The core concepts of Jet blue lay mainly customer value and product leadership. Jet blue operates under a concept of offering a lower, more affordable option to consumers while not letting the value affect the levels of service. The accessibility of the airline creates an aura of extended service by providing contact to limited locations that traditionally can only be reached with the sacrifice of high fares. In order to make logical profitable, business model Jet blue operates an efficient load factor by maximizing the percentage of aircraft seating capacity. (Jet Blue, 2005).
The long-term nature of these purchases creates a long-term relationship whereby the airline is often motivated to purchase the same kind of jets to reduce maintenance and service costs, adding to the leverage held by major jet suppliers.For the major U.S. airlines, labor unions must be considered as a supplier with significant power. This force is held over from an era of regulation but remains a significant factor in successful performance in the industry. Major airlines that existed during industry regulation became involved in labor agreements that left them little flexibility. Threat of Entry While the airline industry is capital intensive and requires
Further, deregulation brought important changes areas such as access to air routes, airline prices, slot allocation at airports, computerized reservation systems, groundhandling services and frequent flier programs. Another immediate consequence of deregulation was that the established national carriers faced competition on many fronts, including from the rapidly expanding low-cost carriers. Michael Porter’s theory on the competitive forces will now provide the basis for our description of the European airline industry. Threat of new entrants Factors that determine the threat of entry include capital requirements, economies of scale, switching costs, and brand value. In the airline industry, access to capital is plentiful.
The five forces are competitive rivalry, threat of substitute products, and threat of new entrants, bargaining power of suppliers and bargaining power of buyers. 2.1 Threat of new entrants The threat of new entrants presents the possibility of new firm entering the industry, which increases the competition while reducing the airline revenue. There are a few factors influencing the threat of new entrants such as government regulations, product differentiation, capital requirements and lastly switching costs. There was a low barrier of entry in the airline industry when Airline Deregulation Act eliminated government control over fares and routes. This allows those new entrants who enter the airline industry to slash price to capture market share which increase in competition.
In 2000 it was listed on the stock market and 2002 they bought their rivals GO. The success of the company has not been a surprise and could be described by the precise planning of its operations and a clear vision including one type of plane, same number of seats per plane and point-to-point routing. (Yeoman et al.) One of the main drivers of EasyJets profits is their yield-based pricing policy. Based on demand and supply the price increases as more seats are sold thus creating incentives for passengers to book early and hence, the firm securing revenues prior to the flight date plus receiving increased profits for the seats sold closer to departure.
JetBlue Airways What is JetBlue’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? JetBlue’s strives to be the leading, lowest fare, lowest-cost passenger airline by offering excellent customer service and a differentiated product and service. JetBlue’s strategy for success is product leadership with customer value proposition.
Moreover, the grueling battle between prolific companies to compete for customer attraction and in the end, loyalty, resulted to further segmentation of the airline industry. Apart from the established full-service airlines (i.e., Southwest Airlines), three other market positions budded. They are: budget airlines, limited-service airlines, and premium-service airlines. ENVIRNOMENTAL ANALYSIS Ecological factor consist of recycling, the level of pollution and attitudes to the environment. For the airline industry, pollution tends to be very important.
Management will evaluate goals that have been set. Evaluation helps to determine possible effects, disadvantages, and advantages of each goal (Bateman & Snell, 2009). If one goal has been to focus on the production of commercial aircraft and suddenly hard economic times fall on societies all over the world, people may not readily have the resources to travel as much as they used to. Management may need to cut production in commercial aircraft and focus instead on production of another craft that is more in demand. After evaluating, management will select plans that are most
It depends on the industry barriers to entry. If the potential entrance is high, it may lead to increase the degree of industry competition. The industry attractiveness therefore is less due to low profitability (Tutor2u, n.d.). There are number factors of barrier to entry however the key barriers to entry can include: * Economics of scale * Production differentiation * Capital requirements * Customer switching costs * Access to industry distribution channels * Government policies (eNote, 2012) a. Economic scale: European airline industry has achieved economic scale in which it creates a barrier of entry that the new entrants have to compete on a large scale (eNote, 2012).
• Offers reasonably priced travel packages with low frills and excellent customer service. • Low cost approach to flights that has drawn consumers to their services. • Excellent employee relations leads to higher ticket sales as they all work as a team. • Purchased only Boeing airplanes to reduce costs in repairs and get a bulk discount on the purchase. Weaknesses of Southwest Airlines Swot Analysis • Does not offer segmented seating options.