JetBlue Airways Vs Southwest Airlines

AsongTazifor

Filip Perunicic

Sonam Rapten

Vaishali Shukla

Yu Zhao

WExpose Inc.

JetBlue Airways: “Happy Jetting!” Introduction JetBlue Airways is a domestic, low-cost, traveler airline owned by JetBlue Airways Corporation. The company is headquartered in the Forest Hills neighborhood of the Queens, New York City with its major base in John F. Kennedy International Airport. The airline primarily serves locations within the United States, and flights to the Caribbean Islands, as well. Majority of their flights have as an origin or destination one of their major-operating cities: Boston, Fort Lauderdale, Los Angeles, New York, and Orlando. In 2009, JetBlue operated on average 600 flights per day, and was the 7th largest passenger transporter in America.2 History JetBlue was incorporated in 1998, but started their operations under David Neeleman in 1999, under the name “New Air”, and some of the company’s directors, including Neeleman, are ex Southwest Airlines staff. In 1999 JetBlue flew its first Airbus A320 aircraft from the John F. Kennedy International Airport located in Queens, New York City. In February of 2000, JetBlue flew its introductory flight between JFK and Fort Lauderdale, FL, and about a week later included service between JFK and Buffalo, NY. In June of the same year, JetBlue started flights between JFK and Orlando, FL and just a few days later JetBlue took delivery of its 5th Airbus A320 aircraft. Exactly a month after expanding their business on Orlando, Fl, JetBlue began flights between JFK and Ontario, CA, near Los Angeles, and a couple of weeks later JetBlue expand services from JFK to Rochester, NY and Oakland, CA, in the San Francisco Bay area. In November of 2000, JetBlue launched service between JFK and Salt Lake City, UT, and about a month later flew its one-millionth passenger and reported a $100 million in flown revenue for 2000.1 JetBlue was one of the very few U.S. airlines that actually made money during the drastic downturn in airline travel due to the September 11, 2001 terrorist attacks. Since its IPO on the NASDAQ stock exchange in the following year, JetBlue has become one of the most popular airline stocks in history and currently has about $2billion dollars in market capitalization. Business Operations & Routes JetBlue functions mainly on origin-to-destination routes with its fleet of 110 Airbus A320 aircraft and 41 “Embarear” 190 aircraft, which represents the most fuel-efficient fleet of any major U.S. airline. The corporation began with Southwest’s approach of presenting low-cost travel, but wanted to establish itself with in-flight entertainment, TV on every seat and satellite radio.1 As of December 31, 2009 JetBlue serves 60 destinations in 20 states, and 12 countries in the Caribbean and Central America. Their flights mostly consist of

transporting passengers within their domestic US routes, which accounted for 89% of their capacity in 2009. The notable distribution of JetBlue available seat miles by region is: East coast to west coast accounted for 34.7% of their route network operations, Northeast to Southeast accounted for 32.8%, in addition, medium and short distances were 11.2% of overall route network operations. The Caribbean accounted for 21.3% of route operations for the previous year of 2009.2 Mission Statement JetBlue mission statement is simply “to bring humanity back to air travel”. It is trying to achieve this goal by offering low-cost traveling, enhancing the commodity of traveling with its in-flight entertainment, and offering direct flights from one coast to another. As they just started their second decade in 2010, their main goal is to become “Americas’ Favorite Airline” for their employees, customers, and shareholders. Completing this goal is highly dependent on continuation of providing the finest customer service and delivering the well-known JetBlue Experience to the passengers, while maintaining financial health. JetBlue is doing this by offering what they believe to be the best domestic coach product and providing their customers with more value for their purchase. JetBlue’s Objectives Competitive Position JetBlue competes in the low-cost carrier section of the airline industry. JetBlue operates a point-to-point service, with flights from one city to another compared to the major airlines that use the hub and spoke system. JetBlue is the leading carrier in the number of flights from New York to Florida and also serves 40% of domestic passengers flying in and out of JFK airport in New York.2 JetBlue also provides most non-stop destination flights from Boston compared to any other carrier. JetBlue credits its top position among low cost airline to several parts of its value proposition. JetBlue’s ability to maintain low operational costs, unmatched customer service both in flight and on ground at its terminals allows JetBlue to generate repeat customers. JetBlue’s award winning customer service, JetBlue Experience, is a vital advantage that JetBlue enjoys in a very competitive and low margin section of the airline industry. Geographic Scope Domestic JetBlue’s current operations involve mainly passenger transporting. Majority of JetBlue’s operation, around 89% is focused on the domestic, US market and Puerto Rico2. JetBlue’s domestic routes cover the East and West Coast, primarily with its non-stop flight from New York to Burbank, California and the Northeast region to Florida.

International Over the years JetBlue has managed to significantly improve its services to the Caribbean nations including Puerto Rico, a region that continues to grow in its share of JetBlue’s yearly total capacity. JetBlue currently operates flights to The Bahamas, Dominican Republic, Bermuda, Aruba, The Netherlands Antilles, Colombia, Costa Rica, Jamaica, Barbados and Saint Lucia.2 Growth JetBlue plans to grow its current domestic and international routes traffic and add more domestic and international cities in its coverage. It plans to increase daily departures out of Boston by 30% by the summer of 2010.2 To further expand its services in the Caribbean, it has applied for route authority from the Department of Transportation for Punta Cana, Dominican Republic. JetBlue has also updated its customer service system in order to further improve its current operations, facilitate more commercial partnerships, and attract more business customers. JetBlue expects its excellence in customer service and attractive prices to achieve its growth targets. JetBlue’s growth strategy in terms of new routes is focused on markets that are underserved and have average high fares. JetBlue analyzes Department of Transportation data on such routes and predicts fares in such markets upon its entrance and the competition’s reaction.

Southwest Airlines: “The Symbol of Freedom” Introduction Southwest Airlines is a major passenger airline that provides scheduled air transportation in the United States. Southwest Airlines has its headquarter at the grounds of Dallas Love Field, Dallas, Texas. Southwest renders services over the country with focus on cities like Baltimore, Chicago, Dallas, Denver, and Houston. Southwest is the United States’ most successful low-fare, high frequency, point-to-point carrier. Southwest operates more than 3,300 flights a day coast-to-coast, making it the largest U.S. carrier based on domestic passengers carried as of September 30, 2009.3 History Southwest Airlines was established in 1960 and started its operations in 1971, with three Boeing 737 aircrafts in the cities of Dallas, Houston and San Antonio. Southwest went through a growth phase between 1971 and 1978. During this phase the company established more businesses within the State. In order to further expand, it started Interstate services during 1978 to 1986. By the end of this phase, Southwest was flying to 14 different interstate airports. Between 1987 and 1997, Southwest achieved most of its growth by expanding its services nationwide. “Ranked #1 Most Reliable Airline for dependability”6 Southwest launched services to LaGuardia Airport in New York7. The terrorist attacks in September of 2001 decimated the airline industry, but Southwest maintained full employment and even opened at Norfolk on October 8. At year’s end, the airline had 29,274 Employees and 344 aircraft. Business Operations & Routes Southwest started with three Boeing 737 aircraft and today, Southwest operates 541 Boeing 737 aircraft between 69 cities. The shortest daily Southwest flight is between Ft. Myers (RSW) and Orlando (MCO) (133 miles). The longest daily Southwest flight is between Providence (PVD) and Las Vegas (LAS) (2,363 miles). Performance-enhancing Blended Winglets have been added to their fleet of 737-700s, and all new 737-700 aircraft arrive from Boeing with Blended Winglets installed. Additionally, Southwest began installation of Blended Winglets on some of our 737-300 aircraft in early 2007. Approximately 90 -300 aircraft have been retrofitted with Blended Winglets as of the end of third quarter 2009; an additional 12 -300 aircraft are expected to be retrofitted by mid-2010. Southwest introduced “Bags Fly

Free” which adds to Southwest’s already attractive low fares. Free Wi-Fi access was introduced as an added amenity on flights. As per the latest data Southwest flies to 69 cities and 35 states. Its Top ten airport Departures as of May 23, 2010 are Chicago Midway, Las Vegas, Baltimore/Washington, Phoenix, Houston Hobby, and Dallas. Mission Statements “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”3

The Mission Statement for the employees -“We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.”3

Southwest’s Objectives Competitive position: The company’s low cost structure has historically been one of its primary competitive advantages, as it has enabled Southwest to offer low fares and drive traffic volume. Southwest airline also competes based on markets served and flight schedules. Many major U.S. airlines have more extensive route structures and marketing and code sharing alliances that facilitate their expansion to new destination. However, Southwest’s point-to-point route structure enables it to offer a high percentage of non-stop flights. Southwest airline also competes with other airlines in areas of customer service such as on time performance, passenger amenities, equipment type, and comfort. According to the most current statistics published by the DOT, the company consistently ranks at the top for customer satisfaction for having the lowest customer complaint ratio.3

Geographic Scope

Domestic Southwest airline provides point-to-point service between midsize cities and secondary airports in large cities. As of May 23, 2010, Southwest Airlines operates scheduled service to 69 destinations in 35 states, the newest of which being Northwest Florida Beaches International Airport in Panama City, Florida, which opened in May 2010.4

International Prior to American Trans Air’s shutdown, Southwest Airlines had set a goal to codeshare with ATA and begin international code share services or ticket for

international flights in 2009.4 Destinations served by ATA could have included Canada, the Caribbean, Mexico, and Europe. Southwest also has announced plans to codeshare with Mexico's Volaris with flights starting in 2010. Growth Southwest Airline will continue to pursue an expanding market with more airport destinations-increasing market share in the next few years. Southwest is working on adding international flights for the first time to the Caribbean, Europe, and Mexico. Southwest has also planned to make unspecified upgrades to its rewards program in 2011. Southwest is pressuring The Boeing Co. to come up with a more fuel-efficient next generation aircraft to replace the 737.5 Conclusion: Veteran Southwest built its reputation on thirty-three years of stake-your-claim seating, wisecracking flight attendants and plentiful peanuts. Upstart JetBlue emerged eleven years ago with new planes, free seatback televisions and baskets of junk food. They’re two very different creations, especially when it comes to size. Southwest flew seven times as many passengers as JetBlue last year. Even today, it serves twice as many cities and has more than 10 times the number of daily flights.8 But Southwest and JetBlue catered to customers in the same way-with cheap fares and good customer service-but avoided much head-to-head competition in major markets for years. These days, they are trying to distinguish themselves as they ramp-up competition in places like New York, Washington, Baltimore and Boston. It also means Jet Blue and Southwest must find ways to differentiate themselves. Southwest is touting its lesser baggage fees and more extensive nationwide presence with its “you are now free to move about the country” slogan, while JetBlue is highlighting it live TV service and its own comprehensive route system.9

Bibliography

1. jetBlue (2010) “History”. Retrieved September 7, 2010 from the World Wide Web:

http://www.jetblue.com/about/ourcompany/history.asp

2. United States Securities and Exchange Commission (2009) “jetBlue Airways Corporation, Item I, Business”. Retrieved September 7, 2010 from the World Wide Web:

http://www.sec.gov/Archives/edgar/data/1158463/000095012310009322/u02987e 10vk.htm#103

3. Southwest Airline annually Form 10-K from SEC website http://www.sec.gov/Archives/edgar/data/92380/00011931251001171191/d10k.ht m

4. Official web site of Southwest http://www.southwest.com/

5. Southwest Airlines CEO sees a bright future – Denver Business Journal.

6. http://www.southwest.com/about_swa/why_fly_southwest.html?int=GNAVWHYFLYSWA&disc=&ss=0Forbes Magazine, 2008

7. Terry Maxon http://www.dallasnews.com/shared content/dws/bus/stories/DN-

Snewyork_28bus.ARTO.state.edition.1-3cf9f96.html

8. Chris Woodyard, USA today Pitting Southwest Vs. JetBlue

9. Southwest vs. JetBlue battle Boston begins http://www.eturbonews.com/11084/wouthwest-vs-jetblue-battle-boston-begins