Jet Blue 3 Question Case Write-Up

JetBlue 3 Question Case Write-Up

Ryan Munge

Question 1: Given the Valentine’s Day Crisis, would it be financially feasible to overhaul JetBlue’s operating systems so that there is only one centralized operating system, as opposed to a patchwork of different systems?

• It is clear that one of the major issues exposed by the Valentine’s Day Crisis was the fact that JetBlue did not have a standardized operating system capable of dealing with setbacks (such as bad weather) in an efficient, customer-focused way. Highly publicized customer service debacles can prove fatal in an industry as competitive and unstable as the airline industry. At the same time, however, the slowing market growth may constrain the resources that JetBlue would have available for the overhaul. While resources are constrained, it is likely that another event such as the Valentine’s Day Crisis could spell the end of JetBlue, so any steps to taken to prevent a future event must be considered.

Question 2:  Given the rising fuel costs and uncertain demand, should JetBlue consider leasing new planes to add to its fleet each year instead of buying them?

• Trends indicate that fuel costs are on the rise, while demand for air travel has fallen as a result, and due to concerns about terrorism in the post-911 environment. Due to the fact that JetBlue will likely have slower growth in the coming years, it is important that they consider leasing as it requires a lower capital requirement than buying new planes. On the flip side, leasing could hinder future growth as JetBlue would not retain ownership of the planes after the leasing period. Buying planes does offer JetBlue the best prospects for growth in the long run as leasing costs add up over time. JetBlue must weigh the benefits of each option as they face a challenging market environment.

Question 3: Due to the fact that JetBlue has played a significant role in the design of the E190 and the fact that the E190 represents their best chance for future growth, would it be wise for JetBlue to scale back orders of the A320 in a greater proportion than orders of the E190?