JETBLUE AIRWAYS

:MANAGING GROWTH

Group 5:
Jean-baptiste Morard
Garima Singla
Neeharika Nidadavolu
Akhila Kallakuri
Amol Tambe

Jet Blue's operations strategy prior to

November 2005 adoption of E190?
Low cost carrier enabled by sole aircraft type-A320
Standard training and service processes
Low reservation cost due to flexibility offered to part time employees

Point-to-point flights between cities in contrast to the hub and

spoke model of legacy carriers
Offered comfort features such as assigned seating, leather
upholstery and satellite TV
High focus on flight completion over on time arrival
Significant number of long-haul and overnight flights

Economics of E190 & A320

for Jet Blue
Parameters

A320

E190

CASM

1.12X

Average RASM

Lower= 7.91

Higher= 11.58

Average daily
utilization

13.4 hrs/day

10-11 hrs/day

Number of passenger
required to breakeven

Higher

Lower

Compensation for Pilot Higher

(hourly pay)

Lower

Time spent on ground

Lesser

More

Loading time

Lesser

More due to nonskid flooring on the

cargo bins

Key drivers of profitability for

E190
Estimated cost of accquisiton per plane is 30-40 million $
approx
CASM is 34% lesser in comparison to that of RJs
Average plane utilization is 10-11 hours which is more than
8 hours of RJ
Seating capacity was higher in comparison to RJ hence
more number of profitable destinations could be targeted
Increased range of choices available to jetblue passengers
by feeding customers to connecting A320 flights at focus
cities

Key drivers of profitability for

A320
High fuel efficiency
Lower costs due to standardization of training and
service processes
Long haul flights hence greater flying time of 13.5 hours
Lower reservation cost due to flexibilities offered to part
time employees
Lower CASM in comparison to E190

Should Jetblue add E190 to its

fleet?
Positive

Negative

Lower pilot
compensation
Ability to serve
wider markets
due to better
connectivity

Additional
burden of
integration costs
Low
compatibility
with existing
operational
measures

The decision to add E190 to the fleet was not wrong but the timing
was unfortunate as the fuel crisis could not have been predicted.

How should Jetblue slow down

the growth of its fleet?
Considering increasing fuel prices and the
data presented by Mark Powers, Jetblue
should slow its rate of growth significantly
Capacity reduction should come both from
A320 and E190 because of the following
reasons
Neither supplier would be pleased with capacity
reductions or deferrals so it should be split between the
two type of planes
Since both the type of planes have inter-dependent
utilization so it wont be a good option to reduce
capacity of only one type

Thank You