JetBlue
JetBlue airways took off its first flight on the 11th of February, 2000. Within five years, the airline was listed among the major United States airlines as classified by the United States Transportation Department. Though price greatly matters when it comes to JetBlue’s secret to success, what keep people coming back is the services offered by the airline. JetBlue clearly understands that any of its competitors have a likelihood of meeting or even beating their prices. However, what these competitors will not be able to do is match up to the level of JetBlue’s service and comfort. Though incentives like discount rates and frequent flier miles are fundamental to an airline’s success in that market place, consumers are still price conscious.
Though brand matters a lot, the lowest fare still sells. JetBlue is different from other airlines owed to the fact that it quick and smart in doing things using new ways. It has avoided commodification via superior customer experienced and opted to pay attention to the customers’ needs. Hence, the airline has been able to meet the customer needs through ways that can not be matched by competitors. It is thus clear that JetBlue relies on customer intimacy to achieve success in the marketplace.
There are some business risks that JetBlue faces, which may jeopardize the ability of the company to satisfy its stakeholders. Competition is one of the risk factors owed to the fact that the airline industry is highly competitive. Majority of JetBlue’s competitors have higher name recognition and greater financial resources. Price competition may negatively affect financial results and harm the business. Another risk factor is high dependency on price and fuel availability. Traditionally, prices of fuel have been subject to extensive fluctuations that are based on supply and demand as well as geographical factors. JetBlue’s purchase agreements do not protect the company against increases in fuel prices or guarantee fuel availability.
To reduce the risk of competition, the company could make sue of innovative and creative strategies that competitors can not match up to. As seen earlier, improving the quality of service provided to consumers and meeting consumer needs is an effective strategy that will ensure JetBlue succeeds in the highly competitive airline industry. JetBlue should also limit its dependency on price and the availability of fuel and opt for other means (Maher, Stickney and Weil, 2007).
While it works well to assign overhead costs to individual units using cost drivers, some activities like setup costs incur costs to produce a batch for similar units. Unit-level activities are the costs incurred each time a product is made or a service is performed. Examples of unit-level activities or costs for JetBlue airline include costs energy for running machines, piecework labor costs and direct materials. To manager the unit-level activities more efficiently, JetBlue management focuses on reducing the costs of each product or service provided. For example the management choosing between pretzels and peanuts is focusing on unit costs (Maher, et. al. 2007).
Batch-level activities on the other hand refer to costs that are incurred after production of a group of units or performing a series of steps. An example of batch level activity is baggage handling for new flights. To efficiently manage batch-level activities, JetBlue produces a batch or large quantity of products within a single day. An example of customer-level activity for JetBlue is special promotions aimed at attracting customers. Examples of organization-sustaining activities for JetBlue include capital cost and aircraft depreciation (Maher, et. al. 2007).
References
Maher, M. W., Stickney, C. L, & Weil, R. L. (2007). Managerial Accounting: An Introduction to concepts, methods and uses. Cengage Learning
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