Jetblu

Question:

Should Dave Barger, Jet-Blue’s new CEO, give the go-ahead on the expansion to Cleveland? Why/why not?

Based upon the past performance that Jet blue has exhibited and the drive that newly appointed CEO Dave Barger has, Jet Blue should definitely expand into Cleveland. Jet Blue has a specific market niche of catering to those fliers who are looking for low cost and low frills in an airline. This has been their motto and the market to which they market to since the inception of the company in 1999. In the Cleveland market Jet Blue will be competing with 10 other airlines currently at the airport. Jet Blue is no stranger to competition. As a company with less than 10 years in business, they entered a very saturated and hypercompetitive market. With the recent passenger delay snafus and management changes Jet Blue has experienced, any expansion undertaking must be well thought out and planned though in order to mitigate potential failure. There are a few steps which Jet Blue has taken in the past and should continue to do in the Cleveland market to ensure success.

In the book flying High, the author describes Jet Blue’s maiden entry into the airline market. Neeleman, then the company’s CEO promised:

“A new kind of economy travel aboard planes with wider, all-leather seats, extra legroom, preassigned seats, and more overhead storage space than other carriers delivered…Moreover, all of this would be provided at a price that was up to 65 percent less than the competition.” (p 122)

This continued stance will be crucial in gaining market share in Cleveland. Jet Blue has corned a very modified niche in the airline industry. Instead of being a low price/no frills like Southwest Airlines with it’s lack of assigned seating and no in flight entertainment, Jet Blue assigned seats to remove any confusion in boarding and gave all of its passengers 24 live TV channels to watch on individual screens. This hybrid approach coupled with a low fare model will allow Jet Blue to differentiate itself from the competition.

Once the decision has been made to enter Cleveland, Jet Blue will want to target those passengers which are either unhappy with the Southwest model or are unhappy paying premium fees for flights. One such customer from Richmond blogged about his continued experiences with Jet Blue here: http://nextup.wordpress.com/2007/04/09/jet-blues/. One interesting point that the blogger makes is “As a native Richmonder, having a new low-cost carrier meant that I no longer had to pay outrageous fares or travel to larger airports. Since that time, I have traveled many times to Boston & NY and always

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