Jet Blue Airlines Case Analysis
1. How would JetBlue describe its core competence? How does it help drive customer value? How does it establish a unique position for the company? JetBlue’s core competence is providing a great customer experience by providing things like leather seats for all customers, blue M;M’s, onboard digital TVs in every seat, and a young and stylish flight crew for a remarkably low fare price relative to its competitors in the same market.
Its other core competence is its human resource management’s values-based approach for building very strong internal and external relationships which drives the successful deployment of its business strategy which is to keep costs down and gets the most out of the fleet, while still providing high-quality service, which drives customer value. The employees believe in these values and serve the customer to the best of their ability in a consistent and highly productive manner.
This combination has enabled JetBlue to establish a unique position for itself by being able to offer excellent service (safety and on-time arrival included – the airline’s on-time arrival rate of nearly 80 percent leads the airline industry) and amenities as well as low fares. JetBlue has been profitable from its beginning, a rarity in the airline industry. JetBlue has gained significant market share on the routes it competes with the major hub-and-spoke airlines and consistently generate profits at a time when those same major airlines are losing billions.
JetBlue’s business model is self-reinforcing. Its planes are full because it offers amenities, low fares, and flies direct routes in attractive markets. At the same time, it is able to offer amenities and low fares, because its planes are full and it is highly efficient. 2. What core processes and technologies support the core competence? * JetBlue recruits bright young flight attendants right out of top schools, and pays them well: an hourly rate that is higher than the competition.
It managed to avoid the problem of the exorbitant salary for senior flight attendant that plagues many major airlines’ cost structures by maintaining a policy of no pay increases for its attendants after five years. This has the benefits of keeping JetBlue’s flight attendants young (reinforcing its youthful and fun image), non-unionized (people pick up after a few years, on to other opportunities), and much cheaper (no highly-paid, flight attendants with 25 years experience) without trading off on service (JetBlue understands that there are very few differences between new flight attendants and ones with 25 years of experience).
Ann Rhoades believes that people do not need to stay with an organization forever, but they will be truly taken care of when they are with the organization. JetBlue puts great emphasis on hiring people who are a good organizational fit to the company, those who will espouse it values and have a high commitment to the organization. When the employees come on board, these values are driven in from the beginning. JetBlue prefers to hire people with little industry experience when they can; they believe in the “can’t teach an old dog new tricks” philosophy.
3. What (internal and external) relationships are critical for creating the competence? Relationships between employees, employees and management (or crew and coaches), as well as employees and customers are key to creating the competence. Jet Blue’s HR management want employees to feel highly committed to the organization, thus they want the employees to know that they truly matter and will be taken care of and they do not need outside agencies, such as unions to take care of them.
Management act as coaches, rather than superiors, and a team spirit is fostered. Constant two-way communication is encouraged. Many airlines repeat the mantra of “employees come first,” but do not mean it. JetBlue truly believes that taking care of their employees and helping them internalize the company’s values creates a significant competitive advantage that will help drive its unique business strategy. Thus happy, confident, and committed employees build effective relationships with the customer and also drive down costs by being productive.
4. What human capital (employee knowledge, skills, abilities) supports the core competence? The skills of the top management team were key to defining the values and corporate strategy for JetBlue. Neelman’s airline industry experience and attention to detail as well as Ann Rhoades with significant HR experience (some at Southwest) clearly set JetBlue on the path to success initially and helped define the core competence that the employees must support.
JetBlue employees must have integrity, humbleness and an overall great attitude. Employee understanding and internalization of JetBlue’s 5 core values is imperative to success and directly supports its core competences. They have to know how to make decisions that conform to the values. The pilots have computer skills and receive aircraft training, but at the same time they must understand the values and integrate them with the training to truly support the core competences.
The ground crew must know how to perform their job functions in a competent matter, but do so in a very efficient matter to drive down costs, while not compromising safety, which is directly in line with the safety value. The Flight Attendants understand the FAA guidelines and in-flight procedures, but must also champion the values in order to give customers the unique JetBlue flying experience that promises safety, efficiency, extraordinary service event though the customer is paying a low fare.
