Businessmodel of JetBlue

Customer Segments

JetBlue provides air travel services to a broad range of travellers. The Company is among the largest airlines in the US by available seating, providing affordable air fares and ancillary services. JetBlue is not a solely an economy-class airline, and as such attracts customers from spectrum of consumer segments. The Company primarily serves solo and group travellers, families, and business professionals.

JetBlue provides bespoke travel services to corporate customers through its Blue Inc service, covering the management of flight, hotel and car bookings for small and medium-sized companies across multiple sectors. Until recently, JetBlue also offered cargo and freight services. These offerings, however, were discontinued in 2015.

JetBlue primarily serves customers in the US, where it offers connections between numerous major cities. It also serves customers across parts of Central and Latin America, and the Caribbean, providing services between the US and destinations such as Bogota, Quito, Mexico City, Nassau and Aruba.

Value Propositions

JetBlue provides value to its customers in the following ways:

• Its affordable air fares, with the Company providing national and short-haul international air travel to consumers at low-cost prices;
• Its provision of full-service corporate travel, with the Company providing flight, hotel and transportation booking services to corporate travels as one-stop shop solution for small and medium-sized businesses;
• Its range of on-board services, with the Company offering food and entertainment services to passengers, including television, radio, movies and on-board Wi-Fi connectivity; and
• Its frequent flyer reward program, with the Company offering various benefits, discounts and rewards for frequent travel in collaboration with a range of commercial partners. Channels

JetBlue operates a website at www.jetblue.com, through which it provides information on its activities, destination network and schedules. This website hosts the Company’s online booking portal, which serves as its primary, preferred, and lowest cost distribution channel to customers. JetBlue also operates an online store, ShopBlue, hosted at www.shopjetblue.com, through which customers can by JetBlue merchandise and travel accessories.

Additionally, JetBlue participates in a number of global distribution systems – including Amadeus and Travelport – and collaborates with online travel agents to broaden its sales network. The Company also operates an affiliate marketing program, through which participating websites and businesses drive traffic and sales through the JetBlue portal, in return for commissions on sales generated.

JetBlue also provides services through a network of kiosks and self-service terminals, located principally at airports.

Customer Relationships

JetBlue air fares are principally available to customers on a self-service basis, with passengers able to make flight reservations, as well as organise car rental and hotel services, through the Company’s online booking portal. These self-service reservations require no interaction with members of the JetBlue sales team and can be completed autonomously in minutes.

JetBlue provides a more personalised service to customers through its direct sales team, which can be contacted over the phone or through the Company’s in-airport kiosks. The Company often deals directly with corporate customers in order to provide a tailored service that accurately fulfils their requirements.

JetBlue provides reservation support to its customers over the phone and via email, handling refunds and alternative travel arrangements in the event of flight cancellations. The Company also makes a range of FAQs and guides available to customers through its website.

Customers can interact directly with JetBlue through its social media accounts with Facebook, Twitter, YouTube, and Instagram.

Key Activities

JetBlue is a passenger airline carrier. It provides air transportation services across more than 100 destinations in the US, the Caribbean and Latin and Central America, including in Mexico, Colombia, the Bahamas, and Ecuador. It operates a varied fleet of aircraft, including Airbus A321s, Airbus A320s and Embraer E190s.

The Company provides three branded fares of varying price range: Blue, Blue Plus and Blue Flex. These fares include different levels of ancillary offerings, including free checked luggage, reduced fees and extra reward scheme points.

JetBlue also provides a range of in-flight entertainment services, such as Wi-Fi and television. Customers are also able to take advantage of the Company’s intercontinental Mint service, which includes lie-flat seats, some of which come as part of a private suite.

Key Partners

Jet Blue collaborates with a network of partner to provide its customers with a quality service. These partnerships include:

• Rewards Partners, comprising a range of commercial businesses that provide products, services and discount deals as part of JetBlue’s TrueBlue rewards program;
• Airline Partners, comprising national and international commercial carriers that collaborate with the Company on flight inter-connectivity, code-sharing, coordinated flight schedules, frequent flyer program reciprocity and joint marketing schemes;
• Distribution Partners, comprising travel agents, affiliate marketers, and global distribution system operators that help to extend JetBlue’s own sales and marketing reach; and
• Alliance Partners, with which the Company participates on joint-venture projects. JetBlue partners with airlines including British Airways, Aer Lingus, Lufthansa, Korean Air, and Hawaiian Airlines, and includes MasterCard, Avis, Emirates and NRG Home among its rewards partners.

Key Resources

JetBlue’s key resources are its fleet of aircraft, its ground and support infrastructure, its sales channels and IT infrastructure, its partnerships, and its personnel.

As of 31st December 2015, JetBlue operated a fleet of 25 Airbus A321 aircraft, 130 Airbus A320 aircraft and 60 Embraer E190 aircraft. The Company also relies heavily on its supply of jet fuel.

Cost Structure

JetBlue incurs costs in relation to the acquisition and maintenance of its aircraft, the purchase and supply of consumables – notably fuel, its operation of sales and marketing programs, the maintenance of its physical infrastructure and ground support facilities, the management of its partnerships, the maintenance of its IT infrastructure, and the retention of its personnel.

JetBlue’s largest expense relates to the payment of salaries and benefits to its workforce of more than 18,000 employees, with personnel costs amounting to $1.54 billion in 2015. The acquisition of aircraft fuel is one of JetBlue’s most significant expenses, with prices and availability fluctuating due to unpredictable global economic and geopolitical factors.

In 2015 fuel costs amounted to $1.35 billion, amounting to 25.9% of the Company’s total expenses for the year. JetBlue also accrues costs in relation to the operation of its offices and facilities, in the form of rental and utility fees.

Revenue Streams

JetBlue generates revenue through the provision of passenger airlines services to consumers and professionals. This principally comprises:

• The sale of air fares and related fees;
• The sale of premium in-flight services, such as access to movie content; and
• The sale of JetBlue merchandise and travel accessories. In 2015 JetBlue generated $6.42 billion in operating revenue, an increase of $599 million on revenue recorded by the Company in 2014, due primarily to an increase in revenue from passengers and a small increase in the price of the average fare.

The vast majority of JetBlue’s revenue is generated by the Company’s sale of air fares and ancillary passenger services and products. Revenue derived from other sources amounted to just $523 million in 2015.