Case Memo: Jetblue Airways: Starting from Scratch

This case talked about the start up and the first year development experience of JetBlue Airways, an entrepreneurial firm founded in early 1999 by David Neeleman. Besides introducing the “birth story” and operations strategy, the case also focused on the HRM practices of the firm, which would help us identify the linkage between SHRM and the success of entrepreneurial firms. Furthermore, this case also inspired me to think about some very important factors and ideas about entrepreneurship we had discussed in class.

Founded in early 1999, JetBlue’s strategy was to combine common sense with innovation and technology to “bring humanity back to air travel.” To accomplish this, JetBlue aimed to be the first “paperless” airline, substituting computers and information technology for everything from flight planning to aircraft maintenance to the sole use of e-tickets. Besides efficiency, service was another important thing the company focused on. In the words of founder David Neeleman,”We like to think of ourselves as customer advocates. We believe that all travelers should have access to high quality airline service at affordable fares.” In the face of the depressing reality, however, the words seemed brave. Of the 51 U.S. airlines founded during the 1980s, only two, America West and Midwest Express, were still in operation, and American West had flirted with bankruptcy on several occasions. Between 1989 and 1999, 39 jet carriers began operating within the U.S. In 2000, only 17 of these remained in operation. Although experts were mixed in their outlook for JetBlue, David Neeleman still showed confidence. Someone might say that this demonstrated, based on the trait model, one important character of entrepreneurs: they were more willing to take risks and endure uncertainty. From my point of view, however, David Neeleman wasn’t really a bigger risk taker. In fact, he was just doing something in which he believed he could succeed. Or we could say, he was doing something he had a great chance to succeed.

Firstly, Neeleman had great experience in both airline business and entrepreneurship. He had gotten his start in the airline business in 1984 when he partnered with June and Mitch Morris to run the Southwest Airlines’ look-alike, Morris Air. He raised $20 million in venture capital from Michael Lazarus of the Weston Presidio group, and in just over one year increased the value of Morris Air from approximately $59 million to $130 million. After being acquired by Southwest Airlines, Neeleman jointed Southwest’s top management team as an executive vice president. Then he also went on to work as a consultant to a Canadian low-fare start-up carrier, West Jet Airlines. In short, Neeleman’s extensive experiences in start-up airline business, especially in low-fare start-up airline business, gave him a great chance to successfully