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Jet Blue 10 K Paper

956 words - 4 pages

Jet Blue Airlines

JetBlue Airlines
JetBlue’s strategy for success in the marketplace is product leadership with customer value proposition. This is evident in JetBlue’s 10k document when they state that their success, “…is attributable to our focus on customer satisfaction and our ability to contain operating costs” (Jetblue, 2005). It also can be seen when JetBlue states that, “We focus on serving markets that previously were underserved and large metropolitan areas that have had high average fares” (JetBlue, 2005). By doing this JetBlue is not only serving under represented communities, but also offering lower cost travel alternatives to metropolitan customers that may not have had ...view middle of the document...

Gas prices are an integral part of the airline business, and an increase in gas prices could adversely affect JetBlue’s core values and structure of having low flight fares for its customers.
A control activity that JetBlue could utilize to avoid being put in a state that would jeopardize the way that it operates would be to do what many economist call, “fuel hedging.” This is the practice of locking in gas prices a year or so in advance. A company that did this successfully in the past was Southwest Airlines who in 2008 had locked in gas at a $2 a gallon rate when everyone else was paying upwards of $4 a gallon on gasoline. By locking in a rate that you are comfortable with in advance, you avoid the possibility of increasing gas prices, which in turn end up being increased operating expenses.
Unit level activities occur every time a service is performed, or a product is made. Direct materials, labor, and machine maintenance are all examples of unit-level activities and thus they can be applied to the airline industry. Direct labor is a unit-level activity that JetBlue experiences. In order to efficiently manage its direct labor, JetBlue offers 5 year contracts to each of its FAA-licensed employees. These 5 year contracts automatically renew unless terminated by either the employee or JetBlue 90 days prior to the expiration date of the contract. By doing this JetBlue is able to deliver continuity in service, maintain its culture, and ensure that it always has qualified staff. Fuel, which is a direct material is also a part of the unit-level activities for JetBlue as well. By entering into a fuel hedging program in which JetBlue enters into crude oil option contracts and swap agreements to protect themselves against increases in fuel prices, JetBlue has taken steps to efficiently manage this cost. Since fuel consumption is also...

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