MGMT661 04-05-2023

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MGMT661 - ANALYSIS ASSIGNMENT Student Name: Student ID:

Executive Summary The research is completely based upon the competitive analysis and marketing of the organization named JetBlue Airlines. The company is originated in the United States and popular for low-fare travel services. It is not easy to operate an airline company as JetBlue itself is running on low profit and high operational cost still earning not much satisfaction rate from the customers. Both internal and external analysis is done to find out the factors, resources, and activities which are supporting or against the decision-making by the company by which multiple strengths and weaknesses are found out by which it can be stated that the company is sustainable in terms of competitive advantage but required improvement in few areas. Contents

Executive Summary ................................................................................................................... 1 Introduction ................................................................................................................................ 1 Mullin’s Model Framework ....................................................................................................... 2 Components Regarding JetBlue’s competitive advantage ......................................................... 4 Key Market Forces in Airline Industry ...................................................................................... 6 Porter’s Five Force Analysis ...................................................................................................... 8 Key Resources and Activities Contributing to Competitive Advantage .................................... 9 Brand and Marketing ................................................................................................................ 11 Recommendation and Conclusion ............................................................................................ 11 Bibliography ............................................................................................................................. 11

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Introduction In this study, the case of JetBlue Airways will be identified using different models and frameworks such as Mullin’s model framework, PESTLE, Porter’s 5 force analysis, and much more. The main aim of the research is to identify different aspects regarding the organization JetBlue such as how competitive the company is out there, how sustainable the company is in terms of competition, different pros, and cons of the competitive advantage, different internal resources, customer segment, and much more. On the other hand, based on the overall analysis, recommendations will be made by which the company can improve regarding as it can be cost structure, competitive advantage, etc. Mullin’s Model Framework Mullin’s Model Framework consists of seven frameworks, and it helps to check how these key factors are affecting the business. [ CITATION Min213 \l 1033 ] In this case, the key factors will be compared and aligned with JetBlue organization such as-  Market Domain/Macro Level: Market Attractiveness- If talk about the market, then there is a high level of competition which states that JetBlue is a company that

operates in a highly competitive market where the profit margins are very low, and the operating cost is very high [ CITATION Reu16 \l 1033 ]. It is all because of the higher competition out there in the market. There are different challenges such as technological disruption, cost control, and customer satisfaction which ensure the market attractiveness from moderate to low.  Market Domain/Micro Level: Sector market benefits and attractiveness- Free amenities, best-in-class customer experience, and comfort while traveling are some of the main areas on which the company focuses. On the other hand, as per the case study more seats have been added to JetBlue’s A320 airplanes which has reduces the leg space in the cabin and made it uncomfortable for the customers as the company wanted to balance its cost.  Industry Domain/Macro Level: Industry Attractiveness- The airline industry is highly competitive and faces lots of challenges such as challenges regarding labor, rising fuel costs, and much more [ CITATION Ben22 \l 1033 ]. The main thing is that companies that are offering services at lower costs are throwing huge competition among other airline companies. JetBlue needs to adapt to sudden changes in the market, and to remain competitive the company will be required to offer something different to control cost.  Industry Domain/Micro Level: Sustainable Advantage- JetBlue company is highly focused on the underserved markets, and provides unique services to the customers for their better experience. On the other hand, the company is facing issues such as in terms of higher dissatisfaction rates among customers and increases in cost.  Team Domain: Mission, Aspirations, Propensity for Risk- JetBlue airline is popular for its innovative tactics and being customer-focused by which the company can provide an experience that is of high standards. If consider the risk-taking and its

propensity, then it has led to an increasing dissatisfaction rate among customers because of the cost-cutting measures.  Team Domain: Ability to Execute on Critical Success Factors- Critical success factors are being challenged by multiple things such as reduction in the customer satisfaction rate, increase in the cost, technical issues, and much more. Innovation is the thing on which JetBlue airline needs to focus to remain competitive out there [ CITATION Sur15 \l 1033 ].  Team Domain: Connectedness Up, Down, Across Value Chain- Customers, suppliers, and employees are the ones with whom the JetBlue airline company needs to maintain good relations. For being more innovative, reducing costs, and enhancing customer satisfaction the company needs to focus more on collaborating with partners. On the other hand, there are some commitment issues too as there are two flight attendants who claimed that JetBlue pilots have raped them which creates a scenario of doubt. In short, there are lots of challenges such as huge competition in the market, rising costs, dissatisfaction rate among customers, and much more are some of the major challenges that JetBlue airline company is facing. In addition, being socially responsible, providing best-in- class customer experience, cost control, etc. are some of how the company can remain competitive out there in the market. Components regarding JetBlue’s competitive advantage It is necessary to analyze and tackle the competition out there to maintain a good position out there in the market. JetBlue is a low-cost airline that has used several different strategies to

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gain a competitive advantage in the aviation industry. The following are the six aspects of JetBlue's competitive advantage:  Customer Service- JetBlue has gained notoriety for giving fantastic client care [ CITATION Mic192 \l 1033 ]. This includes accommodating staff, entertainment on board, and comfortable seats. Merit- Excellent customer service helped the company to settle down the issue of attracting and retaining loyal customers out there in the market. Demerit- Financial burden can take place if high-in-class customer service isn’t managed properly as it can increase the overall operational cost of the business.  Affordable- By utilizing a single aircraft type, maximizing its utilization, and concentrating on routes with a high density, JetBlue has been able to maintain a low- cost structure. JetBlue can offer lower prices while still maintaining profitability thanks to this strategy. Merit- This component permits JetBlue to offer cutthroat costs, which draws in cost delicate clients. Demerit- Customers who are willing to pay more for better services may be turned away if a business relies too heavily on low prices, which can sometimes result in a decrease in service quality.  Route Network- Major cities such as Latin America, the United States, the Caribbean, and other 100+ destinations are the ones that are covered by JetBlue because of the route network [ CITATION Jet23 \l 1033 ]. Merit- Because of its extensive route network, the airline can attract a large number of customers.

Demerit- It can be expensive and require a significant investment to expand the route network.  Innovation- JetBlue has been at the cutting edge of development in the flying business, with highlights like self-registration booths, in-flight Wi-Fi, and portable tickets. Merit- Customers can fly with JetBlue with ease and convenience thanks to the airline's technological advancements, which contribute to an improved customer experience. Demerit- Executing innovation can be costly, and there might be specialized errors that could prompt client disappointment.  Satisfaction rate among employees- JetBlue has been perceived for its endeavors to guarantee that its representatives are happy with their positions. Merit- Fulfilled representatives are bound to give superb client support, which assists with improving the client experience. Demerit- Assuring employee contentment can be costly and necessitate ongoing investment.  Strong brand- JetBlue offers services that are innovative at low prices as compared to the other competitors out there [ CITATION Les19 \l 1033 ]. Merit- Strong brand can help overcome competitors by standing out. Demerit- Investments in marketing and advertising are necessary to keep a strong brand.

It can be said that by employing a combination of low-cost strategies, cutting-edge technology, superior customer service, an extensive route network, a strong brand, and employee contentment, JetBlue has been able to gain an advantage over its rivals. While there are numerous benefits to these components, there are also potential drawbacks that must be considered. Key Market Forces in Airline Industry To analyze the key market forces in Airline Industry which are impacting the choices made by JetBlue PESTLE Analysis and Porter’s Five force analysis will be used for in-depth analysis. Firstly, if talk about PESTLE Analysis, then it helps analyze the external market like how the external market will be going to impact the overall decision-making and choices. Following is the PESTLE Analysis-  Political- Multiple policies impact the price of fuel such as the war between Russia and Ukraine has resulted in increasing the price of fuel from over $100 per barrel which is a lot. Likewise, in the U.S. the price of fuel which is used by airlines is set to increase by 4.3% this year [ CITATION BTS23 \l 1033 ]. But if OPEC increases production, then the prices of fuels can be dropped.  Economic- If talk about the aviation industry, then it is the one with low product and high operational cost. So, a rise or downfall in the economy will directly impact the buying behavior of the consumers too. Also, the continuous increase in fuel prices plays another different yet negative role in the contribution margin.  Social- The market would be drastically altered by events like 9/11. It made security concerns worse and cost more, which made the boarding process take longer and made the turnaround time longer. In addition, customers also experience fear and

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negative publicity as a result of travel-related accidents and plane crashes [CITATION Har05 \l 1033 ].  Technological- Due to increased network access and a faster internet connection, the reservation system has been modified. Additionally, it increases price competition among numerous third-party and online price comparison sellers.  Environmental- For the airline industry, weather has never been good or beneficial because it causes various issues such as dissatisfied customers in this situation the number of aircraft which are managed at once in the airport gets decreases [ CITATION Joc20 \l 1033 ]. The worst thing about weather is that is unpredictable but always impacts the customer satisfaction rate.  Legal- The game's rules could always be altered by new regulations. One of those external effects on industries that opened the door to more private players was the 1978 deregulation of the airline industry in the United States. Porter’s Five Force Analysis As it is not easy to make profits in the aviation industry, and with the help of Porter’s five force analysis the external market will be analyzed as below- Porter’s Five Forces High Medium Low The threat of new entrants ✔ Threat of substitution ✔ Bargaining power of suppliers ✔ Bargaining power of buyers ✔ Competition ✔  Threat of New Entrants- The threat of new entrants is medium because entering this highly competitive market is not easy. On the other hand, instead of buying the flights or investing a lot of money, they can get on lease which is why there is a little threat.

 Threat of substitution- JetBlue Airlines have lots of competitors out there among them Southwest Airlines is one of the biggest competitors which simply means that the threat of substitution is high [ CITATION Sta231 \l 1033 ]. If customers do not find the offer from JetBlue beneficial or suitable then they can easily switch to another airline out there. On the other hand, if the destination is not that far then the customer can easily book a rental car or bus service. [ CITATION Sta231 \l 1033 ]  Bargaining power of buyers- The bargaining power of buyers is low because switching costs can be huge as JetBlue airline is popular for its low fare pricing.  Bargaining power of suppliers- The bargaining power of suppliers is pretty high because there are two most popular suppliers which are Boeing and Airbus and they have completely monopolized the market [ CITATION Kat191 \l 1033 ].  Competition in the industry- In terms of customers, it is high as there are lots of players who are offering the same services at the same prices with offers. This thing ensures good competition out there in the market.

Key Resources and Activities Contributing to Competitive Advantage To analyze the resources and activities within JetBlue organization which are contributing to the competitive advantage of the company. To identify different activities or resources strengths and weaknesses will be required to find out the major strengths and weaknesses underlying the company. Tangible and Intangible Resources  Physical- JetBlue signed a contract with Airbus to purchase A321 aircraft to expand its fleet [ CITATION Reu161 \l 1033 ]. They too improved their accessibility by presenting in a few air terminals (JFK, West Coast, Boston) and that implies more terminals and more center points and talked.  Reputation- JetBlue has a strong brand image and has won several awards, including the Air Transport World Service Award, Conde Nast Traveler's Readers' Choice, and World's Best Domestic Airline [ CITATION NIC22 \l 1033 ]. Nevertheless, they were hurt by things like Valentine's Day late cancellation and recent injuries. In addition, customers were less receptive to the most recent decisions as a result of the current management's investor-friendly signal.  Department of Technology- JetBlue is known for its advancements, Web-based tagging, first free email and instant message administration, Paperless cockpit, At- home reservation organization, etc. In addition, they use fewer offices and offer faster, round-the-clock customer service on the company website, lowering PP&E costs.  General Administration- During the most recent 17 years they changed their Chiefs three times pretty much like clockwork as normal which endangers the tradition of client first approach to some degree.

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In terms of sustainability, the company’s competitive advantage is pretty sustainable as the competitive advantage is valuable rare, and almost imitable but not as organized as it should be. Brand and Marketing It is necessary to target the right market segment, and the main target market segment for JetBlue Airlines are business travelers, Leisure travelers, High-end travelers, and International Travelers. The organization has targeted different types of travelers to provide the best service at reasonable prices. There are different service options available among which “Mint” services is the one with top-notch features and qualities for high-end travelers [ CITATION Jet231 \l 1033 ]. It can be said that the company has properly identified its customer segments. On the other hand, the company has implemented a low-pricing model which includes different options such as “blue”, “blue plus, and “blue flex” for attracting more people and generating more revenue. Recommendation and Conclusion There are various areas of improvement upon which the company needs to work on such as firstly on enhancing the customer satisfaction rate by not bringing sudden changes in the airplane such as redesigning by introducing new seats. In addition, the company should make sure to partner up with other companies out there for enhances sustainability and better operations. In a nutshell, it can be said that the overall competitive position of the company is maintained as there are lots of strengths identified in the research above such as low fare, different options for different types of marketing segments, various external and internal environments factors, etc. all together working in the favor of JetBlue airlines.

Bibliography Mind tools. (2021, April 12). Mullins' Seven Domains Model . Retrieved from Mind tools: https://www.mindtools.com/avrj81b/mullins-seven-domains-model

Reuters Staff. (2016, October 25). JetBlue's profit misses as higher costs drag . Retrieved from Reuters: https://www.reuters.com/article/us-jetblue-airways-results- idUKKCN12P1II Miller, B. (2022, April 11). 'Challenging' staffing issues force JetBlue to cut back on flights . Retrieved from Bizjournals: https://www.bizjournals.com/newyork/news/2022/04/11/challenging-staffing- issues-force-jetblue-to-cut.html Osman, S. (2015). 3rd Global Conference on Business and Social Science 2015 . Solomon, M. (2019, August 26). How JetBlue Topped Its Industry In Customer Service– Through Company Culture And A New Breed Of Technology . Retrieved from Forbes: https://www.forbes.com/sites/micahsolomon/2019/08/26/jetblues-top-rated- customer-service-experience-blending-internal-customer-service-culture-and-new- technology/?sh=467dc6262ddc JetBlue. (2023, May 1). Route Maps . Retrieved from JetBlue: https://www.jetblue.com/route- map Josephs, L. (2019, November 12). JetBlue rolls out cheap fares that come with fewer perks . Retrieved from CNBC: https://www.cnbc.com/2019/11/12/jetblue-rolls-out-cheap- fares-that-come-with-fewer-perks.html

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BTS. (2023, march 3). U.S. Airlines’ January 2023 Fuel Cost per Gallon is Up 4.3% from December 2022; Aviation Fuel Consumption Down 0.7% from Pre-Pandemic January 2019 . Retrieved from BTS: https://www.bts.gov/newsroom/us-airlines- january-2023-fuel-cost-gallon-43-december-2022-aviation-fuel-consumption-down Harumi Ito, D. l. (2005). Assessing the impact of the September 11 terrorist attacks on U.S. airline demand. Elsevier - PMC COVID-19 Collection , 75-95. Timperley, J. (2020, February 19). Should we give up flying for the sake of the climate? Retrieved from BBC: https://www.bbc.com/future/article/20200218-climate- change-how-to-cut-your-carbon-emissions-when-flying Statista. (2023, February 3). Domestic market share of leading U.S. airlines from January to December 2021* . Retrieved from Statista: https://www.statista.com/statistics/250577/domestic-market-share-of-leading-us- airlines/ Sprague, K. (2019, January 26). Why the Airbus-Boeing duopoly dominates 99% of the large plane market . Retrieved from CNBC: https://www.cnbc.com/2019/01/25/why-the- airbus-boeing-companies-dominate-99percent-of-the-large-plane-market.html PETERSON, N. D. (2022, October 4). The Best Airlines in the U.S.: 2022 Readers’ Choice Awards . Retrieved from Cntraveler: https://www.cntraveler.com/galleries/best- airlines-in-us

JetBlue. (2023, May 1). Mint . Retrieved from JetBlue: https://www.jetblue.com/flying-with- us/mint Reuters. (2016, July 26). BRIEF-JetBlue amends purchase agreement with Airbus for additional aircraft . Retrieved from Reuters: https://www.reuters.com/article/idUKFWN1AC0SF

MGMT661 04-05-2023

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