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.
West Jet Strategy 1. WestJet competes in the air travel market segment with a focus of providing low cost flights to the common traveler, such as friends and relatives. An order qualifier would be the timeliness of the flights. WestJet has achieved the best on-time arrival performance in its market segment which it is able to pass on to customer. As delays will often frustrate travellers, this can make WestJet that traveller’s top choice.
Based on the summary table provided in the text book – the first thing that jumps out is how disproportionate the labor volume/number of employees is to the number of aircraft that the company has. The company has to make some tough decisions in streamlining the labor force to reduce the cost of labor and make itself more competitive with its peers in an industry where competition is stiff at the least. In addition to this the idea that they will be using more regional jets e.g. Mesa Air in medium markets may help alleviate operating costs that are also currently very high. US Airways may also want to look into the option of merging/working with one of the more successful low cost carriers as a strategic partnership 2.
What advantages would such an approach give Boeing? a. Value Propositions Due to the mature market, operational excellences have been one of the choices for airline business to compete in the low-cost airline trend of the business. With IT system linked the significant information Boeing improve operational efficiency both itself and its customers, all of which want to pursue in aviation supply chain. b. Differentiation Boeing create total solution
There are many factors that led to the failure of the project. Three main factors include the underestimation of the projects complexity; the project was initiated too late; and the dysfunctional decision making by the project management team (PMT). Key decision makers underestimated the time and complexity of the automated baggage handling system (BHS). It was the most complex to be developed at any airport. Once it was determined that a BHS was to be implemented, the timeframe for completion was too tight (21 months).
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
Highly competitive industry 2. Unsuccessful implantation of growth strategy 3. The hiring of competent staff who maintain the culture of JetBlue JetBlue’s strategy of maintain customer excellence and providing needed low cost service is a definite way to stay up above the competition, customers want a low cost airline that gives them what they need in terms of pricing as well as destination. JetBlue, will be in a position of failure if a growth strategy is not in place to increase capital and foresee methods in which to cover debt and make a profit “ Achieving our growth strategy is critical in order for our business to achieve economies of scale and to sustain or increase our profitability” (JetBlue,2004) Gating is an important issue that must be looked at, due to the fact it could limit their sales “We will also need to obtain additional gates at some of our existing destinations. Any condition that would deny, limit or delay our access to airports we seek to serve in the future will constrain our ability to grow” (JetBlue, 2004).
High cost of entry into industry Potential Competitors: Low - Rivalry among existing firms is intense, which affect the profits to be low. It¡¦s unattractive to the potential competitors. - High initial investments and fixed costs such as lease a fleet of safe and reliable aircraft, negotiate reasonable gate access and landing fees as well as high labor and fuel costs. - There are the price competitions in the airline industry, which some major airlines offer the low-price fares that is very difficult for new entrants to gain enough profit to cover the investment and fix cost in this industry. Rivalry among Existing Firms: High - Currently, there are many major airlines such as Delta, United and American that exist in the same market as Jet Blue.
The Navataire Call system could only accommodate 650 agents, which was more than met requirements during normal circumstances (Rainer, 2010). The next issue arose when passengers struggled to get through reservations, because JetBlue had no computerized system in place for recording or tracking lost baggage another nightmare began. I believe that all of the issues JetBlue face during the 2007 storm could have been prevented if the technology had been in place before hand. It was a hug lesson learned for JetBlue, and they were quick to adjust and expand systems and put in place ones needed that were missing. If I were apart of the JetBlue team I would have build systems that were prepared for disasters like this.
EasyJet- Case Study 1 Q1. Analyse the structure of the industry in which easyJet competes. How attractive was the industry in the late 1990s? The core objective of easyJet was to establish a sustainable mode of air travel at a price that would be comparatively cheaper to its rivals. By using a framework by (Porter 1980) we can illustrate the compatibility of such a strategy in the existing aviation industry Potential Entrants Despite the high volume of new entrants during the period of easyjet’s inception, only a minority were actually able to survive.