff is consistently done. This is done to the new recruits and the other employees already present. This done in order to ensure that the employees are kept updated according to the company’s standards and the customers’ expectations. When the company started, the business started, it received 130,000 resumes of which 3000 qualified applicants were hired. In 2004, flight attendants started by being paid $25 an hour. Mechanics were paid $26 and pilots were paid $108 per hour. Although employees were paid at a lower cost than other airlines, it compensated by offering insurance coverage, profit sharing and retirement plans. It also has no layoff policies.

Strategies for 2008

            The strategies put in place were reevaluation of the ways the company was using its assets, reduction of costs and capacity, growing in designated markets and raising fares, offering improved services for businesses and corporations, form partnerships and increasing ancillary revenues. These are going to be implemented as the management has put in place policies to guide the organization. The management has also enabled the airline to be in business for all this time and have made the business earn awards on top of delivering good services.

Conclusion

A company grows with time and Jet blue is not different. It has proved this by taking slow steps to grow until it has reached its present position. It 2008 strategies have been put in place in order to ensure that it moves on to another level. The values policies and the workforce in place will aide in the success of implementing these strategies. With the aim of reducing costs and maximizing on the revenue, the company will see its profit increase and the business grow to the advantage of both the shareholders and the customers.

 

References

Jackson, J. H. & Mathis, R. L (2008). Human Resource Management. Mason, OH: Thompson Southwestern.

Thompson, A.A., Strickland, A.J., & Gamble, J.E. (2010).Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17thed.). New York, NY: McGraw-Hill-Irwin.

Witzel, M. (2005). Management: the basics. Oxon, OX: Routledge.