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Jetblue
Strategic Report for JetBlue Airways

Harkness Consulting
Innovation through Collaboration
Rosanna Smart Alisher Saydalikhodjayev Sayre Craig April 14, 2007

Table of Contents

Executive Summary ………………………………………………..3 Company History ………………………………….………………..4 Competitive Analysis ………………………………………………7
Internal Rivalry …………………………………………………………. 8 Entry ………………………………………………………………………… 9 Substitutes and Complements …………………………………….. 11 Supplier Power ………………………………………………………….. 12 Buyer Power …………………………………………………............... 13

Financial Analysis ………………………………………………….14 SWOT Analysis ………………………………………………………23 Strategic Issues and Recommendations …………………..25 References ……………………………………………………………30

Harkness Consulting

2

Executive Summary
From its initial flight in February 2000, JetBlue emerged into the heavily competitive airline industry as the little airline that could. While legacy carriers declared bankruptcy, JetBlue trounced its competition by offering low‐cost, customer‐focused service. Under the direction of the energetic David Neeleman, JetBlue became a major player in the airline industry. Operating domestic flights on a point‐to‐point system, JetBlue primarily manages East‐West and Northeast‐Southeast routes. While this route structure initially proved profitable for the company, rising costs and heated price competition are currently threatening JetBlue’s market share. The company’s stock price has dropped drastically since reaching a high of over $30 in 2004. Currently priced at less than half its 52‐week high, JetBlue must take serious strategic action in order to reinvigorate its business. After working with low‐fare carrier Southwest, a touch‐screen airline reservation company, and a small upstart airline in Canada, David Neeleman transformed his brainchild, JetBlue, into reality. Neeleman based his airline around five core values: safety,


References: http://www.jetblue.com   http://www.factiva.com  3 http://www.boeing.com  4 http://www.faa.gov  5 http://www.eclipseaviation.com  6 http://world.honda.com/HondaJet/NBAA2006/video/PressConference/  7 http://www.popularmechanics.com/science/air_space/4216980.html  8 http://www.barclaystransport.com/g550.html  9 Joe Sharkey, “Major Change Foreseen in Air Travel,” New York Times, October 7, 2003.  10 http://www.airlines.org/economics/fleet/  11 JPMorgan Aviation and Transportation Conference, 18 March 2008.  12 “Q4 2007 JetBlue Airways Earnings Conference Call”, 29 January 2008.  13 Southwest Airlines, 10‐K Filing for 2007.  14 http://moneycentral.msn.com/investor/invsub/analyst/recomnd.asp?symbol=JBLU  15 http:// finance.yahoo.com  16 http://www.reuters.com  1 2 Harkness Consulting 29  http://www.reuters.com   JetBlue Airways 10‐K Filing for 2007.  19 “Airlines lighten up to cut fuel costs,” Thomson Financial News, 28 March 2008.    20 David Swierenga, former Air Transport Association of America economist and president of aviation  consulting company AeroEcon. 9 May 2006.  21 Bureau of Transportation Statistics “Airline Data and Statistics,” Research and Innovative Technology  Administration, 2007.  17 18 Harkness Consulting 30
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