Trends in the US Airline industry and how these trends have impacted the company’s strategy are expounded below. US airline have undergone surprising trends especially after 1999 where airlines have witnessed massive purchase of new and expensive aircrafts when demand is low. These witnessed inadequacy in operations of companies sustaining the cost due to reduced profits with minimal revenues. The decisions have been explained due to management failures that have over the years dominated the airline industry in the US. However, these trends have tremendously changed the industry’s picture through employing different strategies and adopted the use of new, sophisticated and technological advanced approaches. According to Strina (2006), change of ownership mostly from government or state owned to private ownership has not only increased competition but also liberalized the airline industry. Government has also been involved in de-regulate of the airline industry to increase competition and allow for greater and more pricing freedom for the airlines (Baum, Locke & Kirkpatrick 1998).
These trends are beneficial to clients who enjoyed lower and affordable fares but the situation has led to growth in traffic of aircrafts especially in the US market although the same situation has been witnessed in Canada, Brazil, Australia, Mexico and other markets. The US industry have been heavily relying on speculative demand with airlines arming themselves with purchases of new generation aircrafts with response to speculative high demand as noted by Balmer & Gray (2003). The recent past have witnessed numerous efforts to maintain the operating capacity especially during low seasons a factor that have not succeed especially during the start of 2008. My analysis further indicated the role of load factor in contribution to low levels of luggage and passengers as well. In order to improve on these conditions, airlines went a high notch to explore new and technological strategies to help salvage the situation. Towards realizing these goals, my analysis revealed how Jet Blue Airways have explored new ways to guard against detrimental consequences (Balmer & Gray 2003).
The airways have started utilizing services of the overwhelmingly populated social networks like face book and twitter. My analysis identified the industry’s use of social networks. Therefore their services are known and used by many customers. To be the leading market competitor, Jet Blue has also introduced online booking and paying of flights. My analysis shows the widespread use of pre-paid services both for passengers and baggage has increased with almost all airlines especially Jet Blue who records over 71% online booking according to Jet Blue (2010). Jet Blue has also introduced specific sitting options where clients can choose at their booking time the seat and the type of arrangement they want (Strina 2006).
Dealing with the stiff competition, Airlines have changed strategic approach in the market to include consolidation, alliances and merging. For instance, Delta airlines took over Northwest airlines while Continental and United airlines agreed to merge. Jet Blue on its part has been involved in talks for possible alliance with American Airlines. Jet Blue has also made special arrangements with Aer Lingus and Lufthansa as well as American Airlines to improve on its service delivery. Delta airline have also utilized these social networks intensifying competition and increasing profits. American airline has also been commanding greater share of the market with future plans and predictions on the activity level in the market. Southwest and United airlines have been witnessed to adopt another conservative approach in doing business mainly due to competition and market conditions. Therefore, my analyses reveal change of strategy by Jet Blue airline to that of alliances especially with American Airline according to Jet Blue (2010) to secure operations from closure due to low revenues (Strina 2006).
Jet Blue’s strategic Intent has incorporated current dynamism of market structure especially in the complex and competitive industry like Airline sector, a winning strategy is paramount to augment sustenance in the market. My analysis identified Jet Blue’s strategy as incorporative to increase pool of ideas to boost its operations. The management has being involving all the stakeholders in decision making process and also in policy formulations. Although not all has being involved directly, in one way or another, they all contribute to the policy prescriptions and implementation of the company. Therefore collective responsibility has being a key intent of Jet Blue Company. This approach according to my analysis has assisted Jet Blue airline to discover new and enterprising markets, boost its financial status and employ use of new technologies like face book and twitter (Tim 2009).
This approach has secured Jet Blue from downbeat huddles like severe financial troubles and worker’s disgruntlement since they are part and parcel of the Airline. Another important approach according to Tim (2009) has being the sensitization of its employees about the operations and products as well as service delivery. Therefore communication strategy has been key and imperative to Jet Blue airline which enables them to receive prompt feedback from clients and other core stakeholders in the industry. This assists them to work in improving their service and product delivery in the market hence realizing increased revenue which consequently augments profits. To maintain its public reputation, Jet Blue concentrates on the brand marketing to sensitize its clients on their existence, brand change have been intent for Jet Blue which has enabled it to be among the most successful airline companies (Tim 2009).
Jet Blue’s Financial Objectives is considered vital among all other operations. The corporation is considered to among the low cost airlines in the US market with provisions of high quality and satisfactory customer services with low fares especially for on point- to- point routes. My analysis revealed corporation’s concentration on large metropolitan and underserved areas which were charged average high fares to maximize on their revenues as recorded in Jet Blue (2010). To achieve their financial intent of maximizing revenue as well profit margin, the airline has increased the frequency especially on the existing established routes besides expanding on new markets. Following these financial objectives, the airline recorded a profit margin of 2.8% and 8.8% in 2004 and 2005 respectively being the 9th largest passenger carrier in the US according to JetBlue (2010).
To further achieve their financial objectives, the corporation according to my analysis has acquired 96 new Airbus of A320 model and further 92 EMBRAER of 190 model aircraft in 2005. This expansion strategy increased the airline’s revenues tremendously than most airlines in the American industry achieving their financial objectives substantially. Therefore following these interventions by Jet Blue airline, it has to an extent successfully achieved its financial objectives as recorded in JetBlue (2010).
Jet Blue’s strategic elements of cost, Organizational culture and Human Resource Practices have been diverse. Jet Blue employs cost cutting strategy to maximize its revenues in order to increase the profit margin. When the de-regulation policies were implemented in the airline industry in US, competition increased and so do pricing became liberal. My analysis reveals how Jet Blue adopted the reduction of fares and engaged in undeserved routes for diversification purposes instead of charging more to compensate for the increased fuel costs according to David (2010). The increased frequency of flights and introduction of others in different destinations was also aimed at increasing revenue while reducing the high cost in the already established routes; this consequently reduced the operational costs (David 2010).
The adoption of modern technology further reduced cost; my analysis identified the widespread technological usage at Jet Blue where over 74 % of all the bookings were done online according to Jet Blue (2010). The organizational culture of Jet Blue revolves around belief that all can be done with equality of all the stakeholders who operate on mutual respect and understanding. The Airline is headed by a C.E.O who oversees the operations of the company. Under Him are manager’s in-charge of different departments and thereafter employees’ tasked with day to day running of the airline. The success of Jet Blue has being greatly attributed to the best human resources practices and management. My analysis revealed how employees are respected and encouraged to own up the corporation. First all employees are regarded as crew members to motivate them. Secondly the C.E.O makes occasionally trips to various destinations to listen to employee’s feedback on best practices of the company (Aldrich 2009).
This way, employees feel respected and valued. In addition, all the employees are taken through a thorough training process to understand the internal branding of Jet Blue Airline. This has cultivated customer’s loyalty. The use of online bookings has provided the airline with a leadership market share in face of stiff competition. The horizontal leadership integration in the organizational culture of the corporation is a competitive advantage since the management is aware of all the operations in the industry. Their treatment and regard of all their employees as crew members coupled with numerous training programs to internalize and sensitize all crew members concerning its internal branding have offered the company a competitive advantage due to its employees aware of what the company offers hence easily handling the customers with ease as noted by David (2010).
Jet Blue’s strategy from 2009 has mostly concentrated with promotion and encouragement of human resource factor within the company. The airline implemented rewarding promotions to its top management personnel to encourage them in their service delivery. Jet Blue (2010) records Martin St. George promoted to Senior Vice President, in the marketing and commercial strategy from Vice President Network planning. Scott Laurence was promoted to be the Vice President Network planning from the post of Director in network planning department. From 2009, my analysis indicated how the Airline concentrated in strengthening its internal branding both to employees as well as customers to command a large market share (Tim 2009).
The appointments of top management positions according to Tim (2009) were another fundamental strategy the airline aimed to increase service and product delivery relying on the experiences and expertise of these personnel. The airline committed to continue strengthening their brand character to secure market leadership in the airline industry. Jet Blue also introduced low fares, free TV as well as numerous award winning services to attract more customers in the highly competitive market according to Jet Blue (2010). The corporation also introduced instant messaging as well as complimentary in-flight email to facilitate easier service delivery to customers and crew members with the management. Much of these strategies formulated for implementation have already been infected by the corporation. My analysis witnessed swift actions especially in the leadership appointments which took effect immediately after announcement. Other strategic measures to reduce fares although not fully implemented are however compensated by the numerous services offered by the airline like award winning services, free TVs and better customer services (Tim 2009).