From Back to Front: How JetBlue Airways has maintained its low price leader position through optimizing its operations

From Back to Front: How JetBlue Airways has maintained its low price leader position through optimizing its operations

At last, your group is called to board the plane. You approach the gate agent and head down the jetbridge, which you find hplanealf-filled with passengers. You must stand and wait, for the third or fourth time that day, before finally entering the plane’s cabin. You slowly move down the blocked aisles behind passengers who are fighting for overhead bin space and trying to maneuver into their seats. After many minutes or hours spent navigating the airport, passing through security, waiting to board, and jostling through the jetbridge and aisle, you collapse into your seat near the back of the plane, relieved to finally be on your way.

 

Boarding a plane can be a painful process, but on my Thanksgiving flight back to Boston, I had a different experience. I flew with the airline, JetBlue, which uses a back-to-front boarding process, meaning the back of the plane boards first, followed by the front rows, preventing the usually clogged and inefficient scenario described above. My entire boarding process took less than 5 minutes. This is just one way in which JetBlue optimizes its operations in order to fulfill its business purpose.

mapBusiness Model: JetBlue strives to create a positive flying experience for its customers while maintaining low fares. JetBlue has been able to differentiate itself since its inception: offering low fares, serving less-competitive airports, and selectively removing “perks” that are often undervalued by customers at other airlines. By striving for internal cost-efficiencies, JetBlue is able to maintain its cost leader position for many of the airports it serves.

JetBlue also differentiates itself from other airlines by the company’s adherence to its five values: safety, caring, integrity, fun, and passion. These values are communicated to the public through its humorous “Air on the Side of Humanity” advertising campaign which essentially compares the treatment of pigeons to how other airlines treat their customers. These values are also apparent through the JetBlue experience: friendly employees, in-flight entertainment, and multiple free snack options.

 

Operations Model: In addition to the back-to-front boarding policy, JetBlue optimizes other aspects of its operations to lower their costs, enabling them to continue to offer the lowest fares while providing a great flying experience. Since many of JetBlue’s operational costs, including fuel prices, are out of its control, the company has managed to find other ways to enhance its operational model:

  • No meals: Regardless of the length of the flight, JetBlue does not offer meal service for any of its flights. Not only does this save the company around $3 per passenger in costs (not counting spoilage), it also improves their turnaround time between flights. They do not have to spend additionally time cleaning up spills, loading & unloading food items onto the plane, or preparing the food during the flight. However, by offering a variety of snack options, JetBlue is able to still provide hospitable service to its passengers.
  • Aircraft selection: JetBlue’s fleet consists of Airbus A-320 aircraft instead of the more popular and less Our-Planes-Image-962-x-440
    expensive Boeing-737. Despite their expensive price tag, these planes have lower maintenance and fuel costs, and the uniform fleet streamlines pilot training and spare parts, thus improve operational efficiency.
  • Use of secondary airports: Rather than vying for gates at the most popular domestic airports, JetBlue establishes its hubs in secondary airports (i.e. Long Beach instead of LAX in Southern California, JFK instead of La Guardia in New York, etc). By doing so, they are able to spend less on airport fees and be the largest provider of smaller, less catered to airports.
  • Use of technology: As part of JetBlue’s desire to be “fun”, they look to technology to add interest for customers (free in-flight Wifi and entertainment) as well as increase efficiencies. For example, it was one of the first airlines to accept digital ticketing on smartphones which IMG_6778improves operations through 1) faster check-in and boarding and 2) decreased clean-up from paper boarding passes.
  • Single-class travel: JetBlue does not offer separate cabins for business or first-class passengers. Since it targets middle-income travelers, the need for a separate cabin is unnecessary. This further decreases operational costs through consistent seating, food and beverage service, and decreased maintenance costs due to the uniformity of the cabin.

Flying, while a great modern convenience, can also be stressful and exhausting. JetBlue is working to change that. The company’s mission has been to bring humanity back to flying and it has done so by providing a fun flying experience at a low cost. This was made possible by reducing operating costs through strategic cost-cutting initiatives and operational efficiencies. JetBlue’s ability to reduce operational costs is critical to its ability to offer low fares. Therefore, their superb operational model is an essential element to their business model.

 

 

Sources:

Hitt, Michael. “JetBlue: A Strategic Management Case Study.” LinkedIn. N.p., 15 Mar. 2014. Web. <http://www.slideshare.net/fawadsiddequi/jet-blue-a-strategic-management-case-study>.

http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy1/Business%20Strategy%20Jetblue%20Airlines%20Success%20Story.htm

Ireland, R. Duane., Robert E. Hoskisson, and Michael A. Hitt. “JetBlue Airways: Growing Pains?” Understanding Business Strategy: Concepts and Cases. Mason, OH.: Thomson Higher Education, 2006

Team, Trefis. “A Closer Look at JetBlue’s Strategy.” Forbes.com 15 Oct. 2015: n. pag. Web. <http://www.forbes.com/sites/greatspeculations/2015/10/15/a-closer-look-at-jetblues-strategy/>.

Team, Trefis. “JetBlue Is Worth $9.10 on Its Low-Cost Advantage.”Forbes.com. N.p., 28 May 2014. Web. <http://www.forbes.com/sites/greatspeculations/2014/05/28/jetblue-is-worth-9-10-on-its-low-cost-advantage-high-value-geographies/>.

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2 thoughts on “From Back to Front: How JetBlue Airways has maintained its low price leader position through optimizing its operations

  1. Great post, Annie! One thing that I have noticed about traveling with JetBlue is that when you call the service line for support, you are immediately put in touch with a person as opposed to all other airlines, which usually connect you to an automated system for at least a few minutes. I wonder how this translates into the company’s cost, and how they made that decision to take on that additional expense, and how efficient it is from an operational standpoint. Why do other planes not utilize the back to front boarding process? How does the Jetblue model compare to Southwest, which is known to exhibit similar efficiencies?

  2. Great post Annie. I love how Jetblue has only one class – it doesn’t make me feel like a second class citizen when I make my way to coach! But a quick question on the introduction of Mint on cross-country travel: does this new dual-class cabin structure disrupt their current model of offering single-class travel to the middle-income American? I’m interested if there will be some sort of pushback from customers and how the company will reply.

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