Jetblue: a Strategic Management Case Study

JetBlue was founded with the goal of “bringing back humanity to air travel” which promoted the most unusual ideas to enhance customer experience. JetBlue primarily targeted the low-cost air travel market by providing the lowest rates in the industry while still guaranteeing customers quality and memorable moments. For instance, unlike other airlines, there was only one class of service in JetBlue, suggesting equality among all humans. All seats were made of leather with more legroom and TV screens fitted for each customer. The airline was also ranked first for best customer experience because of its reliability. To ensure it delivered the JetBlue experience, the airline adopted a number of strategies such as hiring highly motivated, non-unionized staff and making flight cancellation a measure of last resort in popular belief that “passengers preferred getting to their destinations late rather than have their flights cancelled”, demonstrating human understanding.

What challenges did the Airline face in managing the customer experience as the airline grew rapidly, and how did they respond?

Rapid growth meant that the airline’s operations were becoming more sophisticated, which made a change of strategy imminent although it had not dawned on the management. For instance, the prioritization of late take-offs over flight cancellations had worked to earn the airline several awards in best customer experience. However, with an expanded fleet and consequently more flights per day, such disruptions often yielded significant setbacks. This is precisely what happened during the Ice Storm of February 14, 2007, when instead of cancelling its flights scheduled for the day, JetBlue opted to wait hoping that the storm would clear in good time to enable the flights to take-off and, in turn, earn itself an excellent reputation against other airlines that had already cancelled their flights. As it turned out, the long wait ultimately made nine planes full of passengers get stranded on the tarmac and over 30000 passengers left helpless at airports across the country. This had a ripple effect that saw over a thousand flights cancelled over the next six days and losses worth$17 million in revenue and $24 million in compensation vouchers incurred. The crisis prompted significant changes to the airline’s operations, the most eminent being the replacement of Chief Operating Officer David Barger with Russell Chew, who had reputable experience in the aviation industry having served in a similar role at the FAA and as the managing director of American Airline’s Systems Operating Center. Other changes included the recognition of the vital role of early flight cancellations that changed the airline’s approach from reacting to problems by pulling heroic stunts to preparing for disruptions. The airline also adopted the IROP integrity where flight scheduling was computerized. The system also incorporated the cancellation desk which could be activated when a package of ten or more cancellations were issued.

What exactly went wrong? Why? Who or what was responsible?

The crisis was occasioned by the acceleration of weather from snow turning into rain to ice pellets. By the time it became evident that the planes would not take off as earlier expected because of the acceleration of the weather, nine planes full of passengers which had been waiting for take-off could not be towed back to the gates because ice had blocked the taxiways. To make matters worse, the equipment used to de-ice the taxiways were also covered in ice, which made them incapable of saving the situation. The planes remained on the tarmac for more than six hours, which stranded an additional 30,000 connecting passengers across different airports in the country. The chief operating officer at the time, David Barger, was ultimately responsible for the mishap, explaining why he was replaced immediately after the crisis. However, considering the airline’s bias against flight cancellation, the failure was more circumstantial if not institutional.

Did the airline handle the crisis well? Why or why not? What else could be done to handle the situation?

By bringing in a new experienced Chief Operating Officer, the airline improved the competence of its management, which will help identify and fix future crises before they occur. Further, the recognition of the vital role of early flight cancellation eliminates the possibility of misjudgments or underrating potential crises that could have serious financial implications as witnessed in the February 14th ice storm. Moreover, the adoption of the IROP integrity proposes major improvements in operations such as a standardized method of interpreting the severity of an interruption which earlier relied on which Manager on Duty (MOD). This will make such interpretations more reliable and, hence, avoid or reduce the impacts of future incidents. Additionally, the airline could have considered decentralizing operations to other airports to avoid affecting passengers who were not destined for JFK. What are the potential negative consequences for JetBlue resulting from the situation? The situation led to the loss of revenue to the tune of $41 million, which affected the airline’s bottom line for the first quarter of 2007. Further, the ordeal customers went through had the potential to damage the airline’s corporate image, which could, in-turn, lower its credibility. The ripple effect could be loss of customers to other competing airlines, which can potentially weaken JetBlue’s market share and revenue.

The Customer’s Bill of Right as a Customer Service Guarantee

The Bill of Rights was a good way for the airline to start assuring stakeholders of its dedication to quality services and will certainly help JetBlue regain its customers’ loyalty. However, it is important to note that most passengers do not board JetBlue’s planes for compensation. Their primary interest is to reach their destinations in good time to avoid losing out on other useful commitments, meaning that The Bill of Rights will only work in the short term. Further, paying huge sums to passengers for mistakes that can be avoided is not sustainable in the long term.

What other strategic and/or leadership actions should JetBlue take to ensure the company’s success and their ability to deliver the JetBlue experience?

The growth of the company extended the airline’s fleet, making its operations complex. In order to ensure the airline continues its great run of success by avoiding future crisis, the management should distribute risk by dividing its operations into semi-autonomous units and spread them across different airports to ensure bad weather patterns or any other unforeseen events do not affect its entire fleet.

Work Cited

1. 'JetBlue Airways: A New Beginning”. Stanford Graduate School of Business, no. L-17, 2019, pp. 1-33.