Introduction
JetBlue is a low-cost domestic airline in the United States founded in 1999. The airline has grown to become the seventh largest passenger carrier in the U.S. based on available seat miles. JetBlue Airways is headquartered in New York City and flies to more than 100 cities within the U.S., the Caribbean, Latin America, and the U.K (Weiss & Friesen, 2017). The essay focuses on JetBlue’s competitive advantage strategy, opportunities, and sustainability.
Competitive Advantage
JetBlue’s cost leadership strategy entails lowering operating costs while increasing perceived customer value through service offerings. JetBlue reduces operating costs through service automation in the reservation, ticketing, and customer service areas. The airline utilizes a point-to-point model that directly connects fewer routes with high passenger traffic, thus lowering carrier maintenance costs. JetBlue’s differentiation strategy focuses on its onboard premium services, which attract customers. The services include inflight meals, lie-flat beds, wider seat pitches, seat selection, and free WIFI gate to gate (Dess et al., 2021). The cost leadership and differentiation activities are charged for a fraction of what other airlines charge for premium seats; thus, imitation can lead to eroded competitive advantage. JetBlue’s business strategy has led to revenue and organizational growth, enabling the airline to enter high-value geographies catering to corporate passengers.
The rationale for Strategy Choice
One of the main factors influencing JetBlue’s decision is the entry of new competitors with better commercial experience in the low-cost airline sector. The airline industry lacks strong brand identification and customer loyalty; thus, the entry of experienced carriers can lead to a change in strategy as there are no customer switching costs. New entrants can reduce the number of gates and landing rights JetBlue is allowed at key airports, affecting revenues. Oil price hikes can influence the choice of strategy as it forces JetBlue management to increase fares (Matos, 2017). In addition, oil prices may affect the ancillary revenue where the airline attempts to mitigate the cost of higher fuel prices.
Internal Resources
JetBlue can leverage its premium brand name to engage in partnerships that add new fights to strategic markets such as East Coast and Southeastern U.S. The airline offers fewer flights than larger carriers; thus, partnering with smaller airlines can improve its leverage positions regarding entry into prime airports (Zou & Yu, 2020). The airline has invested in automation and thus can use the technology to enable its crew members to forecast weather changes, thus making adjustments to ground operations. In addition, JetBlue can use customer and price insurance data to predict airfare. The applications can be connected to a customer service messaging app to alert customers of flight changes.
Sustainability
JetBlue’s cost leadership and differentiation strategies are sustainable, enabling the airline to compete with major carriers such as American and Delta. The easing of travel restrictions between the U.S. and Latin America can contribute to the company’s revenue growth in the long term. JetBlue can offer direct charter flights at competitive prices with high-quality services, thus attracting higher passenger traffic and strengthening the airline’s dominant position in the Latin American market. The differentiated products, such as high-quality onboard services and low prices, can lead to higher revenue margins due to increased corporate travelers. The airline can capitalize on these higher margins by adding premium services on new routes.
Conclusion
JetBlue’s cost leadership and differentiation strategy enable the company to compete in the highly lucrative airline industry. Cost leadership strategy helps the airline reduce costs and operate efficiently, while the premium services offered attract and retain customers in an industry with low switching costs. The entry of experienced carriers and changes in oil prices precipitate the airline’s strategy as they can significantly reduce revenue margins. JetBlue should partner with smaller airlines to improve its market position and leverage its technology to enhance the customer travel experience. The airline’s competitive advantage is sustainable as it can increase revenue margins through increased passenger traffic in new markets.
References
Dess, G. G., McNamara, G., Eisner, A. B., & Lee, S. (2021). Strategic management: Text and cases. (10th ed.). McGraw-Hill Education.
Matos, P. (2017). 2012 fuel hedging at JetBlue airways. Darden Business Publishing Cases, 1(1), 1–23. Web.
Weiss, E. N., & Friesen, M. (2017). The JetBlue story. Darden Business Publishing Cases, 1(1), 1–12. Web.
Zou, L., & Yu, C. (2020). The evolving market entry strategy: A comparative study of Southwest and JetBlue. Transportation Research Part A: Policy and Practice, 132, 682–695. Web.