This will achieve the goals of the company by increasing occupancy rates and business travellers. The constraints placed on the company will be achieved. Return on Investment is greater than 15% and operating profit % of revenue will be greater than 11%. GR has a good reputation and skilled management team which will make this a smooth transition. The current locations are great to make this move as they reside by the airport and will target the business travellers.
Background of JetBlue’s IPO Initial Public Offering indicates private companies firstly sell the stocks to the public. JetBlue airways grew quickly together with the low fare airline industry. In order to support its high growth trend and offset portfolio losses by its venture-capital investors, JetBlue decided to go public. Is JetBlue ready to go public at this time period? Going public when the airline industry are still suffering from 9.11 attack is adventurous, especially it is even harder when the competition of the airline industry is severe, given the fact that 87 new-airline failure over the past 20 years.
To maximize aircraft utilization, we look for opportunities to operate our fleet in off-peak times when the aircraft would otherwise be idle, to serve markets that may not be as time sensitive or may be better served by evening flights. Through our network and competitive fares, we aim to stimulate demand from guests who would not otherwise travel or from guests who would select another airline. We estimate that when we enter a new market the net effect to that market is an overall increase in traffic. This means we are often able to create new demand. As our Boeing 737 fleet continues to expand and we begin introducing our new Bombardier Q400, we expect that we will be able to establish additional profitable routes in Canada, the U.S. and internationally.
However in the long-run, this price raise is not enough to make people quit smoking so since cigarettes are a demerit good, it will have a negative effect on the environment and it will increase the number of health issues from second hand smoke, not to mention the high unemployment rate and less taxes for the government. Work Cited: BusinessDictionary.com. 2013. What is inelastic demand? definition and meaning.
The first and the biggest challenge was adding unique features and services while still keeping costs and ticket prices low. Adding features such as leather seats, movies and TV, and free in-flight Wi-Fi, as well as more superior on-board service would increase production cost, training cost, and maintenance cost, thus caused lowering costs but creating higher values and improving quality to be difficult. To address this challenge, JetBlue would need to design new features with quality in mind in order to lower maintenance cost and after-sale service cost. Second challenge was the transition from the already established brand image of a low-fare airline company to a company with higher perceived value. Because customers had been used to the original business model, changing their perception of the brand was not an easy task.
One of our major goals this year is to avoid expenses. That is why there is a 10 percent reduction in personnel and administration cost. In order for us to be effective cost must be avoided. Advertising was not chosen due to the cap put onto the publications/public information expenses. We cannot afford and will not be approved for extra advertising without research that proves that this advertising will increase revenues more than the cost.
Based on the book when there are competitive markets such as airlines, a company certainly needs to look at costs and revenue very closely. (Brickley, Smith, & Zimmerman, 2009, p. 180) In this case I believe that the flights from San Francisco t Washington DC should be discontinued. Even though United Airlines is a large company and profitable if they continue these flights in the long run they will lose money. The other option that they would have would be to increase the fares to cover those costs, but since the airline industry is a competitive market people are more likely to go with a lower cost airline. The first thing the airline must do is look at the firm supply.
Exploitable- JetBlue could design the interior of the aircraft to improve passenger comfort and use E190 as an useful tool to expand market and attract new customers. Implication: The E190 provided a unique opportunity for the growth of JetBlue. However, this plane did not completely match the company’s current capabilities and costed a lot. Thus the CEO of Jetblue must change their strategic strategy to either keep E190 as a VRINE resource or sell it. Capability 1: High level of service (Bill of Rights) Valuable-
Larsen wants to spend his time trying to increase profits for Wengart Aircraft. His yearly bonus is totally based on the profits. Since he spending his energy in other places instead of investing his time in implementing TQM but Larsen thinks he is not needed to lead the team. Larsen should spend more time making sure the company’s customers are happy with the quality and the profits will come. 2.
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.