Individual Written Task

The Five Elements of Strategy at JetBlue

Danish Kanojia R2010D11421071

UEL-SG-7001-24500

Tutor: Georgia Sakka Vronti

Date: 3rd May

Year 2020 has been the most challenging time in the company’s history. The 20,000 crewmembers have
responded with incredible passion and determination, continuing to put JetBlue’s values front and center
as they deliver on the mission to Inspire Humanity. JetBlue intends to be a low-fare, low-cost passenger
airline that provides high-quality customer service. Using the strategy diamond, and public documents
posted at www.jetblue.com, JetBlue can determine what strategy JetBlue has pursued in order to meet its
stated objective.

In what arenas does JetBlue compete?

JetBlue’s network strategy is built on serving point-to-point routes from the focus cities – Boston, Fort
Lauderdale, Los Angeles, New York, Orlando and San Juan – and they believe that building relevance in
these key markets creates value for the customers and strengthens the business. Finally, in 2020 JetBlue
continued to prepare for European operations. In the third quarter of 2021, they have plans to begin
flying the customers across the Atlantic to London, the most popular destination that JetBlue do not yet
serve from Boston and New York.

What vehicles does JetBlue use to enter the arenas in which it competes?
JetBlue has given a lot of emphasize to customer satisfaction by introducing “Safety from the Ground
Up,” a multi-layer approach that encompasses enhanced safety measures on the flights, at the airports and
in the offices. JetBlue JetBluere the first airline in the U.S. to waive change and cancel fees to give more
flexibility to customers and JetBluere the first to require the use of masks onboard the aircraft.

What are its differentiators?

Cost control at operational level has been a major factor which helps JetBlue provide consistent customer
experience, following steps JetBluere taken in year 2020 in particular, looking at the pandemic situation
that has helped the organization function smoothly:
1. JetBlue reduced the full year capacity by 49% year over year to align flying with demand and
parked a portion of the fleet on a short-term basis
2. JetBlue temporarily consolidated the operations in certain cities with multiple airports
3. They have renegotiated service rates with business partners and extended payment terms
Through above similar steps JetBlue achieved operating cost savings of approximately $2.3 billion, or
32% year over year.

How does JetBlue’s staging—the speed of its expansion and the sequence of its growth initiatives—
reflect its timetable for achieving its objectives?
In 2020, JetBlue announced more than 80 new routes across the network, consisting of leisure or visiting
friends and relatives (“VFR”) markets, to generate cash through the crisis and into recovery and to
respond to current travel demand trends. Notably, JetBlue added Miami to the route map, one of the
busiest U.S. airports not previously served by JetBlue. JetBlue launched the first phase of the Northeast
Alliance with American Airlines in February 2021, following an exhaustive review by the U.S.
Department of Transportation. JetBlue believe that the alliance will help accelerate the recovery and set
JetBlue up for long-term success

What’s the economic logic of JetBlue’s strategy?

JetBlue’s income statements show that its operation costs are significantly lower than industry averages.
The COVID-19 pandemic drove a significant decline in demand beginning in the second half of March
2020. As a result, JetBlue has, and will continue to implement cost saving initiatives to reduce the
overall level of cash spend. Some of the initiatives JetBlue has undertaken include:

-Adjustments in flying capacity to align with the expected demand.

-Temporary consolidations of the operations in certain cities that contain multiple airport locations.
-Renegotiated service rates with business partners and extended payment terms.
-Instituted a company-wide hiring freeze.
-Implemented salary reductions for a portion of the crewmembers, including the officers throughout
2020 and into 2021.
-Offered crewmembers voluntary time off and separation programs, with most departures for the
separation program occurring during the third quarter of 2020.

JetBlue has also taken several steps to position the Company for recovery when demand for air travel
eventually returns:
 In June 2020, JetBlue announced the addition of 30 new domestic routes to serve customers in
markets where leisure and visiting friends and relatives travel JetBluere showing signs of
strength. These new routes include daily nonstop Mint® service from Newark Liberty
International Airport to both Los Angeles International Airport and San Francisco International
Airport.
 In July 2020, JetBlue announced plans for a multi-year JetBluest coast expansion from southern
California which includes moving the primary base of operations from Long Beach Airport to
Los Angeles International Airport
 Also in July 2020, JetBlue announced the intention to enter a strategic relationship with
American Airlines Group Inc. (“American”).
 In September 2020, JetBlue announced plans to launch 24 new routes aimed at immediately
capturing traffic on a variety of new, nonstop routes as demand increases.
 Reference

JetBlue’s 2020 Annual Report on Form 10-K

http://blueir.investproductions.com/~/media/Files/J/Jetblue-IR-V2/Annual-Reports/jblu017-jetblue-
2020-annual-report-JetBlueb.pdf