In the global era, to sustain in the competitive marketplace, it is essential for the organizations to develop their strategies and organizational structure as per the current trend of the related industry in particular country. Jet Blue Airways is US based airline firm that offers its services at low cost to attract the customers to avail the services of it (About Jet Blue Airways, 2011). There will be discussion for the current trends in US airline industry that influence strategies of the organizations within the industry. Additionally, strategic intent prior to 2008 of Jet Blue Airways will be also discussed along with highlighting financial objectives of the firm. Furthermore, it will be also discussed that whether the company has been successfully achieved these objectives or not. Strategic element of the company like, cost, organizational culture, HR practices etc. will be also discussed to provide the strategic view that these contributed in attaining competitive advantage.
Current Trend in US Airline Industry
About 600 companies are running their operations in the US airline industry with changing landscape. Various trends are available in the US airline industry that influences strategies of the firms in the industry. These are as follow:Air travel on Sales: In US travel industry, firms change pricing of their flights to fill seats of their airlines and to attract the customers. It might affect strategies of the companies as change in price strategy enforces the firms to change their marketing and organizational strategy to follow that changed pricing strategy (US Airline Industry Emerging Trends 2006 – 2011, 2006).
Capacity cuts Continue: US airline industry is cutting down its schedule to manage declining travel demand. For this, about 10% to 20% of the domestic flights have already eliminated by the firms in the industry. It might also affect to the strategies of the firms as they have to change availability of resources at the time of changing schedule (Wensveen, 2010).Ancillary fees Proliferate: Due to decline in airfares, firms have to relinquish the added revenues from those annoying ancillary fees for meals and snacks, checked luggage, in-flight entertainment, seat selection, etc. It might influence strategies of the firms in forcing the services and extra charges on the customers to maintain profitability of the company (US Airline Industry Emerging Trends 2006 – 2011, 2006).
Strategic Intent Prior
Jet Blue Airline’s strategic prior to 2008 was related with the increasing growth and efficiency in operations of the firm. Similarly, involvement of the safety, caring, integrity, fun and passion is also countered as strategic intent prior of Jet Blue that is followed by it prior to 2008. In addition, increase in customer satisfaction level was the main purpose and focus point of the company and for that “bring humanity back to air travel” is framed and followed by the management (About Jet Blue Airways, 2011).Introduction of the loyalty program to retain the customers for long period of time is countered as main strategic intent of the company. Involvement of the additional services in the service portfolio was also strategic intent of Jet Blue that was aimed to attain by 2008 (Saloner, Shepard & Podolny, 2008). Low cost operation in terms of low cost distribution, high aircraft utilization, etc. was also targeted by the firm as a strategic intent and for that sufficient and effective strategies are developed and formed (Wensveen, 2010).
Jet Blue Airlines sets the financial objectives to sustain its growth and run its business effectively in the competitive marketplace. For this, customer oriented approach is followed in which effective services are offered at competitive prices. Some key business drivers are focused by the company for financial success like, coach product, free in-flight entertainment, pre-registered seating, unlimited food &drinks, etc (Wensveen, 2010). Growing amount of the revenue is delivered by the firm to its stakeholders by growing 185%, from $998 million in 2003 to $2,842 million in 2007. So, to maintain this level and to increase profitability of the company, jet fuel expenses are also increased by the firm as a part of financial objective. The company also determined to increase the market share in terms of revenue by 10% in its financial objectives (Annual report of Jet Blue Airways, 2008).The firm has been successful in attaining these financial objectives in terms of increasing market share and increasing profitability. Financial restructure is followed by the firm that helped it to attain the targeted financial objectives through involving the factors that are beneficial such as reduction in labor cost structure, increase in workforce flexibility, restructuring of debt, etc. It refers that at high extent, firm enjoyed success in terms of attaining financial objectives (Sadler & Craig, 2003).
Jet Blue Airways is ranked as one of the top companies in US airline industry as it follows collaborative efforts to acquire its customers and manage its resources effectively that assists it to sustain good position in the competitive marketplace. The firm is cost effective as compared to its competitors that help it to attract the customers to avail services of the company. It also offers the company to attain competitive advantage in terms of creating positive image as it provides better services at low cost (Hitt, Ireland & Hoskisson, 2010).
Similarly, human resource practices and its resources also work as an important strategic tool for Jet Blue Airways as it helps the firm to execute the strategies in effective manner. In this, to select the best “crew members”, methodic and meticulous approaches are followed by management in which different tools are used such as online application, phone interviews and a collective selection process as a team (Sadler & Craig, 2003). These practices of human resource management help the firm to hire knowledgeable and skilled employees to execute the strategies effectively (Wensveen, 2010).Additionally, to improve the knowledge and leadership skills among the hired candidates, training and development programs are also followed by the companies. It helps the firm to attain competitive advantage and position in the global marketplace in terms of developing and adopting the activities and strategies that could improve the effectiveness and competitiveness of the firm (Saloner, Shepard & Podolny, 2008). Organizational culture of Jet Blue Airways is also effective that help it to sustain itself at competitive position. It is evaluated that Jet Blue Airways is ranked third in the airline industry that offers high amount of pay on the basis of hours (Hitt, Ireland & Hoskisson, 2010).
Along with this, it is also found that the company has compensated in different areas for motivating its resources for working effectively such as healthcare coverage, profit sharing and retirement plan. These actions of human resource management of the firm helped it to improve overall performance as maximum efforts are given by the resources for overall growth that increases the chances of attaining competitive advantage. It is also evaluated that in the US airline industry, Jet Blue is seen as the firm that pays low attention to reduce salary and has “no-layoff” policy that also maintains positive organizational environment and culture that assist the firm to achieve competitive advantage (Sadler & Craig, 2003).Overall actions increase ability of the company to enhance sales and profitability positively. Strategic element of the firm in terms of offering low cost fares to fly point-to-point destination was also helped it to gain competitive advantage as it increases effectiveness of the dealing with the customers. Familiar environment of the firm also attracted the customers and the view of the firm in terms of upholding the values of the customers also helped it to attain competitive advantage through satisfying customers positively (Wensveen, 2010).
In order to gain competitive position and advantage, effective strategies are formed and executed effectively by Jet Blue. In this, the firm followed growth and efficiency strategies. Through these strategies, the firm reduced costs of its flights as they increased aircrafts utilization rate that retain the customers for long-period of time. As per the market trend, the firm raised and cut down the rates that attract the customers. Additionally, to generate the revenue, new fee structure is followed by the firm that comprises fixed fee for select seats. These strategic actions refer that the firm attained its financial objectives and performance during the period of 2008 (Annual report of Jet Blue Airways, 2008).Implemented strategies in 2008 moved positively toward success and growth of Jet Blue that is reflected in 2009 (Annual report of Jet Blue Airways, 2009). The firm has gained strongest liquidity position in US airline in relation of its revenue. Generation of positive cash flow also refers to the positive result of strategic implementation in 2008 (Annual report of Jet Blue Airways, 2008). Annual report of the company also refers that Jet Blue Airways gained benefit of growth strategy in terms of managing capital expenditure, maximizing revenue and controlling cost. So, it can be stated that the firm has enough capacity to implement these strategies effectively in future.
On the basis of above discussion, it can be inferred that Jet Blue Airways has competitive position in US airline industry. It can be also concluded that current trends like, price, oil price, competitor’s strategies, etc. influence organization’s strategies and position in the competitive marketplace. It can be also inferred that the company has achieved its goals and strategic targets at high extent that were planned by the firm in 2008.
- About Jet Blue Airways. (2011). Retrieved April 06, 2012 from http://www.jetblue.com/
- Annual report of Jet Blue Airways. (2008). Retrieved April 06, 2012 from http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-reportsAnnual
- Annual report of Jet Blue Airways. (2009). Retrieved April 06, 2012 from http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=1380104&highlight=
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- Sadler, P & Craig, J. C. (2003). Strategic Management. USA: Kogan Page Publishers.
- Saloner, G., Shepard, A & Podolny, J. (2008). Strategic Management. USA: John Wiley & Sons.
- US Airline Industry Emerging Trends 2006 – 2011. (2006). Retrieved April 06, 2012 from http://www.aviationplanning.com/RAAPres/BoydRAAPres.pdf
- Wensveen, J. (2010). The Airline Industry: Trends, Challenges, Strategies. Retrieved April 06, 2012 from http://sydney.edu.au/business/__data/assets/pdf_file/0010/67789/johnw-presentation.pdf