SHREYA PGFB1144

WRITE UP ON
JETBLUE AIRWAYS: CHALLENGES AHEAD

Submitted To
Dr. Deepak Singh

Submitted By
Shreya PGFB1144 PGDM (G) 2011-13

Jaipuria Institute of Management, Noida

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SHREYA PGFB1144

Strategic Issue: To provide a low cost carrier segment within the airline industry and to achieve an image of far superior customer service. Challenges: Maintaining JetBlues culture as it grows, dealing with the surfing complexities of two fleet types, managing maintenance expenses as airplanes and engines begin to age, and dealing with an increasing senior level pool Summary The case talks about how to achieve the position which jet airways were holding before 2005. David Neeleman the founder and chairperson of Jet Airways Corporation sought to bring humanity back to air travel. They have faced a rapid growth between the years 2000-2004 and named as Best Overall Airline by Onboard Service Magazine. There was cut-throat competition in the industry the main competitors were Southwest Airlines, AMR Crop., United Airlines and US Airways. The bargaining power of the suppliers were very high as the employee and fuel were the two main components and according to the recent trends fuel price is rising at rapid pace which is leading to increase in the expenses of the airways which tended to increase the price of tickets. Bargaining power of customer was also high but to prevent customer to shift to others they provided new and innovative services in order to make their experience better. In order to reduce the cost many new technologies were used like removing paper use and establishing use of laptop which make system effective and opening online reservations, check in which helped both customers and airlines because it resulted in saving times. The recent strategies used by Jet Airways are Return to Profitability as it incurred losses in the years 2006. Jet Airways also started JetBlue Card in which after collecting 100 points a free round trip was offered to the customer. As we see the financial condition of the Jet Airways it was basically measured by three components:

Jaipuria Institute of Management, Noida

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SHREYA PGFB1144

Short Term Liquidity Long Term Stability Company Profitability Jet Airways was struggling in short term liability since 2005 we can see that payable turnover ratio was increasing which shows that jet airways are paying its suppliers at a minimum time even though the receivables are not able to pay. Long term stability is issue with the jet airways as it is difficult to maintain decreasing profits. They have maintained a fairly debt to asset mix and company profitability was decreasing as they were not paying dividends and there was declining return on equity and inconsistency of net income was a negative thing for Jet Airways.

Jaipuria Institute of Management, Noida

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