The first thing the airline must do is look at the firm supply. If they are to continue the flights from those two hubs then they must determine if at some point in the long run the firm must be profitable or should exit the market. (Brickley et al., 2009, p. 181) Since I would assume that the costs of that route would be quite high it would appear that it would be extremely difficult for them to make a profit especially since there are lower cost airlines that customers could do business with. A competitive firm should produce
What are the forces driving competition in the airline industry? Using this approach to industry analysis discussed in this chapter, evaluate each of the six forces in the task environment to ascertain what drives the level of competitive intensity in this industry. Threat of New Entrants – Low Larger, and more established airlines can achieve economies of scale since they can spread costs among a larger fleet of airplanes and more routes. Smaller firms and new entrants will have to make do with specific routes; otherwise, they can run into logistical problems if they take on a wide variety of routes while they are still starting up. Most airline customers travel for vacation or holiday, and plane fares are a more important criterion rather than product/service differentiation between the airlines.
In JetBlue case, the current economy situation creates high market entry barriers, which consists extremely high fixed cost and numerous capital requirement. Moreover, the potential and existing competitors affect the industry has a low profit margin, and it is difficult for new entrances to differentiate their products and services from competitors. The bargaining power of supplier is high. The key inputs for the airline industry are the fuel and aircrafts. Boeing and Airbus dominate the aircraft manufacturing industry.
COO David Barger and CFO John Owen had worked in airline companies before joining JetBlue. JetBlue’s comparative advantages are demonstrated as following areas: * Offer passenger great experience by providing new aircraft, free Live TV, high quality customer service and most importantly, it offers this great service with low fares, and this is attributed to its fuel efficient strategy (6.98 cents versus an industry average of 10.08 cents) * Advanced technology allows JetBlue to calculate the weight and balance of the aircraft and also equip cockpits with security equipments. * Building strong employee morale through generous compensation and passionately communicating the company’s vision to employees can provide employees with greater motivation and it is good for the company in a long term prospective. Advantages and
TITLE OF ASSIGNMENT CRAFTING AND EXECUTING STRATEGY STUENT MOHAMMAD HOSSAIN INSTRUCTOR DR. RHONDA POLAK COURSE TITLE STRATEGIC MANAGEMENT –BUS 599 DATE: - OCTOBER 16, 2011 Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy. Trends in the US airline industry have an impact the performance and strategies of the airlines. As a result, the Jet Blue has struggled to survive. The trends of U.S. airlines industries are discussed as follows: (1) Increased crude oil pricing: fluctuations crude oil price lead to passenger fees for revenue generation, This dramatic price increase caused airlines to struggle to offset the cost of fuel. Presently, gas prices have dropped.
I. KEY ISSUE In 2007, the CEO of JetBlue Airways, David Barger, faced an immediate survival issue as the company struggled to overcome a major operational failure during a difficult time in the airline industry when fuel prices were increasing tremendously and the profitability levels were low. Barger knew he should move quickly to maintain the confidence of customers, employees, and shareholders. He considered the option of reducing either E190 or A320 deliveries in order to maintain low costs as the company was not ready to continue growth in the E190 regional market segment. II.
Week 7 Checkpoint: Modes of Travel STUDENT HTT/200 December 14, 2013 INSTRUCTOR The three methods of travel I chose to discuss are travel by airplane, travel by train, and travel by automobile. So far, as the journey length on each and every method of travel, travel by airplane is often the quickest, then comes travel by train, and after train comes travel by automobile. While you may discover different factors that could affect the time duration of each and every way of traveling, there are definitely advantages of choosing one over another. Travel by airplane is often the most costly; however the costs for this method of travel does seem to be evening out. It does usually allow you to get there in the least amount of time.
JetBlue’s strategy for success is product leadership with customer value proposition. With their strategy they promise their customers high-quality customer service at a low fare on primarily point-to-point routes. This is evidenced by the fact that JetBlue has one of the largest load factors in the United States. JetBlue implements this strategy by having a productive workforce, having low distribution costs, flying the same type of aircraft, and utilizing their aircraft effectively. What business risks does JetBlue face that may threaten the company’s ability to satisfy stockholder expectations?
It is consistently ranked as one of the top Fortune 500 brands. Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures, and on-time flights. Many people recognize the reputation Southwest Airlines has in the airline industry and it appeals to many customers and potential fliers. The reputation and recognition of Southwest Airlines is enough to support the ad. The advertisement goes after the common sense of the reader because it is very simplistic.
In 2008, fliers can expect to see fewer flights and fewer seats as airlines cut costs and reduce growth to counteract rising fuel prices. In essence, peak flying season is becoming a year-round affair. Bailey observes that, “Because full flights cause airlines all sorts of operational problems, travelers should also brace for continuing problems with delays and misplaced bags. That means the chance of being bumped from an oversold flight could be greater, and finding a seat on a later flight will take longer.” Paul S. Hudson, executive director of the Aviation Consumer Action Project said, “It’s not a good thing,” about airlines reducing capacity. “You’re going to degrade the reliability of the system.” Experts say it is