JetBlue Case Study Example | Topics and Well Written Essays - 1000 words

JetBlue - Case Study ExampleTrends within the US airline industry such as crude petroleum pricing and passenger fees, post 9/11 and pilot shortages give birth substantial effects on the performance and strategies of airline companies. Prices of crude oil have increased considerably in last few historic period, which has had a substantial effect on the pricing of passenger fees. For instance, in 2008, crude oil prices bloom to a record $140 per barrel and this price swell caused airlines to labor to offset fuel costs. Many companies were forced to implement new passenger fees to give for the surge in fuel prices. However, while fuel prices are currently low, airlines continue to increase revenue by passing costs to its customers. Shortages of pilots have in like manner forced companies to adjust their strategies. As baby boomers retire, the airline industry suffers a shortage of pilots. Prior to becoming captains, pilots have to gain sufficient flight hours. The foreign Air Tran sport Association asserts that airlines need nearly 3,000 special pilots each year, which is far more than training schools provide (Thompson et al., 2010). Post 9/11 strain security also influences airlines strategies. After the 9/11 terror attack, Congress implemented the Aviation and conveyance of title Security Act (ATS). This led to the creation of the Transportation Security Administration (TSA) and established that federal employees should be in charge of airport security at all airlines (Kaplan, 2006). This forced airlines to institute numerous layers of security. JetBlues strategical intent David Nelleman founded JetBlue with the view to bring humanity to air travel. The aim was to offer lowly discounted comfort and service to customers. The companys philosophy was to look into flights instead of cancelling them entirely. The firm was the first airline to publish a bill of rights for its passengers. This document outlines its policies with regard to the airlines custom ers. It launched electronic ticketing to enhance convenience and offered additional services such as in-seat television, as well as PayPal payments for tickets. In order to enhance its customer and shareholder value, the airline established rapid and strategic growth initiatives. In 2000, the firm made a rather chancy decision by starting services in New Yorks JFK Airport, which was already quite congested. JetBlue took advantage of the lighter 8 to 9am flight window to offer appealing flights to young and wealthy New Yorkers and those travelling to the city. In 2008, JetBlue launched Terminal 5 at JFK to offer customers more efficacy and convenience, while also saving them up to $50 million in fuel, vouchers and labor. Between 2003 and 2008, the airline launched service to numerous destinations such as Portland, Fort Lauderdale, and San Diego among others. By the end of 2007, JetBlue had expanded its operations to more than 53 destinations (Thompson et al., 2010). However, this imp ressive growth did not immediately trickle vote down to add shareholder value. JetBlues financial objectives While JetBlue showed immense promise, its stock values dropped by 50% in a span of five years ending December 2007. This is because between 2003 and 2007, the companys operating expenditure increased by 222%. This is primarily because of jet fuel (532% rise) and interest expenditures (658% rise). Rather than discussion the interest expendit