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JetBlue in the Global Financial Downturn


There are numerous external forces that affect the airline industry. As a result, the industry is compelled to continuously change its ways of doing things. The industry is not only vulnerable to bankruptcy, terrorism, amalgamation and acquisition but is also adversely affected by political instability in the various countries where it extends its services. The economic conditions of society also affect the airline industry. There are numerous challenges that affect the airline industry ranging from financial, human resource and information problems.

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Human Resource Issues in the airline industry

Due to constant changes in demand for services offered by the airline industry, the industry faces a shortage of human resources. Human resource managers face problems in recruiting enough and competent staff to cater to customer needs. Before embarking on recruiting staff in the industry, it is imperative for human resource managers to have enough information regarding customers’ needs. This will ensure that the recruited employees effectively address these problems. There are numerous departments found within the airline industry. Often, all these departments require extra human resources. Human resource managers will only be able to supply these departments with the necessary staff if they are conversant with services provided by these departments and the number of staff required per department (Milliman, Ferguson, Tricket & Condemi 2003, p. 43). This calls for the establishment of a good line of communication between these departments and the human resource department. In most cases, there is poor communication between the human resource department and other departments within the airline industry. Human resource managers fail to get enough information regarding the number of staff required and the role played by these staff. Consequently, some departments fail to get enough staff while others get the staff that are not competent.

This leads to the airline industries having to conduct several employee recruitment exercises for the same department. It costs the company a lot of money which could have been saved if there was proper communication among the departments. In the case where incompetent staff is recruited, it leads to airlines organizing for employee training. There are numerous contingencies that occur within the airline industry. These include employee strikes, terrorist attacks or crashes. In such instances, operations in the industry are brought to a halt costing the industry dearly. This calls for human resource managers to come up with a strategy to cater to these problems. In case of a pilot strike, it becomes a problem for the industry to get other pilots to replace those gone on strike. Recruiting or training new pilots is very expensive. In case people responsible for ground services go on a rampage, it becomes hard for operations within the industry to continue. Competition within the airline industry calls for airline companies to offer competitive packages for their employees. This helps them in ensuring that they have retained and recruited competent staff. Companies that are incapable of doing this regularly lose their competent employees to other competitors. It becomes hard for such companies to maintain competent staff thus failing to attain customer satisfaction (Milliman, Ferguson, Tricket & Condemi 2003, pp. 51-57).

Effective performance within the airline industry depends on reliable communication between different departments as well as coordination between various hierarchies within the industry. The old hierarchical method of management within the airline industry contributes to poor performance among employees. It calls for the development of a system of governance that eliminates the various hierarchies within the organization. The system would ensure that employees are effectively monitored. Top managers in hierarchies normally carry out their responsibilities by issuing instructions on what to be done to people below the hierarchy. They then monitor the activities of their subjects. This leads to employees failing to take the initiative of carrying out activities within the industry (Milliman, Ferguson, Tricket & Condemi 2003, p. 126). Despite employees identifying areas that may require changes as they conduct their daily activities, they do not take steps to make the changes until they receive directions from the top management. Consequently, it results in most employees underperforming. Failure to implement employee empowerment within the industry leads to poor performance among the employees.

Employee empowerment leads to improvement in their performance. Employees; being the ones involved with daily operations within the company are able to identify areas that constraint growth within the company. Empowerment leads to such employees taking the initiative of making changes to these areas thus attaining organizational growth. As employees feel to be part and parcel of the company, their commitment to the company improves leading to consumer satisfaction. The company avoids cases of having to regularly recruit and train new employees as they lose those experienced due to poor working conditions. As the airline industry offers its services internationally, it has the advantage of getting staff with varied experience. To be able to exploit this opportunity, human resource managers within the industry ought to have clear knowledge on how to organize diverse employees with different talents. A diverse workforce in an industry leads to the introduction of new ideas and innovations. This helps in organizations being able to respond to various problems that rock it with minimum difficulties (Laszlo 1999, p. 1). One of the problems that affect the airline industry is the lack of ability by its human resource managers to effectively work with a diverse workforce. The managers fail to establish a working environment that encourages diversity. As a result, employees fail to offer their varied expertise to the company while other employees quit the company in a bid to look for companies where their diversity is appreciated.

To manage and mobilize the diverse workforce found in the airline industry, it calls for human resource managers to undergo cultural-oriented human resource management training. Local professionals within a country feel threatened when a company employee international employees with diverse abilities. They fear their job security perceiving these international employees are aiming at taking their jobs. This leads to local professionals failing to deliver as expected. Their commitment to the company goes down, eventually resulting in customer dissatisfaction. A tag of war ensues between local and international employees which may eventually hamper development in the company. To cater for this, human resource managers need to have adequate experience to convince local professionals of the benefits of encouraging diversity within the company. Acknowledging the presence of diversity within the organization can not lead to improvement in its performance. Human resource managers need to strategically organize the human resource in a manner that will be able to attain organizational goals.

The airline industry regularly experiences mergers and acquisitions. For mergers or acquisitions to work well within the industry, stakeholders need to put adequate considerations on human resources (Laszlo 1999, p. 3). Failure to do this is one of the factors that lead to the failures of numerous mergers and acquisitions within the industry. It requires the organization to come up with a safety and customer-oriented culture by establishing a working environment that takes into consideration employee welfare. This guarantees that employees are able to respond to changing customer needs. Before embarking on acquisition or merger, stakeholders in the airline industry need to ensure that the system of operations that will be used will encourage employee empowerment. This will make them more committed to the new organization’s work. Most mergers curtail the powers of employees participating in various activities within the organization. In cases where employees used to participate in decision making in a previous organization, the new organization needs to ensure that it has retained employee participatory culture that existed before.

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Financial Issues facing airline Industry

Airlines face significant financial constraints in their day-to-day operations. This leads to the emergence of uncertainty in the cash flow trend in the industry. Characteristics of the industry such as its cyclic demands, high capital investment, strong competition and high cost of labor greatly affect the industry financially. As the industry employ staff who can work in any country that the company extends its services, the company incurs expenses when sending its employees to international assignments. It requires the organization to cater for all expenses incurred by the employee being relocated. Apart from offering the employee a competitive salary to lure him or her to take the international assignment, the company is also required to cater for expenses such as relocation allowance, air ticket for the employee, company car, home leave and schooling expenses. According to an airline industry in the United States, its total cost in catering for relocation expenses of its one hundred and fifty human resources assigned to international duties amounts to ninety-nine thousand dollars per family (Algoe 2010, para. 1).

The increased cost of catering for experts assigned to international duties within the airline industry coupled with hiked competition in the industry exerts pressure on the financial status of most companies in the industry. This compels companies to look for mechanisms to cut the number of their employees working abroad. Despite this, for airline companies to offer their services internationally, they have to be represented by experts in all countries they offer their services. To balance the costs of hiring experts to represent the company abroad and protection of investments made by the company in these countries, it requires human resource managers to come up with the most viable option for the company. Airline companies lack mechanisms to determine the contribution made by their expatriates abroad in realizing organization profit (Algoe 2010, para. 3). They continue offering support to their expatriates who in return do not help in improving organization performance in the countries they are allocated.

Due to high competition in the industry, it requires every company in the industry to adapt to the latest technology in the industry. This does not go without the company having to invest heavily. It calls for the company not only to install the latest infrastructure to support its operations but to also recruit or train its employees on how to use the infrastructure. The airline industry is one of the industries with very sensitive services. Failure of the industry to employ competent staff may lead to the loss not only to the company but also to the country. To train staff within the airline industry requires the company to set aside a huge amount of money. As a result, operations within the airline industry are hampered by the huge amount of money required by the company to install and train staff to use the supportive infrastructure. Apart from the cost associated with installing and training staff in the airline industry, employees’ salary is another problem that rocks the sector. The amount of salary paid to most of the staff in the industry is very high. This makes it hard for airline industries to expand. As airline companies offer international services, they are affected by numerous international rules that they have to meet before being allowed to offer their services in these countries.

Political unrest in oil-producing countries leads to the financial status of most airline companies being shaken (Laszlo 1999, p. 5). Despite these companies struggling to make their status stable, they eventually end up experiencing some financial problems. Some companies end up cutting the number of flights made per day which adversely affects the profit margin of the company. There has always been a change in oil prices across the globe. This does not translate to increased charges in flight. Competition in the industry does not allow airline companies to increase their flight charges in case of an increase in oil prices. Companies that attempt to hike their prices end up losing customers. To maintain their operations, most airline companies end up looking for debtors to finance them. Such companies enter into a lot of debt with different institutions as they are not able to make a profit to repay their debts. The case of airline companies being declared bankrupt is a common phenomenon. Every day an airline company is acquired while others try to merge in a bid to overcome their financial hardships.

Apart from the increase in oil prices, a terrorist attack is another issue that has resulted in financial constraints in the airline industry. Due to fear of terrorist attacks, most people have cut down on the number of flights they used to take in the past. This significantly has affected the airline industry. At times, operations within the airline industry are brought to a halt in case of suspicion of an attempted terrorist attack. During this period, companies pay staff that is not productive at such instances. The case of terrorist attacks within the airline sector has led to the industry having to invest heavily in security. Every person using airline services needs to be assured of his or her security in using the service. Failure to have proper security measures leads to customers declining to use the company’s services. As a result, airline companies have resulted in the installation of the latest technology to ensure the security of those traveling through their companies. The technologies do not only cost the companies a lot of money but also require experienced personnel to operate them.

Insurance costs also have been increased in the airline industry. The vulnerability of the industry to terrorist attacks hassled insurance companies charging airline companies high premiums for them to be covered. It is hard to determine when the company will be attacked. This implies in case the company is attacked, insurance companies will have to compensate for the damage incurred. As insurance companies try to void incurring losses due to terrorist attacks in the airline sector, they have decided to charge the industry highly for them to be insured.

Information Issues in the airline industry

The airline industry faces numerous challenges with respect to the information collection, storage and transmission among its different branches operating internationally. It becomes hard for airline companies to comply with regulations to do with information storage. One of the challenges affecting airline industries is the requirement for them to store information for a long time. According to government regulations, every airline company is supposed to keep information about their planes for a hundred years. This is to make it possible to ensure the safety of the plane and facilitate its maintenance. As every plane has different components designed and maintained by different manufacturers, it becomes hard for one to maintain the plane without proper knowledge of how the different components are manufactured. Failure to have proper information about the plane leads to its obsolescence in case of breakdown. Airline companies also need to maintain their information in a way that it is not distorted when a company upgrades or installs new technology (Dornheim 1999, p. 40).

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As most airline companies operate in different regions, they require having a good infrastructure that ensures that they are able to monitor operations within the different hubs. The success of such companies lies in their ability to communicate and cooperate through information sending and receiving. The presence of many branches among airline companies implies that the company has to meet the challenges of managing the big volume of information. The company is also expected to sort information and transmit it to the relevant persons within the different branches for effective operations. The need to provide the right information to the right person and at the right time has been a major problem in the industry. Companies lack proper technology to help them organize data properly. In most cases, information is relied on when late with cases of information not reaching the right person being reported. Despite the airline sector using information technology in managing its information, little effort has been made to make use of database and collaboration technologies (Dornheim 1999. 42). This has led to the industry not be able to integrate information from assorted sources.

A brief history of JetBlue Airline

A JetBlue airway is a private low-cost airline company run by JetBlue Airways Corporation. The company was founded in 1998 by David Neeleman. Initially, the company was referred to as NewAir. Following Neeleman’s experience after working with Southwest Airlines, he decided to come up with an airline that offered services to customers at a low cost. To make the airline popular, he decided to include some facilities that were not found in other airlines. Some of this included satellite radios, televisions and in-flight entertainment. When the company was being established, Neeleman and his group had the intention of referring to the company as Taxi. However, the negative attribute people have against New York taxis led to them dropping the idea. One of the investors JP Morgan also threatened to withdraw his share of investment h if the term Taxi was to be used as the name for the airline company (Eaton 2001, p. 21).

Following the September eleven attack in the United States, the airline industry was heavily affected. Many people stopped their journey in fear of being attacked. This led to airline companies paying staff who were not productive at that time. It took long before the industry recovered from the effects of the attack. However, JetBlue airline did not feel the impact of the attack. Operations within the airline company were as usual. The company was reported to make a profit despite the sharp downturn in travel. Currently, the airline is one of the most popular in the United States with approximately two billion dollars in market capitalization. Its effectiveness in offering airline services led to it being declared the number one United States domestic airline. In 2009, the airline was ranked as the first among airline companies that offer low-cost carrier services.

Challenges facing JetBlue airline

Despite the company making great progress in the industry, there are numerous challenges that have hampered its rapid expansion to different countries. These challenges can be classified as financial challenges, human resource challenges and information challenges.

Financial Challenges affecting JetBlue Airline Company

One of the reasons that have led to the company experiencing financial constraints is fluctuation in oil prices. As oil companies continue hiking oil prices, the company incurs extra costs in its operations. This is because it is hard for the company to increase its flight charges. An attempt to increase its charges would lead to the company losing its customers to competitors. Fuel prices have been accompanied by competition in the airline industry. Every airline company is trying to use all means possible to attract more customers and increase its market share. All these require the company to invest a lot of money. In its bid to overcome competition, JetBlue airline has opted to include some services to its customers such as televisions, in-flight entertainment and satellite services. These have greatly added to operations costs within the company. Apart from incorporating more services in the company, airline companies have resulted in charging low fair to attract customers. JetBlue has not been an exception. The company has embarked on charging less fairly to its customers. This has not significantly increased the number of flights made by customers. As a result, the company has ended up making little profit. For instance, in 2005, the company’s profit decreased from $8.1 million to $2.7 million. This was attributed to increasing in oil prices in the industry.

Competition may prove healthy to customers but it leads to competing companies facing financial constraints. In the airline industry, competition leads to companies having to offer their services at low prices as well as having to look for ways to improve their services through using the latest technology. Competition in the airline industry has led to JetBlue Airline Company having to always be at par with the changing technology. The company keeps on purchasing the latest aircraft to attract more customers (Mark 2008, para, 4). This incurs the company a lot of money. The purchase of new aircraft implies that the company has to either train its employees on how to operate the plane or recruit new employees with knowledge on how to operate it. To be able to recruit new employees, the company is required to offer a good package for them to be willing to work in the company. Bearing in mind the fact that JetBlue offers low-cost services to its customers, the company faces high employee turnover. In case the company opts to train its employees, the amount of money required for one to undergo training in piloting becomes costly for the company. As the employee is not productive at the time of going through the training, the company does not only incur costs in catering for his or her training but it also has to pay the employee at the end of the month.

There has been a problem in getting qualified pilots and mechanics in the airline industry. For pilots and mechanics available, recruiting them to the company has been a problem due to the conditions they present to company owners. Due to their demand, they have required airline companies to offer them huge salaries as well as different allowances. This has led to JetBlue Company incurring huge expenses in employing pilots and mechanics. Lack of qualified employees to repair planes and the cost of repairing the plane has led to some flights being canceled in case of mechanical breakdown of the plane in the company. Planes take days before they are repaired. This cost the company as it does not get any proceeds from such planes during this period. To cater for this shortage, airline companies; JetBlue included has resulted in advertising and monitoring trends of such employees. The fact that pilots and mechanics are offered competitive salary packages in foreign countries has contributed to the United States having a limited supply of pilots and mechanics as most of them work with foreign airline companies. JetBlue has decided to incur an extra cost in ensuring that it does not run short of these vital employees through investing in new pilots. The company monitors new pilots as they continue with their training and offer them services such as free-flying experience so as to attract them to work for the company (Springer 2009, para. 6).

Operations in the airline industry are greatly affected by weather conditions. The occurrence of storms may lead to flights being canceled or delayed for some time. This has been one of the factors that have led to JetBlue incurring an extra cost in its operations. The company established a consumer bill of rights which directs that the company has to compensate its customers for canceled or delayed trips. Compensation is based on the number of hours the trip is delayed. There are cases where trips in the company are delayed for even one week due to poor weather conditions. This has cost the company a lot of money. For instance, in the year 2007, the company spent between $20 million and $30 million in compensating customers who had their flight delayed for almost a week (Springer 2009, para. 7).

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Human resource Challenges facing the company

Apart from financial problems, JetBlue has experienced a lot of problems with respect to human resources. For many years the company has run short of pilots and mechanics. High demand for piloting services and the cost of undergoing piloting training have resulted in the number of pilots in the country being low. Most pilots in the country opt to work with foreign airline services where they are offered a good salary. This has resulted in JetBlue Company having a shortage in a number of pilots. The lack of enough pilots in the company has hampered its desire to open new terminals in countries where they have not yet extended their services (Mark 2008, para. 2). This has led to the company having to liaise with other companies in the development of pilots and mechanics to meet their needs.

Competition in the airline industry leads to some companies facing human resource problems. As companies struggle to attract more qualified employees to work for them, they offer competitive packages. One of the problems that JetBlue has faced with respect to the human resource is retaining its qualified personnel. The company is blamed for offering a non-competitive package to its employees. This has resulted in most employees declining to work with the company. It is one of the factors that have led to the company facing employee shortages. As much as the company expects its employees to be productive, employees also expect the company to pay them well and provide good working conditions. Failure to offer a good salary has led to high employee turnover within the company. Employees leave the company after working for a short period and look for companies where they are paid well. It has led to JetBlue having to conduct regular employee training and recruitment to cater for positions left vacant by those who leave the company.

It has been hard for human resource managers to predict development trends in airlines. The industry has increasing continued developing new types of aircraft. Operational requirements within the industry have also changed with time (Mark 2008, para. 4 Mark, R., 2008). Different countries have changed their terms and conditions for airlines to be allowed to provide their services in the country. As the company continues to expand, it has faced a problem with respect to employee experience. JetBlue has continued purchasing new aircraft as well as introducing new technology within its operations to improve customers’ satisfaction thus overcoming competition. This has slowed down operations within the company due to its employees not being conversant with the technology or equipment introduced in the company. For instance, the introduction of Embraer 190 saw the company struggle as its pilots were not in a position to effectively operate the plane. It is considered to be one of the factors that led to a reduction in the profit margin of the company during 2005. The company has always been in dire need of employee training and recruitment to cater to the ever-changing needs.

When JetBlue Company was established, everybody in the company had the confidence that the company would develop rapidly. Every employee was pleased with the working environment in the company. However, this feeling was not to continue forever. As the company continued expanding, it became hard for the management team to coordinate all activities within the company. In 2002, most of the employees complained of poor leadership in the organization. They also claimed that there was a poor teamwork relationship. The success of any organization depends on good management and employee satisfaction. In case employees find to be shortchanged in a company they may drop their commitment to the company leading to poor performance. This has been one of the challenges that JetBlue has experienced. In the past, Promotion in the company was not based on the level of experience among the employees (Mark 2008, para. 5-7). This coupled with the fact that the company offers less salary compared to other companies has resulted to employees not being committed to the company. Their productivity has not been improving as per initial expectations within the company.

Information challenges affecting JetBlue Airline Company

All airline companies offer their services in different countries. To effectively monitor operations within the different branches, it requires the company to have reliable mechanisms of collecting, storing and transmitting information across the branches. This calls for organizations to employ effective information technology infrastructures. Failure in information reliance within the airline industry may result in flights being canceled or delayed. JetBlue Company has experienced numerous problems with its system of information collection and transmission. Customers have complained of their flights being delayed without substantial reasons. One customer went to enquire the reasons as to why his flight had been delayed only to be told that the plane he was to use was had been delayed in another terminal (Daugherty 2007, para. 2). It has been hard for operators to predict the time a plane will reach a specific terminal as well as locate the place where a specific plane is at a specific time.

At times customers have been unable to make calls to the customer care center of the company. The size of broadband used by the company is often overwhelmed by a number of callers making it hard for others to communicate with the company. Information storage on the company’s website has had some problems. This has led to some more people booking the same plane beyond its capacity while other planes leave with fewer passengers. Some passengers book their flight online only to be told later that their flights do not exist in the company’s system. Poor communication on the mode of operations within the company has also led to people missing their flights. It is a culture in the company to take its flights earlier than they are scheduled so long as every passenger has checked in. Some passengers are not aware of this. As some passengers check-in online before going to the airport, they have always missed their flights. The company needs to ensure that it has effectively communicated its operation modes to customers to avoid inconveniencies (Daugherty 2007, para. 4).

Recommendations on how to Deal with problems facing JetBlue airline

There are numerous ways that JetBlue Airlines can employ in solving the problems that hamper its development. As the company continues growing, its financial hardships will only be reduced by overcoming competition. This can be through identifying some of the potential routes that have not been exploited by their competitors. Using such routes would imply that the company will not have to charge low fares for their flights. Establishing themselves in new routes in advance would help them in improving their brand name. By the time their competitors embark on exploiting these routes, the company will have gained a strong competitive advantage making it possible to reduce operating costs in these routes (Seal & Kleiner 1999, pp. 123-125).

Employee performance within the company is affected due to the poor package offered to employees by the company. The success of any business does not rely only on the amount of profit made by the company. The company needs to ensure that it has satisfied its employees to improve their productivity. This calls for JetBlue to look at the available methods of employee satisfaction to satisfy its employees. In so doing, the company will be able to cut down on employee turnover and at the same time improve its profit. Apart from increasing the salary given to its employees, JetBlue can come up with a method of acknowledging the role played by its employees such as giving them an opportunity to grow (Eaton 2001, p. 45). This would make employees remain in the company. Other methods of employee motivation that the company can use include profit sharing and stock options. JetBlue needs to encourage its human resource department to regularly monitor changes in the airline industry. This would help the company is being prepared for the changes in advance by conducting employee training or recruitment in advance.

Information about company operations and customer needs is important when it comes to developing company strategies. It is through this information that the company identifies areas where it is performing poorly thus making the necessary changes. The great need for information in JetBlue calls for it to come up with measures to ensure that information received is transmitted or stored efficiently. To cater to problems where customers are unable to make calls with the company, JetBlue needs to increase its bandwidth. The company can also establish numerous call centers to cater to customers. Regular upgrading of its information system would ensure that it does not crash in moments when it is most required (Eaton 2001, pp. 123).

Apart from ensuring the reliability of information collection, storage and transmission, information technology can help in reducing financial and human resource problems that affect the company. The technology can be used in collecting the relevant materials for employee training. Some of the activities performed by employees can be done by one person using the technology. This can reduce the number of employees required by the company thus cutting down on employee turnover. The use of information technology would reduce employee workloads thus ensuring their satisfaction.


The airline industry is growing at a very high rate. Every day there is a new airline company introduced in the market as well as a new model of aircraft. Competition in the industry has continuously increased. This has led to mergers and acquisitions of companies as they fail to meet the financial requirements. Competition has led to some companies not being able to maintain their human resource (Wederspahn 1992, pp. 56-79). Some airline companies have suffered from high employee turnover as employees quit and go to work with companies where they are paid well. To overcome the problems experienced in the airline industry, companies can use the methods recommended for JetBlue. This is because all airline companies offer similar services and face the same problems. (5402 words)


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