JETBLUE

JetBlue: Delivering Extraordinary Customer Service through the Airline Industry

JetBlue: Delivering Extraordinary Customer Service through the Airline Industry

Introduction

JetBlue is a low-cost domestic airline service in the United States of America. Its marketing strategy is a combination of low-cost and value-added differentiation for customers. Since its launch in February 2000 to date, the airline grew to become the 11th largest player in the airline industry in a short time of 4 years. The reasons behind this early success are numerous: JetBlue entered the market segment with one of the largest levels of liquidity of any start-up airline; it met the needs of customers' whose primary concerns are price and route; and it successfully defined its brand and differentiated itself from competitors by offering an above average customer experience and amenities for a discounted price (Johnson & Weinstein, 2004). Looking ahead, JetBlue's competitive advantages are increasingly at risk. The company must find a way to deal with much heavier debt load and industry reorganization while competing with leaner and stronger legacy airlines.

Moving into the growth phase, JetBlue transitions from launch mode to an established product stage where it needs to focus on growth of scale. The decision-making body has determined that JetBlue must increase its existing route network by adding service to mid-sized markets. JetBlue's core strategy capitalizes upon superior customer service paired with a low-cost structure achieved through the use of brand new single model planes that reduced maintenance and training costs, better use of technology including automated processes, a smaller and more productive workforce, and staffing of content yet non-unionized workers.

JetBlue's organizational structure is a modified hierarchy divisional design so that are important decisions regarding strategy and implementation could be more easily executed by crew members at all levels of the organization. This balances with a corporate policies designed to create integration and standardization across divisions such as the Holiday Helper program through which office-based staff volunteered in customer service operations during peak holiday travel times to aid in the operational heavy workload as well as to interact with customers and stay in touch with the core product. This aggressive growth plan mandates a departure from low-cost competitive advantage of supporting only one type of plane because a smaller plane is required to deliver service to these markets. This will directly affect the competitive edge that JetBlue has created for itself through increased maintenance and training costs, staffing needs and physical space requirements.

Challenges in delivering superior customer value by the airlines industry

JetBlue operates under the constraints of the airline industry and its unique dynamics: intense federal regulation, customers driven mainly by price and route with low brand loyalty, substantial capital costs, and monopolistic conditions among its suppliers (Johnson & Weinstein, 2004). These challenges are examined below.

Legacy vs. Discount Airlines

Airlines are typically described as traditional (“legacy”) or low-cost (“discount”). Legacy airlines were operational prior to industry deregulation in the 1980s and typically have high debt-to-asset ratios and high overhead costs due to labor contracts, defined benefit pension plans, and older fleets. Discount airlines entered the picture in the more competitive environment created by deregulation; not saddled by the same overhead costs, they could offer fares for slightly less for similar service and ...