JetBlue airways was founded in 1999 with an initial capitalization of $130 million.
David Neeleman, founder of JetBlue, partnered with Mitch Morris and June in running the airline business. His vision when forming the company was to bring a new breath in airline industry especially with regards to innovation and technology. The overall goal was to restore humans back to air travel. To achieve this mission, JetBlue embarked on a mission of becoming a paperless airline. At first, it replaced computers and information technology for everything from flight planning to aircraft maintenance to the sole use of e-tickets. Alongside enhancing quality in its operations, Jetblue also paid close attention to the service it offered. In this way, it aimed at offering great personal and quality service, acquiring modern airplanes, charging customers affordable fares as well as formulating a unique revenue management system.
New planes, leather seats with more legroom, great people and innovative thinking.
At the time of its launch, American West and Midwest Express were predominantly the top companies in the industry. Neeleman joined Southwests top management team as an executive vice president and while at Southwest, he observed that customers stood in long queues and strenuously underwent through myriad procedures while being cleared. However, The number of employees for southwest were operated 344 aircrafts and had about 27,000 employees while Jetblue operated 40 aircrafts and had an employee base of 5,000 employees. With the great need of heavily finance Jetblue Company. He was able to raise $130million with his equity amounting to $10million. Neeleman opted to acquire airplanes instead of leasing them from other companies. By the year 1999, southwest company had made a net margin of 11percent, a rate of return of 19.9percent as well as a net earnings of $629 million. The profit in the company had increased by 3.1%
Rhoades, Executive Vice President for people, was really busy trying to hire and increase their number from 10 to almost 1000. Under the leadership of the expert team led by Neeleman, the company grew tremendously. Putting the management team together was another big step for Neeleman as a CEO and chairman of the board at Jetblue. Essentially, he brought on board experts such as Thomas Kelly, Dave Barger, John Owens as well as Ann Rhoades. In coming up with the basis of management and development, Jetblue formulated five core values which included: Safety, caring, integrity, fun and passion. Ideally, the airline industry is one is heavily unionized. However, Jetblue opted to operate out of unions. The company believed that operating without unions had more synergy in creating a team environment.
Achieving success was however not easy for Jetblue. The challenge ahead was how to maintain the success that the company was enjoying in the long term. Expansion of operation was inevitable. Some of the critical decisions the company had to make included location of its operations, the type of aircraft to operate as well as the method to use in achieving its visions, leveraging technology and delivering a low-cost high service experience. However, the company set the location of its operations in New York City and opted to purchase Airbus A320s instead of Boeing 737s. Airbus had a better fuel consumption, had a better cabin technology, wider cabin and it was a favorite brand for lots of passengers.
Gittell, J.H. & Oreilly, C. (2001). JetBlue Airways: Starting from Scratch. 9-801-354.
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