Executive Summary Outlined in this analysis is the underwriting process for Jetblue Airways IPO as well as a description of the steps taking, and lastly the valuations for this IPO based on financial and non-financial information. JetBlue Airways is an innovative and low-fare airline that promised to “bring humanity to air travel back in 1999. Their primary goal was provide high-quality customer service for passengers flying in unique and new aircrafts that had leather seating free Live TV in every seat, pre-assigned seating, reliable performance and simple low fares. In this study we analyzed the value of debt of the firm to help us compare the effects of percent changes of price per share in relation to growth as well as the percent change in price per share in relation to cost of equity. We found that Cost of Equity has a much larger impact on PPS than Growth.
The Ryanair strategy is to keep paring away at fixed costs and increase the passenger load per aircraft to improve profitability. The fixed cost of operating a flight is spread over the larger number of passengers per flight. This is an example of Economy of Scale as defined by Besanko (Ref: Besanko, et al, 2010. Economics Of Strategy, 5th Edition, Wiley, 2010). The reduction of fixed costs has been made up of the following strategies: • Use of older leased aircraft in place of buying or leasing new aircraft.
The business model for Full Service Carriers (FSCs) main focus was to provide product quality and service to lots of cities. They had extra service features such as, for in-flight catering, entertainment, leg-room and loyalty programs. Structural changes within the industry gave emergence to another business model long before 9/11 which was the Low Cost Carriers. This model took market shares from FSCs, its main focus was to provide simple point-to-point services with no or limited connectivity and secondary airports. Porter’s five forces To analyse the attractiveness of the airline industry pre 9/11, it will be helpful make use of various models such as Porter's 5 forces framework.
Boeing VS Airbus A380 Business Interior Both Boeing and Airbus share some similar business practices and marketing techniques, but that’s where it stops, the rivalry and competition between the two companies has always proved to be beneficial to clients. Between the two companies, you are able to find the perfect aircraft for your needs. But between Boeing and Airbus, who provides the best marketing to clients, and most important, who has the better product. Boeing 787 Mockup Interior Boeing is staying away from the large capacity aircraft designs and is looking to producing the B787 Dreamliner which will be a quick and fuel efficient. Having already filled the market with 747s, Boeing is looking to capitalize on the demand for direct flights and medium capacity requirements.
Their service strategy is based on short-haul, point-to-point direct flights that are accomplished with amazingly short turnaround times. With their strategy, Southwest has a strong majority of the market share in the point-to-point market. Southwest’s goal is to make air travel affordable to all, both the time-sensitive business traveler and the price-sensitive leisure traveler. They are able to offer their low ticket fare because of good management-labor relations, fast turnaround time at the gate, faster speed of operations offered with smaller airports, and lower maintenance costs due to flying only one model of airplane. The strong leadership, strategy and culture that were built and are supported by Herb Kelleher, the former CEO of Southwest, support all these items that keep ticket fares low.
Market Analysis – Southwest Airlines What is the market structure for your good or service selected in Week Two? After almost thirty years of service, Southwest Airlines has emerged as one of the world's premier airlines. The Southwest approach to business and the industry at large have enabled the company to continue to grow at profit in times of true economic downturn. Presently, the market for air carriers is saturated and highly fragmented. Overcapacity has led the major United States airlines to compete with Southwest's low fare pricing strategy.
Statement of Facts Since Southwest Airlines was created its mission has been to have a low cost no frills airline that attracts repeat customers because of the lower costs and the quality employees that work there. Southwest believes that its employees help differentiate its airline with other airlines that are similar. The only look to hire the best employees for each particular job they have. They look for energetic applicants with attitude that can be trained the skills needed for the job. Max Nisen (2013) states that Southwest’s success comes from its founder and the emphasis that is put on culture and customer satisfaction.
JetBlue's core strategy is to “provides high-quality customer service at low fares primarily on point-to-point routes" (“JetBlue”, 2005). Offering alternative choices to customers such as point-to-point routes to areas that are not catered to by most airlines as well as large metropolitan areas that have had” high average fares” is another part of their strategy. Differentiating their product and service is another part of the plan. Items like new aircraft, leather seats, free LiveTV at every seat and pre-assigned seating are just a few things that make JetBlue different (“JetBlue”, 2005). I would say that JetBlue would fall under both customer intimacy and product leadership customer value proposition.
Flying in the World Flying in Rural Alaska is a far cry from flying commercially across states. Many people never get to experience the thrill of flying in Rural Alaska by way of Alaska's traditional chariot, the Super Cub. For the person who is accustomed to traveling aboard large passenger jets, like the Boeing 737, flying can be a very different experience for someone who has never stepped foot in a Super Cub. There are very drastic differences, and few similarities, among the Super Cub and the Boeing 737 passenger transportation aircraft for instance the size, view, accommodations and speed. The first thing one would notice is the difference in size between the two aircrafts.
JetBlue believed that its web-based booking, rather than booking through ticketing agents, the company would be able to gain greater control on managing seat sales which in turn avoids customers being bumped. JetBlue also uses paperless cockpit, no meals served on any of its flights, and paperless ticket, which all reduce time and costs. They also use a single aircraft type, which in the long run keeps training costs low, and manpower utilization at a high. Another way that JetBlue utilizes it resources is by using the new A320s, which are larger and more fuel-efficient. JetBlue also has less congested airports, which helps to speed flight departures and get their passengers to their destinations in a faster manner.