Read the “Jet Blue Airways” Chapter Case at the end of Chapter 6, and then answer the following 3 questions in an initial post to express your original, relevant analyses and observations from the case:
- Despite its initial success, why was JetBlue unable to sustain a blue ocean strategy?
- JetBlue’s chief marketing officer, Marty St. George, was asked by The Wall Street Journal, “What is the biggest marketing challenge JetBlue faces?” His response: “We are flying in a space where our competitors are moving toward commoditization. We have taken a position that air travel is not a commodity but a services business. We want to stand out, but it’s hard to break through to customers with that message.” Given St. George’s statement, which strategic position is JetBlue trying to accomplish: differentiator, cost leader, or blue ocean strategy? Explain why.
- JetBlue CEO Robin Hayes is contemplating adding international routes, connecting the U.S. East Coast to Europe. Would this additional international expansion put more pressure on JetBlue’s current business strategy? Or would this international expansion require a shift in JetBlue’s strategic profile? Why or why not? And if a strategic repositioning is needed, in which direction should JetBlue pivot? Explain. After you have made your initial post, provide at least one response to one of your classmate’s postings that conveys specific and well-developed thoughts, ideas, or comments about what they discussed.
Early in its history JetBlue Airways achieved a competitive advantage based on value innovation. In particular, JetBlue was able to drive up perceived customer value while lowering costs. This allowed it to carve out a strong strategic position and move to a non-contested market space. This implies that no other competitors in the U.S. domestic airline industry were able to provide such value innovation at that point in time. Rather than directly competing with other airlines, JetBlue created a blue ocean. Although JetBlue was able to create an initial competitive advantage, the airline was unable to sustain it. Because JetBlue failed in reconciling the strategic trade-offs inherent in combining differentiation and cost leadership, it was unable to continue its blue ocean strategy, despite initial success. Between 2007 and 2015, JetBlue experienced a sustained competitive disadvantage, at one point lagging the Dow Jones U.S. Airlines Index by more than 180 percentage points in 2015. A new leadership team CEO Robin Hayes put in place in early 2015 is attempting to reverse this trend. The new team made quick changes to improve the airline’s flagging profitability. It is putting strategic initiatives in place to lower costs, while also trying to further increase its value offering. To lower operating costs, JetBlue decided to start charging $50 per checked bag instead of offering it as a free service. It also removed the additional legroom JetBlue was famous for in the industry. To drive up perceived customer value, JetBlue is adding to its fleet a new airplane (Airbus A-321), which scores significantly higher in customer satisfaction surveys than the older A-320. Although JetBlue already flies internationally by serving destinations in Central and South America as well as the Caribbean, Hayes is considering adding selected flights to Europe. Flying non-stop to cities in Europe such as London is now possible with the new Airbus A-321. Flying longer, non-stop routes drives down costs. International routes, moreover, tend to be much more profitable than domestic routes because of less competition, for the time being.