1. What internal resources and assets does JetBlue have that may give it a competitive advantage?
2. Is JetBlue’s competitive advantage sustainable?

JetBlue was a domestic airline in the United States with a geographically diversified flight schedule that included both short-haul and long-haul routes. The mission of the company, according to founder David Neeleman, was “to bring humanity back to air travel,” and become America’s favorite airline. To stimulate demand, the airline focused on underserved markets and large metropolitan areas that had high average fares. JetBlue was positioned as a low-fare alternative, an airline that offered customers a differentiated product with high-quality customer service on point-to-point routes. JetBlue’s low–cost strategy was to be achieved through automated processes; better use of technology; and use of large and fuel-efficient planes. The differentiation strategy had been intended to provide a unique “JetBlue Experience” through excellent customer service, new aircraft, greater comfort (wider legroom), and entertainment through free LiveTV. With virtually no incidences of passengers being denied boarding; high completion factors (99.6 percent as compared to 98.3 percent at other major airlines); the lowest incidence of delayed, mishandled, or lost bags; and the third-lowest number of customer complaints, the company was indeed setting standards for low cost operations in the industry. The company had been voted the best domestic airline in the Conde Nast Traveler’s Readers’ Choice Awards for five consecutive years.

As JetBlue grew, it made some changes. In February 2007, JetBlue joined an alliance with Aer Lingus to facilitate easy transfers to both airlines’ customers, and signed a code-share agreement with Cape Air for service to Cape Cod. In 2008, Germany’s Lufthansa acquired a minority equity stake in JetBlue, with details of any code-share or other agreements undisclosed. In 2011, JetBlue announced an interline agreement with Virgin Atlantic that allowed passengers to connect through selected U.S. cities to airports in England and Scotland, and by 2014 JetBlue had code-share agreements with Qatar, Emirates, Korean Air, AirChina, Indian carrier Jet Airways, Eithad Airways, and El Al Israel. However, high fuel prices, the competitive pricing environment, and other cost increases were making it increasingly difficult to fund JetBlue’s growth profitability. For instance, JetBlue had introduced a new type of aircraft, the Embraer, which complicated its maintenance operation, adding costs. In 2005, JetBlue had suffered its first losses since its IPO in 2002. Losses continued through 2008, with profitability finally returning in 2009, and remaining so through 2014.

This turnaround was welcome. A disastrous storm on Valentine’s Day 2007 had exposed many weaknesses in JetBlue’s operations and had a negative impact on the airlines’ reputation as well as its financial performance. Founder and CEO David Neeleman had made a public apology and published JetBlue’s Customer Bill of Rights in an attempt to restore customer confidence. However, in May 2007, Neeleman was replaced as CEO by president Dave Barger. Barger had to pay attention to costs, and reduce capital expenditures in areas such as new airplanes, but in 2012 he initiated moves to update the Airbus fleet and purchase new aircraft as the airline continued to add routes. By 2014 JetBlue’s low-fare business model was being threatened as its costs continued to go up.

Then, in 2014, the JetBlue board asked Dave Barger to step down to allow JetBlue’s current president, Robin Hayes, to replace him. During Barger’s tenure, JetBlue was known for its customer service, but operating margins had continued to be among the lowest of the U.S. carriers. Analysts viewed Barger’s concern for customer service as counter to the needs of the stockholders, so the promotion of Hayes seemed to signal to shareholders that the airline was ready to focus on investor-friendly changes. Given that the airline had been founded on a promise to be a low-fare airline that offered customers a differentiated product with high-quality customer service, could this promise still hold? Would the needs of JetBlue loyal customers still be met? Was JetBlue moving away from its original strategy?

The answer appeared to be “yes”, as JetBlue was becoming a “hybrid carrier” model, in a niche positioned between the ultra-low-cost and full-service network air carriers. By concentrating on markets where it could become the top carrier, JetBlue was acting more and more like the big carriers it once set out to disrupt. Will JetBlue still become what it was envisaged to be, “America’s Favorite Airline”? Or, with too many complexities being introduced into its simple model of success, will JetBlue sink into the blues once again?