JETBLUE AIRWAYS ANALYSIS Case Solution
In order to support its low fares, the customers of the company are allowed to purchase the tickets of the company through its online website. There are many such innovations taking place within the maintenance, service, processes and the operations of the airline companies. Only maintaining the reputation of a top tier career is not important to remain competitive however,it is equally important to keep the fuel costs low to pass low ticket prices to the customers. The airline industry has become sophisticated to determine the needs of the customers and deliver them the required level of service.
The airline industry is significantly impacted by the environmental effects. The governments have introduced a number of laws and regulations regards the CO2 emissions, fuel burning rates and noise level. Most of the airports are now being established near the metropolitan cities for enhancing the convenience of the customers. Today, all the airline companies will have to incorporate ethical compliance and social responsibility into their business operations to remain competitive and sustain the long term growth of their businesses.
Most of the legal issues within the airline industry are related to the issues of labour disputes and lawsuits related to the customers. Many airlines are also becoming huge through mergers and acquisitions. We have the example of Delta and Northwest airline both of which merged in 2008. Apart from this, there are many other legal issues facing the airline industry such as EU regulatory changes, security requirements, privatization of the transport industry, traffic rights, employment laws, Customer Bill of Rights, Company laws and tax laws.
3. External Evaluation – Porter’s 5 Forces
The Porter’s 5 Forces model has been applied for determining the attractiveness of the airline industry.
Threat of New Entrants – Low
- In the case of JetBlue, the threat is only from the current competitors of the industry.
- The entry costs are high which require huge capital investment and fixed costs.
- Major competitors of the industry are merging with one another to remain competitive and overcome the burden of high fixed costs.
- The differentiation of the products is high for instance; Jet Blue has introduced personal satellite TYC, roomy leather seats, satellite radio etc. Overall, the threat of new entrants is close to no appeal.
Power of Suppliers – High
- Jet fuel is the key input and the suppliers of Airline Companies are large companies such as Airbus and Boeing dominate the market.
- Suppliers have power to increase the prices when market demands. However, currently, this power has reduced and this has increased the bargaining power of JetBlue and other competitors.
- The price of jet fuel has been rising constantly. Most of the airline companies pay exactly or close to the actual prices of fuel.
- As a result, the suppliers’ power is high.
Power of Buyers – High
- There are many airline companies and customers have many choices to choose from.
- Customers in the industry are price conscious and they have firm belief that all airline companies will take them to their destinations.
- Online ticket purchasing websites and zero switching costs give the buyers a high bargaining power.
Threat of Substitute Products – High
- There are numerous substitutes available in the industry for the travellers such as Greyhounds, Amtrak trains, boats and personal vehicles.
- However, for hurried customers and longer distances, the airline companies do not face threat from substitute travelling modes.
- But looking at the state of the economy, people travel less and thus the threat of substitutes becomes higher……………….. This is just a sample partial work. Please place the order on the website to get your own originally done case solution