Risk Management Case Study: Blue Airways, Inc.

Blue Airways, Inc. (JetBlue) is a low-cost carrier (LCC) that is based in New York’s John F. Kennedy International Airport. The founder, David Neeleman, developed JetBlue’s business plans in 1998, and established the company in February 1999. JetBlue started its operations in February 2000, with its first flight from JFK to Fort Lauderdale airport in Florida. [1]

In addition to low fares, the company differentiate itself from its competitors by providing a great experience to its customers notably through the use of new aircrafts, with leather seats and entertainment, and a reliable operating performance, even if it is using low-cost solution for booking (on-line only). JetBlue benefit from a strong reputation among customers to be very service

Although there was no way JetBlue could have prevented the cancelled flights due to bad weather, as we mentioned earlier they did not have risk management plan in effect addressing ice storms before this incident occurred. Most other airlines responded by canceling more flights earlier, sending passengers home and resuming their schedules within a day or two. But JetBlue thought the weather would break and it would be able to fly, keeping its revenue flowing and its customers happy. [4]

The JetBlue crisis started on a Wednesday, but its woes dragged on day after day.

By the following Saturday night 23 percent of JetBlue flights were cancelled for Saturday and Sunday and would also be canceled Monday. This confusion led to angry exchanges between customers and employees, promoting the airline to call out security personnel which was totally unexpected.

JetBlue Main problems can be categorized as bellow:

1. First and for most JetBlue was in a real need to restructure SOC (system operational center) which is a hart of

Powers customer service oriented airline among low-cost carriers. With the debacle that happened JetBlue must take airline customer service to even a higher precedent as issues such as passenger rights, getting planes off the ground on time, and employee empathy are addressed [6]

David G. Neeleman the founder and CEO of JetBlue airlines said he was humiliated and mortified by the huge breakdown in the airline’s operation. He also admitted that the current crises which led to about 1,000 cancelled flights in five days, was the result of a shoestring communications system that left pilots and flight attendants in the dark, and undersized reservation systems. Later he changed his position but still remained in the company. [5]

Jet Blue was in real need to take back the lost reputation they tried to asked their internal OD consultant to go for all the details .After synthesizing the data, the OD consultant met with SOC (service operation center)leadership to interpret the data during a one-day working session.

Action plans of OD