Low cost strategy

As Jet Blue manages growth, the airline must also standardize many other things it does to avoid starting from scratch every time. For example, JetBlue has developed a checklist of what has to happen whenever it enters a new market. Everyone involved has access to the list on the corporate intranet. Each department sees what has been done, what remains to be done, deadlines, problems. Currently, the checklist makes launches that occur months apart more predictable. But before too long, it’ll make simultaneous launches, unthinkable early on, manageable.

JetBlue adopted a strategy for effective cost control by identifying and eliminating all unnecessary expenses and concentrating on providing high quality services to its passengers. Towards this end, it adopted a number of innovative measures on the planes such as: not serving food, point-to-point flights, and quick turnarounds. It also made effective use of advertising to position itself as a fun airline. JetBlue’s innovative operational model helped it succeed at a time when the major players of the airline industry were crumbling.

These activities and efforts are noteworthy and also improve efficiency, which will be critical in the years ahead as JetBlue tries to offset rising costs for aging planes and more-senior employees. And low costs remain an obsession. JetBlue’s reservation agents, for example, work from home rather than in an expensive call center. At the same time, Neeleman is looking to widen profit margins again. A new 100-seat regional jet fleet being added next year will tap relatively uncontested — and so more profitable — markets.

One of the latest tools designed to help JetBlue as it grows is an “operational recovery system.” During any disruption — weather that grounds some flights, for example — it allows planners to select various goals before rerouting planes. No canceled flights or delays beyond three hours? The software produces a solution and calculates its cost. It factors in each plane’s maintenance and fuel needs, and the flight crew’s experience and availability within FAA rules. With the current fleet of 57 planes, the program is a perk. Down the road, with 100 or more planes, it will be indispensable.

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