Jetblue Rising

I. The Problem

A. The Key Fact

Although JetBlue is expanding very quickly and has already won many service awards, they still represent only 2.3% of the domestic airline market.

B. Advertising Objective

Many travelers don't realize that JetBlue offers at least as many perks as the traditional legacy despite their low-cost model. The stigma in the airline industry has been that low-fare/low-cost equals low frills. Our goal is to convince domestic travelers that with JetBlue they don't have to sacrifice comfort, service, in-flight entertainment, and other amenities to obtain a low-fare ticket.

II. The Creative Platform

A. The Issue

1. Reality

Strategy

Goal-To establish JetBlue as a leading low fare, low cost passenger airline by offering customers high-quality customer service and a differentiated product.

Plan-JetBlue strives to offer low fares that stimulate market demand while maintaining a continuous focus on cost-containment and operating efficiencies. They intend to followed a controlled growth plan designed to take advantage of their competitive strengths. They believe growth has, and will continue to, occur by adding additional frequencies on existing routes, connecting new city pairs among destinations already served and entering new markets often served by higher-cost, higher-fare airlines. *

History

JetBlue was created by CEo David Neeleman back in 2000 and took to the air for the first tine that February with inaugural service between New York City's JFK Airport and Fort Lauderdale, FL. Today JetBlue remains based out of JFK Airport, offering one-class service to nearly 30 US cities, the Bahamas, the Dominican Republic, and Puerto Rico. A secondary hub has been established

outside of Los Angeles at Long Beach Airport for West Coast operations.

The airline offers upgraded amenities to flyers while focusing on keeping operating costs low by relying entirely on electronic ticketing and keeping its turnaround times down by choosing less crowded airports located near larger cities. In 2004, the carrier broke into the Top 10 list of US carriers (based on revenue passenger miles) with a fleet of just 70 aircraft.

Expansion

A rapidly growing discount airline, JetBlue has used its strong customer service platform and low fare structure to build a solid and growing customer base. To this end, JetBlue launched service from 9 new destinations in 2004 including Boston, the 7th largest metro area in the US. They now serve 7 cities from Boston with 20 daily departures. Neeleman and his management team plan to further develop key markets like this by increasing the number of flights per day as demand dictates.

Offering more departures from existing markets is beneficial to both the company and its customers. It allows JetBlue to milk additional revenues from current markets, and because they focus on point-to-point travel, it also allows them to use their employees and facilities more efficiently. Customer benefit from more convenient schedules and the point-to-point travel means nonstop flights, less delays to connecting flights, and reductions in lost baggage.

As part of their expansion plan, JetBlue has purchased 100 Embraer E190 Jets. These jets will give them new market opportunities by giving them the ability to serve mid-sized markets that cannot handle the large jets they currently operate. This will bring opportunity and will definitely expand their business strategy.

Competitive Environment

Until recently low fare airlines have been able to compete with major carriers by attracting fare-conscious business and leisure travelers away from them by offering fair service at a reasonable price. In the last 5 years the migration of such passengers have helped to increase the market share of the low fare market to 47%, accounting for more than 27% of all domestic air travel. However, the competitive environment is constantly changing as major airlines develop new partnerships with regional and low fare carriers, consolidating the market and resulting in a concentration of assets among the major carriers.

2004 saw the majors undertake broad cost-cutting measures and reevaluations of their business models as they struggle to remain players in the industry. Marketing alliances have also become increasingly popular as airlines offer code-sharing, frequent flyer program reciprocity and coordinated flight schedules for convenient connections between participating carriers. These networks cast a wide net to attract more customers than the individual airlines could independently. At the present time, JetBlue does not participate in any such program.

SWOT Analysis of JetBlue

Strengths

OPERATIONAL COMPETENCE/LOW OPERATING COSTS *

* JetBlue utilizes their aircraft efficiently, operating a plane 13.4 hours per day on average, more than any other major US airline allowing them to spread their fixed costs over more flights and available seat miles. This is achieved through a combination of red-eye flights, keeping aircraft operating at night, and minimized ground time, which increases turnaround time and allows more flights per aircraft.

* JetBlue works to hire and train the best employees in the industry, looking for enthusiastic and committed workers to fulfill their customer service objectives. And to keep them happy and productive, performance incentives are offered and compensation packages are designed to balance the interests of employees and stockholders alike.

* Low distribution costs are achieved through ticketless travel, 75.4% of which is booked online at jetblue.com, 22.9% booked through reservation agents.

* Operating one type of aircraft with one class of service means cost savings in maintenance and inventory, and efficiencies in training and scheduling. This simplifies operations enhancing productivity, increasing capacity, and results in an operating cost advantage