Jetblue Crisis Feb 2007- Synopsis Essay

JetBlue Airways was created with the primary purpose to provide low cost American flights with “top-notch customer service” at budget prices. On the stormy day of February 14, 2007, their airline service was tested to the extreme. JetBlue initially serviced passengers between New York and Florida and then expanded rapidly. By the end of 2006, the airline had 500 flights operating in 50 different cities providing each passenger with (luxury) amenities such as TV, and leather seats (Laudon, pg. 72).

This rapid expansion brought challenges the airline had not prepared for. JetBlue’s most valuable differential advantage above other airlines, their “customers come first” attitude, was severely tarnished. Jet Blue had and was utilizing several different information systems, standardized flight operations and maintenance procedures, an out-sourced reservation system and a system for managing plane and crew. However, their system was not seamless or adequate to handle the onslaught of turbulence on February 14th.

In an attempt to identify the problem, a Fish diagram (please refer to the end of synopsis, before reference page) shows that there were many issues with their current information system that were not addressed in the event of a massive scale shutdown. In evaluating the problem with the JetBlue disaster, we find that the organizations business model was highly based on customer service. It was founded on the basis of offering luxurious flying experience and quality customer services at low prices.

The airline operated by offering this low cost service by cutting “unnecessary” expenses, and through the use of (available but inadequate) “simple-is-better” (Laudon, 2010, p. 72) information technology systems. The airline automated all its services, out-sourced other information systems used, employed a very lean non-union workforce in an effort to push spending costs toward supporting their “customer-experience-first” business model. The airline only operated airbus A 320, and when not exclusively using Microsoft software for its information systems, it also used Navitaire, who hosted JetBlue’s reservation system mong other airline systems. This approach gave JetBlue a competitive advantage over other airlines such that the airline expanded more rapidly than was envisioned. It was not well rounded enough or large enough to cover its customer’s needs in the time of a major crisis and shutdown. JetBlue was so successful for so long because it was a small organization.

From the case study, it seems that JetBlue was only taking measures to emphasize their business model, “purchasing a new plane every five weeks through 2007” (Laudon, 2010, p. 2), and not attending to other important infrastructural and information system details that should be considered with company expansion. Although we hear about all the information systems (in-house and out-sourced) that JetBlue had in place before the snowstorm, there is no discussion about upgrades to their systems due to growth. JetBlue was still operating under the same information and technology systems even with their primary goals accomplished of strong customer relations and rapid growth.

On February 14, 2007, New York City area experienced an ice storm affecting flights and most airlines started canceling their flights earlier in the day. JetBlue did not and operated on the “belief” that the storm would pass. There was no evidence-based management system put in place or practiced to make well-informed decisions on facts. JetBlue only hoped to live by its reputation of providing excellent service to its passengers. This resulted in the passengers and the crew being confined inside the planes for up to six hours without basic necessities such water, food and access to sanitary toilets.

Upon realizing the severity of the problem, JetBlue management started canceling flights leading to many customers rescheduling their flights or canceling them altogether. Due to so many passengers rebooking or tracking their (lost) baggage, the airlines automated system and skeletal staff could not handle all the traffic and crashed. Furthermore, the airline did not have a system in place to effectively communicate with its employees in case of such emergencies. With the breakdown in communications, thousands of pilots and flight attendants were out of position, and the staff could neither find them nor tell them where to go” (Laudon, 2010, p. 73). Overall, the airline’s primary problems is best outlined by their Chief Executive, David Neeleman, who admits in an interview that “JetBlue management was not strong enough and its communication system was inadequate (Laudon, 2010, p. 73). The department responsible for allocating pilots and crews to flights was too small” (Laudon, 2010, p. 73). This was a wake up call for the company that had relied on low cost technology, and a skeleton workforce.

Notwithstanding the mishap, JetBlue remained true to its business model of excellent customer service. JetBlue took a very active role after the crisis. David G Neeleman, the airline’s CEO, was openly apologetic to JetBlue’s customers and took accountability for the situation. He promptly expressed deep regret that good intentions, the plan to fully cater to customers needs, had gone wrong. Learning from the meltdown, JetBlue management introduced numerous changes to deal with inadequate staffing, obsolete and disconnected technology, and discouraged and untrusting customers.

The airline took action to upgrade its IT infrastructure and install new software to track availability of its staff during emergencies, to train 100 employees from the corporate office as backups during emergencies. In an attempt to restore customer faith, JetBlue introduced a bill of rights that would implement standards for airline behavior and customer treatment. Regrettably, changes included firing David Neeleman as CEO, making him non-executive chairman, by the airline’s Board of Directors who held him accountable for the meltdown.

Other persons such as Dave Barger, JetBlue’s president and Chief Operating Officer, should have also been dismissed. Dave Barger, at one point boasted, stating, “Airlines are powered by fuel, but this airline is powered by its IT infrastructure” (Laudon, 2010, p. 72). He may have realized that it was inadequate for his airline to spend “only 1. 5 percent of its revenue on improving its information technology infrastructure compared to 5 percent by competitors”(as stated in the text) after the airline’s meltdown under considerable pressure.

Such (precautionary) expense may have been necessary to sustain JetBlue’s rapidly growing customer base in such a crisis. The airline relied heavily on low cost technology that was unable to withstand high traffic volumes as witnessed during the New York ice storm. Multiple systems collapse, mismanagement, especially in decision-making, and inadequate operation and functions systems put JetBlue at a huge monetary loss. A primary flaw to be noted was with the JetBlue Transaction processing systems (TPS). JetBlue was unable to manage passenger rebooking or rescheduling their flights because of TPS failure.

Since JetBlue did not have a seamless, expandable information system in place to accommodate the demand and overflow, its weak TPS failure proved catastrophic for the airline. There was no flow of important information regarding all transactions and lost customer baggage. JetBlue was also lacking an Executive Support System (ESS) that senior managers may have used to address strategic issues and long term planning. The fact that the company outgrew its infrastructure capacity shows that management did not plan for and continued to operate after its rapid growth without modifications to its business operations.

The lack of foresight proved costly to the organization, about 30 million dollars. Besides TPS and ESS failure, JetBlue was suffering from a huge deficit in their Customer Relationship Management System (CRM). CRM systems help firms manage their relationship with their customers. The fact that the airline was unable to effectively communicate with their customers during this period shows disconnect in whatever system the airline did have to effectively communicate with its customers. JetBlue was unable to provide better customer service during the crisis.

We have to also note some core problems within the airline that was not directly dealing with its customers: JetBlue did not have a Collaboration and Communication System in place to fully keep in contact with its crew and flight attendants during the ice storm. An Internet based collaborative environment or even a mass instant messaging system connecting other flight crews in this crisis would have aided JetBlue’s “crews that had just worked their maximum hours without rest… JetBlue did not have a system in place for rested crews to call in and have their assignments rerouted” (Laudon, 2010, p. 73).

An effective Intranet and Extranet System, allowing for integration throughout JetBlue and flow of information within the organization and its members can be suggested to avoid any disconnection in communication. Finally, let us note a failure in the Human Resources functional business process. JetBlue’s Human Resource department did not predict or hire enough staff to keep up with the company’s rapid growth. The ice storm of 2007 was a wake up call that prompted JetBlue to revisit and revise its operational workings; business management processes and implemented changes can be seen in JetBlue today.

It is essential to appreciate the measures the airline has put in place. Such measures include upgrading its IT infrastructure, training more supporting staff, and introducing the customers’ bill of rights. It was a conscious effort to restore customer relations and trust towards their airline. The introduction of customers’ bill of rights gives customers reassurance, more than mere words, that they will be treated fairly and will not be left stuck again.

These measures better prepare the airline to handle future events in a more efficient and effective manner. JetBlue remains vulnerable though. It stated that the performance and reliability of their automated systems was critical to their ability to operate and compete effectively (in the text). Although replacements and upgrades have been made to their processes, developing, maintaining a strong and diverse skill-set, a Knowledge-based Management system within the airline’s operation is imperative.

A (KMS) is also recommended, may have enabled JetBlue better manage processes for capturing and applying knowledge and expertise of risk management in this particular case. We live in increasingly evolving technological times that test core competencies and intellectual capacity of (especially top) management. Therefore, there is need for the airline to build strong Information Management System and Human Resources System to prevent another meltdown.

References

• Laudon & Laudon, Management Information Systems 11th Edition, Upper Saddle River, NJ : Pearson/Prentice Hall, c2010.