2. What core processes and technologies support the core competence?
- JetBlue recruits bright young flight attendants right out of top schools, and pays them well: an hourly rate that is higher than the competition. It managed to avoid the problem of the exorbitant salary for senior flight attendant that plagues many major airlines’ cost structures by maintaining a policy of no pay increases for its attendants after five years. This has the benefits of keeping JetBlue’s flight attendants young (reinforcing its youthful and fun image), non-unionized (people pick up after a few years, on to other opportunities), and much cheaper (no highly-paid, flight attendants with 25 years experience) without trading off on service (JetBlue understands that there are very few differences between new flight attendants and ones with 25 years of experience). Ann Rhoades believes that people do not need to stay with an organization forever, but they will be truly taken care of when they are with the organization.
- JetBlue gets far more out of far fewer planes by utilizing them far more effectively, resulting in much lower plane costs, enabling it to make money while flying passengers at cheaper rates than its competitors. Fast turnaround times at the gate, averaging 35 minutes versus an hour+ at the major carriers, keeps JetBlue's planes on time and in the air for an industry-leading 13 hours per day. It is able to accomplish this because its made the choice to fly out of one uncongested airport - JFK. Although JFK is crowded for international flights, air traffic is minimal for domestic flights (domestic flights fly at lower altitudes adding for more entry ways into the airport), thus enabling it to fly its planes much more frequently than its competitors and offering more on-time departures and arrivals, adding to a greater convenience for its customers.
- JetBlue flies dozens of flights daily between New York and five Florida cities -- an Eastern seaboard route that is often closed due to congestion or thunderstorms. To improve the odds that its flights can operate on time, all JetBlue planes are equipped with life rafts and vests so they have the option of using flight paths over the Atlantic.
- JetBlue has avoided travel agents (average cost: $14 per ticket). Instead, its reservation agents answer calls from their homes (average cost: $4.50 per ticket). The company also pushes online ticket sales (average cost: 50 cents per ticket).
- JetBlue builds efficiency into everything it does, and leveraged state-of-the art technology. JetBlue created the first paperless cockpit, which equips pilots with laptops that speed maintenance checks and turnaround times at gates.
- JetBlue uses only one type of airplane, the Airbus 320, to minimize maintenance and training expenses.
- JetBlue offered customized employment packages to employees and offered ramp workers benefits packages as well that met or beat industry standards. They want to take care of their employees and avoid unions, as this would change their business model and go against their defined values. It would change the relationship dynamic, which is essential to deploying its business strategy.
- JetBlue puts great emphasis on hiring people who are a good organizational fit to the company, those who will espouse it values and have a high commitment to the organization. When the employees come on board, these values are driven in from the beginning. JetBlue prefers to hire people with little industry experience when they can; they believe in the “can’t teach an old dog new tricks” philosophy.
3. What (internal and external) relationships are critical for creating the competence?
Relationships between employees, employees and management (or crew and coaches), as well as employees and customers are key to creating the competence. Jet Blue’s HR management want employees to feel highly committed to the organization, thus they want the employees to know that they truly matter and will be taken care of and they do not need outside agencies, such as unions to take care of them. Management act as coaches, rather than superiors, and a team spirit is fostered. Constant two-way communication is encouraged. Many airlines repeat the mantra of “employees come first,” but do not mean it. JetBlue truly believes that taking care of their employees and helping them internalize the company’s values creates a significant competitive advantage that will help drive its unique business strategy. Thus happy, confident, and committed employees build effective relationships with the customer and also drive down costs by being productive.
4. What human capital (employee knowledge, skills, abilities) supports the core competence?
The skills of the top management team were key to defining the values and corporate strategy for JetBlue. Neelman’s airline industry experience and attention to detail as well as Ann Rhoades with significant HR experience (some at Southwest) clearly set JetBlue on the path to success initially and helped define the core competence that the employees must support. JetBlue employees must have integrity, humbleness and an overall great attitude.
Employee understanding and internalization of JetBlue’s 5 core values is imperative to success and directly supports its core competences. They have to know how to make decisions that conform to the values. The pilots have computer skills and receive aircraft training, but at the same time they must understand the values and integrate them with the training to truly support the core competences. The ground crew must know how to perform their job functions in a competent matter, but do so in a very efficient matter to drive down costs, while not compromising safety, which is directly in line with the safety value. The Flight Attendants understand the FAA guidelines and in-flight procedures, but must also champion the values in order to give customers the unique JetBlue flying experience that promises safety, efficiency, extraordinary service event though the customer is paying a low fare.
