Strategic look on JetBlue in 2010. Written for Business Strategy Course at FSU.

3.  A free baggage allowance (under 50 pounds)
 JetPaws- for your pet travel needs
 TRUE Blue loyalty program
 Access to low cost, luxury flights
 Wifi and Inflight Entertainment
 Gift Cards

4.  Later in this PowerPoint you will find a Matrix with all of the
positions; the reasons will be in the meat of this PowerPoint.
 The BCG Growth-Share Matrix is a portfolio planning model
developed by Bruce Henderson of the Boston Consulting Group in
the early 1970's. It is based on the observation that a company's
business units can be classified into four categories based on
combinations of market growth and market share relative to the
largest competitor, hence the name "growth-share". Market growth
serves as a proxy for industry attractiveness, and relative market
share serves as a proxy for competitive advantage. The growth-
share matrix thus maps the business unit positions within these two
important determinants of profitability.
◦ (http://www.netmba.com/strategy/matrix/bcg/)

5.  American Airlines
 Southwest Airlines
 United/Continental Airline Merger, now called United Continental Holdings
http://www.dailyfinance.com/company/jetblue-airways-corporation/jblu/nas/top-competitors

6. 2008 figures JetBLue Southwest United Contine- American
True Blue Program Rapid Rewards ntal
% of 3.7% 6.4% 8.3% 8.5% Almost 10%
passengers
that flew on
pts
Number of 297,000 2.8m 2.3m 1.6m 3.1 m
travel awards
issued
Points earned 6 Points for 2 Points per 25
every dollar, any round-trip miles
(booked per
online) dollar
Miles/Points 10,000 points 16 credits 25000 25000
needed to miles miles
redeem a
round-trip
flight in North
America
Sources: sec fillings and http://www.insideflyer.com/articles/article.php?key=5277

7.  1- American Airlines
 2- Continental Airlines
 3- United airlines
 4- Southwest Airlines
 5- JetBlue Airlines

8.  OPERATIONS COSTS
 FFPs are big operations, employing hundreds of marketing, customer service and technical staff. Other significant costs:
facilities, computer hardware and software, phone systems.

 COMMUNICATIONS COSTS
 Member communications: enrollment materials, program brochures, newsletters, postage, etc.

 TRAVEL AWARDS COSTS
 Travel award costs depend on whether the member uses a free award ticket on the host airline, or an award on one of the program
partners.

 1. When a member uses a free ticket on the host airline, the costs include...
 (a) Direct costs (extra costs of meals, fuel, etc. required to carry an incremental passenger)

 (b) Displacement costs (where a non-paying passenger occupies a seat which would otherwise be occupied by a paying passenger)

 (c) Diversion costs (where a customer uses an award instead of buying a ticket)

 Whereas (a) will always be a cost, (b) and (c) may or may not apply, depending on how full the flight is, and whether the member would
have traveled even if he'd had to pay for the ticket.

 2. When a member uses an award on a program partner...
 The host pays the partner company, in essence buying the award for the member. Typically the rate would be between 1-2 cents per
redeemed mile.

 Example: A free trip to London on AAdvantage partner British Airways (available for 50,000 miles) would "cost" AA between $500 and
$1000, depending on the per-mile rate negotiated between AA and BA. Assuming the member earned those 50,000 miles flying on
AA, and AA earned on average 10 cents per-flown-mile, the award would amount to a 10-20% rebate to the member (simply the
member's revenue contribution to AA, versus the cost to AA of the award ticket purchased from BA).

9.  PARTNER REVENUES
 Because FFPs are such effective marketing programs, many companies are willing
to pay for the privilege of participating in them as program partners. (Such
partnering also benefits the FFP host company, which wants its FFP to boast a wide
array of high-quality partners.)

 Typically, a partner company pays the host company 1-2 cents per mile earned
when a member uses the partner's product. (These expenses are counted against
the advertising or sales promotion budget, and can be significant. A hotel giving
500 FFP miles (@$.01 = $5) for a $100/night room stay suffers a 5% yield dilution,
right off the top.)

 ADVERTISING SAVINGS
 Also counted on the revenue side of the ledger are the savings FFP marketing
affords over mass-market advertising.

 Because FFPs allow targeted communications with the airlines' proven customers,
it is not necessary to spend as much on expensive (and inefficient) print and
broadcast advertising to maintain the interest and loyalty of current customers.
The dollars "earned" through these savings run into the millions.

10.  American Airlines has issued the most
rewards, which means that they have had people
accumulate the most points, which means more
people are using the program.
◦ AA was one of the first to implement a rewards program
 AA has the highest percentage of passengers
using its program
 JetBlue has the lowest percentage and the lowest
number of awards issued
◦ JetBlue is also one of the newest airlines and has one of
the newest loyalty programs, so they have a lot of room
for growth, a lot of potential, especially considering how
well they have done in other areas.

11. Suggestions
In order for JetBlue to increase their market share they should
continue to expand and remain profitable. Things look positive
for this relatively new airline, but they must remain competitive
through the things that have allowed them to be competitive–
their marketing, comfortable flights, pet friendliness, low cost
and entertainment.
Another suggestion is that JetBlue could better promote the
program through Viral Videos over the internet.
A third suggestion is to create a forum where answers can be
found for questions about loyalty programs. They do have a FAQ;
however, I had many questions that I had to search diligently for–
the average consumer would most likely give up

12. Because they matter
Pet Programs

13.  P.A.W.S, stands for ―Pets are welcome at
Southwest‖- Southwest
 JetPaws- JetBlue
 United Airlines, no pet program, just a pet
policy
 Continental Airlines, no pet program, just a
pet policy
 American Airlines, no pet program, just a pet
policy

14.  JetPaws is JetBlue's exclusive program designed to provide pets and their owners the tips and
tools they need for a smooth trip from start to finish. We're simply committed to each and
every one of our customers—including the four-legged ones. There's no charge and the
program provides:
Pet carrier bag tag - a bag tag will be attached to your pet carrier at check in to let everyone
know your pet is ready to jet.
Travel Petiquette™ - a handy list of JetBlue's social graces of pet travel.
TrueBlue® points - you'll earn 300 TrueBlue points each way when traveling with your pet. If
you're not a TrueBlue member, sign up now, it's free!
JetPaws welcome email - once you book your pet, you will receive a welcome email with useful
information such as next steps, Petiquette and travel tips.
Free Pet Travel Guide - a useful, downloadable e-booklet featuring: The ins and outs of jetting
with your pet from the moment you book your flight to your arrival at your final destination.
 Travel Petiquette
 Pet-friendly hotels, restaurants and parks plus animal hospitals in some of JetBlue's major
cities
 Accepts small dogs and cats
 $100 dollar one way fee per pet
 Travelers earn 300 TrueBlue points if they travel with a pet.
 www.Jetblue.com

15.  $75 dollar charge each way
 Only for small cats and dogs
 Pets must be accompanied by owner
 Not as developed of a program- marketing
wise.
◦ JetBlue has a more focused website whereas
southwest still seems like others that appear to just
have a pet policy.

16.  Only Cats and dogs allowed
 Allowed Travel Destinations
◦ Flights within the 48 contiguous United
States, Alaska, Puerto Rico, St. Thomas and St.
Croix.
◦ From the U.S. to Canada, Mexico and the Caribbean
provided the country of arrival permits entry.
 Free within US, 100 dollar charge outside of
US
 Pets can travel alone

17.  Accepts birds, dogs, rabbits, guinea pigs, and
other animals
 Unaccompanied pets are allowed
 Charge between 175 and 250 dollars per
flight

18.  125 dollars to transfer a pet one way
 Can earn miles through Petpass program

19.  American Airlines has the least cost, but
JetBlue has the best marketing.
 United Airlines accepts more animals, but
charges substantially more
 JetBlue also appears to have the most user-
friendly website, the appearance of empathy
for the desire that customers have for their
pets to be safe.

20.  JetBlue is doing a great job at promoting the
―new‖ policy; however, they should
concentrate a percentage of their efforts on
viral videos and social media– something they
are doing well with the overall company.
 They have a Facebook, but it may be even
more helpful if they connect a PetPaws
Facebook page with the JetBlue one– a page
where pet owners can create a community.
The JetBlue page has 430,557 likes. That is
great!

21.  JetBlue (domestic, economy)
◦ First bag free, and carry on.
 All checked bags must not exceed 50 pounds
 $30* fee for checking a second bag and a $75 fee for a third bag
 American Airlines (domestic, economy)
◦ 25 dollars for first checked In bag
 Bags must not exceed 50 pounds
 $35* fee for checking a second bag, $100 dollars for a 3rd bag.
 Southwest Airlines (domestic, economy)
◦ First two bags are included in ticket
 Bags must not exceed 50 pounds
 $50 dollar fee for a 3rd through 9th bag.
 Continental Airlines (domestic, economy)
◦ First two bags are free if you are part of their elite/first class loyalty
program, or if you are in the military; otherwise first and second bag
check ins are 23 and 32 (online) and 25 and 35at the airport.
 United Airlines (domestic, economy)
◦ First bag is 25 dollars, second bag is 35 dollars.

22.  Based on customer cost, two bags, online
purchase, and the average flyer (someone
that is not part of a loyalty program):
Tied-4- American
Tied-4- United
3- Continental
2- JetBlue
1- Southwest Airlines

23.  Not much to suggest here: JetBlue has an
advantage to its other competitors when it comes
to price for luggage- and that is a huge
competitive advantage. The main concern is
southwest, which happens to be one of its
biggest rivals in the Low cost carrier market. It is
necessary for JetBlue to ensure that it does not
get beaten due to lower prices by its competitors.
Factors that would allow them to lower prices
would include changes in oil prices and other
operational costs.

24.  Major differences:
◦ United Airlines promotes their cards as selling miles
and not gift cards
◦ Southwest has the greatest amount you can
purchase, $25,000
◦ All other airlines provide gift cards
◦ Gift cards are nothing new
◦ All these gift cards rank similarly
 Conclusion: all companies are doing a great
job.

25.  One flight, five airlines, who offers the best price?
 JetBlue- $183- 3rd Place
 Continetal- $163- Tied
 American Airlines- $158- 1st Place
 United Airlines- $163- Tied
 Southwest- does not offer flights to Newark
A Comparison for fun
Side By Side Comparison of Flight based on ticket details:
Departure: December 12, 2010
One Way ticket from Fort Lauderdale Airport to Newark, New Jersey
Departing before Noon
Based on the lowest price

26.  I found it interesting that JetBlue didn’t have the greatest
deal, considering that they are an LCC. However, it might
put things into perspective to remember that JetBlue offers
things that other Airlines do not:
◦ A lot more leg room and comfort
◦ Free Wifi, TV per seat, and movies
◦ And, according to JD Power and Associates, great service.
 The airline industry is not a new industry; however, JetBlue
has managed to be one of the top airlines in an industry
that is known for entry barriers and extreme competition,
so I would still classify them as question marks due to
their high growth over the last ten years, but small market
share (see next slide). JetBlue should continue being
competitive and find ways to continue cutting cost so they
can compete in their niche of low cost, luxury travel.

27. 2010 Top 10 U.S. Airlines Market Share based on Revenue Passenger Miles[29]
Rank Carrier Market Share
1 American 13.8%
2 Southwest 13.8%
3 Delta 11.8%
4 United 10.4%
5 US Airways 8.0%
6 Continental 7.6%
7 Northwest 4.8%
8 JetBlue 4.3%
9 AirTran 3.4%
10 Alaska 3.1%
11 Other 19%
http://www.wikinvest.com/stock/JetBlue_Airways_%28JBLU%29

28.  American Airlines: flights over 3 hours are
12.95 or 30 day subscription of $29.95
 United Airlines: ranges from from $8-$13
 Southwest Airlines: 5 dollars
 JetBlue: free wifi access
 Continental Airlines: no wifi
 Rankings based on likelihood to attract customers:
 1- Jetblue
 2- Southwest
 3-Tied for United and American Airlines
 4- Continental Airlines

29.  JetBlue has done a great job of promoting there free
Wi-Fi, even though carriers that offer Wi-Fi at a
charge usually don’t ask for more than 13 dollars– I
find that interesting considering that people will
make a huge deal out of this, but, alas, it’s
psychology. JetBlue probably loses money doing
this, but makes up for it in the attention it receives.
 I recommend that JetBlue continue promoting their
Wi-Fi; however, it may be a competitive parity
because other companies, like continental are already
talking about installing wireless internet. Also, they
should always be conscious of Southwestern because
they are one of their most similar/dangerous
competitors .

30. JetPaws
TrueBlue Wireless
Internet
FLights
Gift Cards Baggage

32. One of the largest independent regional airlines in the United States.
According to www.Jetblue.com, Now JetBlue customers can enjoy smooth,
simple connections from Boston's Logan International Airport to Nantucket
(ACK), Martha's Vineyard (MVY), Provincetown (PVC), Hyannis (HYA) and
Rutland, Vermont (RUT) on Cape Air. Customers can book connecting
flights between Cape Air’s New England cities and JetBlue cities online at
www.jetblue.com
Related Diversification

33. On February 14, 2007, JetBlue entered into its first codeshare
agreement, it happened with Cape Air.
Codesharing: the practice of multiple airlines selling space on
the same flights, so Aer Lingus, Lufthansa, and Cape Air can
fly on JetBlue planes, and the other way around, allowing
customers more freedom and less hassle
JetBlue Airways announced, that it had ―entered into a
marketing partnership with Cape Air, an airline based in
Hyannis, MA, to provide easy connecting service beyond
JetBlue's Boston focus city to four new destinations served by
Cape Air: Nantucket, Martha's Vineyard, Provincetown, and
Hyannis, MA.‖
http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=963198&highlight=

34. JetBlue customers can now easily connect to Ireland’s Dublin and Shannon
airports through our partnership with Aer Lingus, Ireland’s airline
providing true Irish hospitality, low fares and access to great destinations.
http://www.jetblue.com/about/ourcompany/aerlingus/
Related Diversification

35.  On February 6th 2007, USA today reported JetBlues plans to develop
an alliance with Aer Lingus.
 On February 1st 2008, JetBlue announced details about this alliance
 On April 30th 2008, JetBlue and Aer Lingus ―celebrated their
partnership by welcoming the first customers connecting between
the two airlines at New York's John F. Kennedy International Airport.
The innovative partnership enables Irish and U.S. customers to book
a single reservation between Ireland and more than 25 U.S.
destinations, connecting through JetBlue's home base at JFK.‖
 http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=1137738&highlight=

36.  One of the world’s largest airlines,
Lufthansa flies from 21 North
American cities to over 200
destinations in nearly 80 countries,
through its Frankfurt and Munich
hubs. Together with its partners,
Lufthansa serves 915 destinations in
160 countries.
 An industry innovator, Lufthansa has
long been committed to
environmental care and sustainability,
operating the most technically-
advanced and fuel-efficient fleet in
the world. Lufthansa will be the
largest European operator of the
Airbus A380 and is the launch
customer for the new Boeing 747-8.
For more information please visit
lufthansa.com.
 http://www.jetblue.com/about/ourcompany
/lufthansa/
 Lufthansa currently owns a 19 percent
Lufthansa stake in JetBlue.
Related Diversification

37. On January 22, 2008, Lufthansa and JetBlue completed their stock purchase transaction
that established a 19 percent ownership of JetBlue by Lufthansa
On March 12, 2008, Financial Times reported Lufthansa’s plan for an alliance with JetBlue.
On August 31, 2009, Lufthansa signed a codeshare agreement with JetBlue
On November 11, 2009, began their codeshare agreement via Boston and New
York, expanding customer choices for both airlines, and allowing JetBlue customers with
new access to Europe, Africa, the Middle East, and Asia
On October 1st 2009, ―Travelers flying JetBlue from these cities will be able to connect via
New York/JFK or Boston onto Lufthansa flights bound for Germany and beyond, including
top cities like Delhi, Madrid, Rome, Tel Aviv and Zurich.‖
Austin, Texas
Buffalo, NY
Fort Lauderdale, FL.
Fort Myers, FL
New Orleans, LA
Pittsburgh, PA
Raleigh/Durham, NC
Rochester, NY
San Juan, Puerto Rico
Syracuse, NY
Tampa, FL
West Palm Beach, FL
http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-
newsArticle&ID=1337578&highlight=

38.  JetBlue struck a deal to provide
connecting flights with them
when they are flying into the
United States. ‖JetBlue will
provide connecting flights from
its destinations in the US and
Caribbean and Emirates will
handle the long haul routes to
the Middle East from New York’s
JFK. This deal comes on the
heels of a similar interlining
agreement between JetBlue and
American Airlines.‖
 http://www.lowfares.com/blog/
2010/11/17/jetblue-and-
emirates-airlines-alliance/
Related Diversification

39. On November 15, 2010, JetBlue Airways and Emirates (one of the
worlds largest international carriers) partnered to create new
global connections
This partnership will allow JetBlue to ―connect to cities as diverse
as Auckland, Bangkok, Hong Kong, Kuala
Lumpur, Nairobi, Singapore and Sydney plus ten cities in
India, points throughout the Middle East, and a host of exotic
island getaways including the Maldives, Mauritius, and the
Seychelles,‖ greatly enhancing JetBlue’s scale and ability to
compete with other Airlines.
=
http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=1496341&highlight

40. JetBlue and South African Airways (SAA) Africa’s most awarded airline have
partnered to offer easy connections and seamless travel through New York’s JFK
airport to over 40 destinations in southern Africa and beyond.
JetBlue customers are now able to book travel to all SAA destinations worldwide:
South Africa, Kenya, Mauritius, Tanzania and Zimbabwe are now all within easy
reach with the convenience of a single ticket and automatic bag transfer at New
York’s most convenient hub. Visit flysaa.com to start your journey right now.
http://www.jetblue.com/about/ourcompany/south-african-airways/
Related Diversification

41. On May 12, 2010, an agreement took place with South African
Airways that allowed travelers to fly on both carriers with one
single ticket.

42.  JetBlue and American Airlines have teamed
up to offer convenient connections
between 26 domestic JetBlue markets and
15 international destinations served by
American from New York's JFK and
Boston's Logan airports. The interline
service can be booked through jetblue.com
(coming in early 2011), travel
agencies, American Airlines AA.com
website, American Airlines ticket counters
and American Airlines Reservations.
Additionally, JetBlue's TrueBlue members
may earn TrueBlue points when they fly on
American flights in the select markets
listed above. Enjoy the convenience of
interline service with seamless check-in
and baggage transfers when connecting
between JetBlue and American within any
of our included markets.
 http://www.jetblue.com/about/ourcompany/aa/
American Airlines
Related Diversification

43. On March 31, 2010, it was announced that American Airlines and
Jetblue had arranged an alliance
On November 17, 2010, JetBlue and American Airlines announced
a reciprocal frequent fler agreement, which allows members of
the American Airlines loyalty program and the JetBlue loyalty
Program to earn points on select routes

44.  Now a wholly owned
subsidiary of JetBlue.
 LiveTV provides televisions
for the back of headsets
and LiveTv channels that
customers can watch while
inflight. Jetblue provides
this service for free, all
other Airlines do not.
 It is interesting to note that
LiveTV also provides
services to
Continental, Virgin
Blue, Frontier, WestJet, Airtr
an, Expressjet, Air One, and
Blue Wings
JetBLue LiveTV
Unrelated diversification

45.  JetBlue has done an incredible job of expanding. It can be easy to
forget that JetBlue, as a company, has barely existed ten years-it
is in credible that it is considered one of the top Airlines of the
United States. They know what they are doing.
 The decisions made by the Executives to expand alliances with
partners worldwide is a smart decision considering that they are
mostly a domestic airline. I believe these partnerships are only
the beginning and that JetBlue will continue to acquire
partnerships in various strategic locations. JetBlue is one of the
fastest growing airlines, and one of the few that are consistently
profitable; I have no doubt that their profitability is largely
influenced by their related and unrelated diversification
strategies.
 The fact that their subsidiary, LiveTV, is in the Airplanes of many
other well known Airlines is a great indicator that the Airline is
using that partnership to create value in their company (others
must charge customers, but they don’t have to- so customers
will be more inclined to go with JetBlue).

46.  The next 3 years will belong to JetBlue. It is highly unlikely that the Airline will
surpass giants like American Airlines; however, I see JetBlue becoming an even
stronger player in the industry; possibly surpassing Southwest- though that may
take longer than JetBlue.
 The next 3 years will consist of reduced cost for JetBlue because of the savings
that occur when airlines participate in codesharing (almost no expenses are
incurred by JetBlue when another airline’s customer travels on the Airplane,
because that airline pays for the cost per seat).
 The next 3 years will bring more destinations for JetBlue customers to connect to
with all of their current partners, as well as new partnerships.
 The next three years will show an increase in customer loyalty to JetBlue because
of their marketing efforts toward their TrueBlue frequent flyer program. Their
loyalty program is still relatively new, and I do not doubt that JetBlue’s excellent
marketing will lead to a greater awareness of the programs benefits.
 The next three years will bring lower costs as a result of economies of scope from
all of their partners working together, but most especially Lufthansa.
 The next 3 years will consist of more competition from other Airlines developing
possible partnerships with other companies similar to LiveTV; possibly leading to
more perks for customers, or a struggle for JetBlue to diversify itself- though,
given their track record, JetBlue, will do just that in order to deliver value, style,
and service.

47.  1. The purchase of a subsidiary oil company that
would allow JetBlue to purchase part of their oil at a
discount. In an industry where cost of oil is one of the
greatest determining factors of success, reducing oil
prices would boost JetBlue to a whole new level.
 2. A partnership with Amazon where Amazon
provides Kindles that JetBlue can have on their
airplanes, exclusively with JetBlue, could help
continue the ―cool‖ vibe surrounding JetBlue’s
brand, while providing a benefit to customers that
enjoy reading and inflight entertainment- some
people prefer to read. JetBlue could charge a minimal
fee, or provide it for free depending on whether
JetBlue would be able to afford that.