SHREYA

PGFB1144

WRITE UP

ON

JETBLUE AIRWAYS: CHALLENGES

AHEAD

Submitted To Submitted By

Dr. Deepak Singh Shreya

PGFB1144

PGDM (G)

2011-13

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SHREYA

PGFB1144

Strategic Issue: To provide a low cost carrier segment within the airline industry and to achieve

an image of far superior customer service.

Challenges:

Maintaining JetBlue’s culture as it grows, dealing with the surfing complexities of two fleet

types, managing maintenance expenses as airplanes and engines begin to age, and dealing with

an increasing senior level pool

Summary

The case talks about how to achieve the position which jet airways were holding before 2005.

David Neeleman the founder and chairperson of Jet Airways Corporation sought to bring

“humanity back to air travel”. They have faced a rapid growth between the years 2000-2004 and

named as “Best Overall Airline” by Onboard Service Magazine. There was cut-throat

competition in the industry the main competitors were Southwest Airlines, AMR Crop., United

Airlines and US Airways. The bargaining power of the suppliers were very high as the employee

and fuel were the two main components and according to the recent trends fuel price is rising at

rapid pace which is leading to increase in the expenses of the airways which tended to increase

the price of tickets. Bargaining power of customer was also high but to prevent customer to shift

to others they provided new and innovative services in order to make their experience better.

In order to reduce the cost many new technologies were used like removing paper use and

establishing use of laptop which make system effective and opening online reservations, check in

which helped both customers and airlines because it resulted in saving times.

The recent strategies used by Jet Airways are “Return to Profitability” as it incurred losses in the

years 2006. Jet Airways also started “JetBlue Card” in which after collecting 100 points a free

round trip was offered to the customer.

As we see the financial condition of the Jet Airways it was basically measured by three

components:

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SHREYA

PGFB1144

Short Term Liquidity

Long Term Stability

Company Profitability

Jet Airways was struggling in short term liability since 2005 we can see that payable turnover

ratio was increasing which shows that jet airways are paying its suppliers at a minimum time

even though the receivables are not able to pay.

Long term stability is issue with the jet airways as it is difficult to maintain decreasing profits.

They have maintained a fairly debt to asset mix and company profitability was decreasing as

they were not paying dividends and there was declining return on equity and inconsistency of net

income was a negative thing for Jet Airways.

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