Jetblue Swot Analysis

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(+) JetBlue

Airline Commercial Partnerships It is common practice in the airline industry to participate in commercial partnerships. These partnerships offer benefits to the customer by providing inter-connectivity, cooridnated flight schedules, code-sharing, frequent flyer program reciprocity or other joint marketing offers. As of the end of 2015, JetBlue had established 43 commercial airline partnerships. For JetBlue, code-sharing is the best opportunity. Code-sharing is the practice where one airline places its name and flight number on flights operated by another airline. This maximizes full flights and causes less cancellations from lack of interest in smaller flights whcih benefits both partners.

TrueBlue Loyalty/Co-Brand Credit Card JetBlue has two partnerships with credit card companies, American Express and Mastercard. American Express allows cardholders to convert Membership Reward into TrueBlue points. These points can also be earned by flying on JetBlue partner airlines like Emirates and South African Airways.

JetBlue Getaways JetBlue has partnered with hotels such as the Ritz-Carlton, Marriott and Starwood resorts and car rental companies to create start to finish discount vacations.

Airport Infrastructure Investments JetBlue invested in the JFK airport to more than double its flight capacities by building terminal 5. It brought JetBlues flights from 100 flights a day out of 14 gates to 26 gates capable of up to 350 daily flights. In late November 2015, JetBlue unveiled a $50 million planned upgrade of Terminal C of the Boston Logan International Airport. This will include new kiosks and ticket counters in the North Pod. A second phase will upgrade the South Pod to mirror the North Pod. Updated digital flight information displays and a connector between Terminal C and international flights in terminal E are also planned.

JetBlue Technology Ventures "In early 2016, JetBlue created JetBlue Technology Ventures; a subsidiary created to invest in, incubate and partner with early stage startups that are involved in technology, travel and hospitality. This is groundbreaking as it is the corporate venture capital subsidiary in Silicon Valley created by a U.S. airline.

JetBlue Technology Ventures will build relationships with incubators, venture capital firms, universities and other organizations. They will create a partnership with a range of startups across the travel and hospitality industry. This initiative will serve as a launch pad for innovations. As history has shown, JetBlue has been a pioneer in technology improving both operations and customer satisfaction.

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THREATS (–) JetBlue

Industry Competition The domestic airline industry is typified by low profit margins, high fixed costs such as fuel, and significant price competition in a concentrated competitive field. JetBlu must compete with more established airlines with more name brand recognition and deeper resources on all of its routes. Competitors also implemented new services initiated by JeBlue like paperless ticketing.

Availability and Cost of Fuel "Fuel costs are the most substatial operating costs in the airline industry. Historically, fuel costs have been given to wild fluctuations based on politics, geopolitical factors, supply disruptions, and demand from competitors.

Fuel availabiliy is not just dependent on obtaining crude oil, it is also dependent on the ability to refine it. Even a minor disruption in the domestic or global oil refining process capacity can cause supply shortages for exteneded periods of time. Fuel availability is not just affected by airline demand but the demand for all petroleum products like gasoline and home heating oil.

Dependence on foreign imports and potential hostilities in the oil producing regions of the world also drive the cost of fuel. This makes it impossible to predict the future cost and availalability of fuel wih any degree of certainty. "

Fuel Hedging The airline industry offers purchase agreements (fuel hedging) to protect against the volatility of the fuel market. JetBlue being a smaller domestic carrier does not have the leverage that more established carriers in fuel negotiations. JetBlue has and plans to continue using a variety f option contracts and swap agreements for crude oil and jet fuel to partially protect against significant and unpredictable increases in fuel prices. These contracts are limited in volume and duration and also carry counterparty risks. If the price of fuel falls below the contract “hedge” price, JetBlue is still required to pay the amount agreed upon even though it is above market rate.

Airport Infrastructure The costs associated with airport infrastructure range from gates to check-in facilities to landing slots and even operations facilities. These fees are negotiated on short term basis with the airport authority and costs often increase without negotiation. Losing any of these facilities at an airport would essentially lock JetBlue out of that area.

3rd Party Vendors JetBlue uses third party providers for their data center infrastructure and automated systems. If the vendor fails to adequately provide technical support for any of the key systems listed in automated systems there would be a significant impact to JetBlue operations. Disruptions could also occur due to new or updated components not integrating smoothly. These disruptions could come in the form of service disruptions or loss of important data.

Acts of Terrorism The airline industry and transportation in general are at particular risk for acts of terrorism or even the threat of an act of terrorism. Not only does it affect direct sales but the industry experiences significant increased security requirements. Changes in government regulations increase operational costs and cause disruption and customer dissatisfaction.

Reliance on NY/Metropolitan Airports JetBlue is highly dependent on the NY metropolitan area with approximately half of its daily flights into or out of JFK, LaGuardia, Newark, Westchester, or Newburgh’s Stewart airports. Airport delays and flight cancellations due to congestion increase turnaround time and harm the profitability of JetBlue. More direct competition at these airports would also