Jetblue Airways - Problem Solving Models

CASE STUDY Analysis: JetBlue Airways

1.       What is the JetBlue strategy?

• Capitalization on technology:  idea was to substitute every aspect related to airline i.e. flight planning to aircraft maintenance to the  sole use of e-tickets instead of paper
• Customer oriented:   customers no longer had to stand in long queue due to the electronic system for buying tickets, which were cheaper compared to other airlines. Also they were given vouchers of $159 if delay was more than 4 hrs and $25 is luggage was misplaced. They had replaced Boeing 737 with Airbus A320, which had wider cabin and more leg space.
• Flexible HR policy: jobs were tailored according to the skills of various individuals for maximum productivity. Their remuneration more than industry average and they had flexible working hours which helped to maintain  balance between work and family , thus make it the ideal company to work for.
• World’s first “paperless” airline: customer could book tickets online and pilots were given laptops which reduced their checking formalities to 4 mins
• Maximum aircraft utilization:  connectivity was provided to areas where there were no or some flights. this lead to increase in average number of flight hours

2. How is it different from Southwest?

There were so many differences JetBlue and Southwest airways. Most importantly was the airfare price. JetBlue offered low-fare by fully utilizing their aircrafts. In southwest airways everything was done on paper which used to take a lot of time and manpower. Customers used to stand in long queues for getting tickets. JetBlue combined common sense with innovation and technology. They accomplished this by becoming the first “paperless” airline. They substituted computers for everything starting from getting tickets to flight maintenance. In southwest airways Boeing 737s were used. But JetBlue preferred Airbus A320s instead because of various advantages. Airbus 320s burned less fuel. It had wider cabin compared to Boeing. It also used better cabin technology. Each seat in Airbus had an extra space of 1 inch as compared to Boeing. Both the airways also differed in their turn-around times. JetBlue developed working force and achieved a turn-around time of 30 minutes whereas for Southwest airways it was 25 minutes. Another important difference between these airways was that Southwest focussed only on its members who worked for them whereas JetBlue not only took care of its employees but also its customers. Southwest airways had unions but JetBlue was totally against the formation of any unions. They even said that they will consider it as a failure of their strategy if any union is formed. Another important factor is that JetBlue offered customized jobs. It basically divided the jobs into three categories. One for college students with a term period of one year. Second option was the job sharing designed for people looking for a job balance. Third was a standard full-time job. In all these job option various benefits were also provided. This job tailoring was not present in Southwest airways.

3.  What are the key success factors for JetBlue airways?

• Most important factor that helped in the success of JetBlue airways was its low-fare. Customers preferred JetBlue airways as they were getting all the personal services with fares averaging 65% less than other airways.
• They provided a convenient method of getting tickets to customers by e-ticket system. They no longer had to wait in the queues.
• They provided compensation to its customers in case of flight delays by giving vouchers of $159. And also gave voucher worth $25 in case of misplaced bags.
• JetBlue gave more comfort to its customers than other airways. They even provided better connectivity by increasing its flights frequency.

4.   What is the value proposition for employees at JetBlue?

Value propositions for employees

JetBlue was a very employee friendly company, and it had many things for their benefit. Some are described below:

• Customized jobs

The intent at JetBlue was to deliver customized pay and benefit packages that met or exceeded the industry standard. Benefits started on day one, with no so-called “probationary” period, which Rhoades found demeaning and associated with union contracts. Benefits for full-time employees included medical benefits and personal time off rather than the conventional holidays, with double pay for those who worked the holidays. Within these broad parameters, HR packages were highly customized. There was a great location flexibility. Employees were residing at different places and were able to work from there comfortably. The company also had three distinct job options for flight attendants. There were one-year employment contracts designed for college students which included medical coverage and $500 per month of additional pay, in lieu of other benefits, to help them afford to live in Manhattan. A second option was job-sharing offered to two people who wanted to share a job who were seeking to balance work and family responsibilities. Finally, the company also offered a standard full-time flight attendant position but with a pay scale designed to appeal to those who wanted to work more hours per month than industry norms. The highest hourly pay for starting flight attendants in the industry was $19. JetBlue offered $20/hour for those who worked up to 70 hours/month and $30/hour for those who worked more than 70 hours/month

• Medical facilities

There were full medical benefits for full-time employees and they even had medical benefits for college students who joined the airlines as flight attendants for a short period of time.

• Better payback

All the employees at JetBlue got decent packages and compensations. It followed an untraditional way of setting packages according to productivity. Unlike the other employee groups, JetBlue pilots, dispatchers and technicians got stock options. The flight attendants got an additional $500 for residing in Manhattan. Apart from this, a $159 voucher was given to customers when flight was delayed for more than four hours for reasons other than weather or air traffic, and was giving $25 voucher for misplaced bags.