BUSINESS ETHICS GOVERNANCE & SOCIAL

RESPONSIBILITY
CASE STUDY REPORT-2
ON

JetBlue- Bringing Humanity back to Air

Travel?

Submitted By: Group3 (Section B)

Jahnavi (21080)
Jahnavi De (21081)
Jakkampudi Moulithya (21082)
Kavana K (21083)
Kelvin Francis (21084)
Kuntal Mandal (21085)
Kushagra (21086)
Mullapudi Teja (21087)
Suraj Maheswaram (21088)
Session 2021 – 2023

Submitted To:
Dr. Nilanjan Sengupta
 Case Facts
 Jet Blue Airlines was established in 1999.
 David G. Neeleman, CEO, entered the airline industry with the greatest initial capitalization
of $160 million and a slew of advantages.
 Despite an unsustainable growth rate, Jet Blue continued to expand by purchasing more
aircraft.
 On Valentine's Day 2007, JetBlue Airways changed the course of history.
 A winter snowstorm that enveloped the New York metropolitan area, including JetBlue's
hub.
 It detained hundreds of the company's passengers for up to ten hours.
 It was a nightmare for business and public relations.

1) Were there any pre-crisis signs that the company would respond the way it did? If, so,
what were the indication of a potential crisis?

By assessing the current conditions of the organization, the pre-crisis stage from the initial approach
in crisis management assists the company in lowering the recognised risks that can lead to crisis. Pre-
crisis indicators include Low-cost operating structure, insufficient personnel, dispersed workforce,
communication system on a shoestring Quarterly profit fell from $8.1 million to $2.7 million,
indicating that the company's growth rate was becoming unsustainable. Potential crisis indicators
include New York is experiencing a severe ice storm. There was no information from air traffic
controllers or pilots, and the workforce was not well trained to deal with unusual weather or an
emergency. The company expected the weather to improve and to be able to fly again, which
allowed it to continue to lead and keep its customers happy. As the hurricane intensified, the
decision proved to be quite serious. The planes landed at their gates, hoping to receive news of the
storm. Meanwhile, several airlines dropped off, were loaded with taxis, and took over most of the
airline's gates. Hundreds of JetBlue passengers were waiting at the airport for flights that were about
to be cancelled. Former JetBlue CEO David Neeleman admitted that the company's management
structure was insufficient, and that their communications systems lacked a budget, leaving pilots and
operators in the dark. The business also admitted that no qualified staff were unavailable to lead the
pilots. One of the most critical points was the terrorist incident on September 11, 2001. While the
company made substantial progress from 2002 to 2004, the impact of rising gasoline prices was
unexpected, and the company's quarterly earnings dropped significantly in October 2005. However,
rather of evaluating the company's internal structure, JetBlue attempted to develop by acquiring
more planes and extending routes, which resulted in massive losses, commonly known as "The
Valentine's Day nightmare, on 14 February 2007." Except for Jet Blue, several airlines have cancelled
flights in advance when severe ice storms threaten the New York area as a preventive step for
passengers and aircraft. The company stated that keeping their airlines operational would increase
customer loyalty. This was a costly blunder that severely harmed the organization's credibility.

The following were the pre-crisis indicators-

• No proper training for staff / Employees were divided: As the station was in the price competition,
it turned to training staff to be of less acceptable standard. So, after the fiasco at the airport it was
said that the crew was full of energy.

• Rising fuel costs: The external factor, which is the increase in fuel costs, has played a major role in
organizing the decision, as it has led to a drop in revenue of $ 2.7 million. To cover this loss JetBlue
turns to piloting in bad weather, sacrificing the promise of comfort and satisfaction for customers /
passengers.

• Inactive Database Transfer: When 10 JetBlue was stranded on the runway, flight controls found it
difficult to communicate with pilots, who did not receive further instructions.

• Insufficient staff: For passengers who were lucky enough to stay inside the airport and not the
network company, they were not treated due to shortages if their JetBlue affiliates were able to
answer their questions and provide information about their flights. Therefore, adding customer
dissatisfaction, discomfort, and confusion.

• Poor infrastructure: Evidence of this was the inadequacy of the JetBlue handle problem. For
example, where the JetBlue number 1-800 can handle the flood of current calls. The profitable
company infrastructure is expected to have better technology and support infrastructure to deal
with the crisis calmly and consistently.

Recommendations-

• A central place where all aspects of the airline may be coordinated must be constructed for an
Emergency Command Centre. Regardless of their location or job, the command centre must
develop a communication network and assist all members, including crew members. 
• Provide basic multitasking training to all staff so that they can respond to special assignments.
Every member of the team (from airport operations to marketing and corporate real estate, as
well as all crew members in all sectors) should have a distinct and valuable role to play in
addressing the issue during a crisis. They must be able to multitask and supervise the work of
other departments to ensure that the flight departs on time.
• Drills and table-top exercises should be done on a regular basis throughout the year to keep
emergency responders on their toes. 
• All crucial internal messages should be archived on the JetBlue Internet that should allow search
• Expand the JetBlue.com Press Room beyond news releases to include backgrounders, leadership
biographies, and white papers on topics such as airport flight limits and proposed passenger bill
of rights legislation, among other things.
• To foster a sense of family among all staff present or affiliated with the crisis management team,
as well as to safeguard and give additional help. Employee retention is improved even more
when the company remembers and honours employees during challenging times.
• Make sure everyone on the crew has access to company e-mail and Internet information.
• Continue to explore for new ways to reach out to innovative stakeholders via social media.
• Keep all vital information in a resource "lock box," including contact lists, priority stakeholders,
emergency contacts, insurance plans for various situations, and other business information.
JetBlue Airlines, for example, might have used cloud services to create a kind of lock box.

Conclusion-

This sequence of events suggests that the company did not effectively train its employees, had a
primitive communications system that kept pilots and flight attendants in the dark, and a reservation
system that was too small. Due to the company's financial troubles, JetBlue management was
oblivious of the long-term consequences and was only concerned with short-term aims, so they
failed to consider their stakeholders. Unexpected crises present the modern firm with several issues,
including financial insecurity and organizational unpredictability. A crisis can be just as damaging to a
company's image and reputation as a decline in productivity, a drop in stock price, or the loss of
important corporate assets.

2) Evaluate JetBlue’s handling of the ‘aftermath’ of the event. What actions would you take
as CEO of the firm if you were to handle the situation for containing the crisis from the
stakeholders’ perspective? 
The occurrence that happened was unpleasant and can be described as a "sudden crisis,"
but it is important to recognise that all of the chaos that occurred was simply the result of all
of the company's key decisions. The organization's management and systems lacked the
capacity to handle such a massive problem, the corporation had not kept up with its growth,
and it was inexperienced when it came to making such quick decisions. The employees were
not properly trained, and the number of employees was insufficient. For years, the company
was able to manage with little personnel, but it was not prepared for an unexpected
calamity like the "Valentine's Day Blunder."
The original Valentine's Day blunders were created by an inadequate communication
system, which has been dubbed the "shoestring communications system," but the disaster
also revealed fundamental management faults in the corporation, which contributed to
JetBlue's troubles. JetBlue's objective is to expand swiftly, but as the company has
developed, its management processes and communications have not kept up, resulting in all
of the problems that the company had to deal with during the crisis. To make matters worse,
JetBlue had never dealt with a crisis of this magnitude before, making it difficult for the
airline to make fundamental operational decisions. However, the problems stemmed from
the company's lean and mean cost structure, which keeps costs down while simultaneously
reducing the number of staff available to assist in a crisis.

The issues faced by company can be explained through Crisis Management Approach.
a) First approach: Pre- crisis through resolution
According to this model, a crisis consists of four stages
 Prodromal (pre-crisis stage): Warning symptom of the case was that even
though there was a warning given to all of the airlines about a severe ice-storm
hit the New York are. All the airlines had cancelled their flight ahead of time as a
precaution for passengers and aircraft. Except for JetBlue’s, who ignored the
warning and did not cancel the flights which resulted in the Valentine’s Day
“Customer Disaster”.
 Acute Stage (Crisis occurs): 10 JetBlue airplanes found themselves full of
passengers and unable to take off. Planes literally became frozen to the tarmac
and could not get back to the gates. There were communication problems faced
by the airplanes. Damage has already been done in the second stage, acute
crisis. The goal is to keep as much of the damage under control as possible. This
is usually the shortest of the levels.
Passengers were frustrated because they were detained in the runaways, there
was no food, no air ventilation, flight crews stopped answering, and there were
no buses to evacuate the passengers since JetBlue airline ignored the warning
signal. This decision cost them heavily and also, they lost customer’s trust in the
process.
 Chronic Stage (lingering): The corporation, as stated in the case, had a
shoestring communication network, which meant that its network was
 constrained by funding, time, and data availability. The failure of the
communication system, according to the case study, was one of the key factors
for the crisis' mishandling.

Another reason the airline's reputation was tarnished is that it failed to offer
customers with straightforward answers. As a result, this demonstrates a lack of
consistency in communication, casting a negative picture on the organisation.

Furthermore, any type of risk should not be accepted amid adversity in order to
avoid repeating such unpleasant events. Another key cause of the calamity was
a lack of trained personnel.

1000 flights cancelled & $30 million losses for refunds, travel vouchers,
incremental costs. Loss of reputation

 Resolved Stage (health restored):

CEO took the responsibility and also apologised with formal letter.
They understood the problem faced without proper communication system and
had learnt their lessons and the event lend to the implementation of new policy
called Customer Bill of Rights. Company reviewed its code of ethics.
JetBlue created a Customer Bill of Rights to formalise what customers should
expect from an airline and to demonstrate the company's commitment to
responsibility, which is critical in establishing or re-establishing customer
confidence. Neeleman appeared on morning and evening talk shows to
personally apologise and discuss what had occurred, how sorry he and the
leadership team were, and the purpose of the Bill of Rights.

Stakeholder management
Mapping Stakeholder Coalition
• Based on the stakeholder analysis matrix, we may deduce that customers must
be moved from a non-supportive to a supporting phase. They are gravitating
toward competitors because they are dissatisfied.
• Mapping actual stakeholders (customers) with potential stakeholders such as
advertising agencies, outsourcing service providers, and aviation consultancies
might aid in repairing and developing the company's lost image in this
circumstance.
• Accept full responsibility, apologise, and ensure that moral or ethical
commitments to customers are met.
• Attend to customers and restore lost trust in the company
• Establish communication objectives for connecting with internal and external
stakeholders
• Create Corporate Communications-specific protocols for formally recognising
crises and emerging threats to company stability
• Collaborate with the Marketing group to promote the Customer Bill of Rights
with key external stakeholder groups, particularly existing and potential
customers.
Recommendation:
Understanding the reasons of mistakes and learning from them is critical
• The importance of an effective crisis management team and effective
communication
• Maintaining stakeholder confidence while balancing the business is critical
• It is acceptable to take moral responsibility for the problems that customers
have caused.
• For a company's long-term growth, credibility is more crucial than money.