JetBlue Hits Turbulence

JetBlue Hits Turbulence : 

JetBlue Hits Turbulence Submitted By: Ashwathy S.R Jithin Raj Praveen B Sreesha R

Types of IS and Business Functions : 

Types of IS and Business Functions Transaction Processing System which is used to perform and record the day-to-day business transactions including reservations, paperless ticketing and baggage handling. Other systems that were in place were systems for managing planes, crews and scheduling. Communication system that is seen in this case is new software that sends recorded messages to pilots and flight attendants to inquire about their availability. Information from the returned calls is entered into a system that stores data for access and analysis.

Business Model and Role of IS: 

Business Model and Role of IS JetBlue’s goal is to deliver a luxurious flying experience while operating at low cost. JetBlue’s technological expenses were approximately one-third of its competitor’s IT costs in spite of the fact that operations were extremely reliant on automated systems. This automation helped keep headcount low and union affiliation nil. It used a very lean, non-union workforce and flew only one type of plane from one vendor allowing it to standardize flight operations and maintenance procedures and streamlined its business processes to a great extent. JetBlue’s information systems supported its business model because they were standardized to involve a single vendor across its entire operation hence its IT cost remained low in comparison to its competitors. JetBlue spent only 1.5 percent of its revenue on information technology, as opposed to the 5 percent spent by competitors. Additionally, web-based booking tools offered convenience to its customers, also at a low cost.

Problems Experienced: 

Problems Experienced The problem experienced here was that the kind of investment being made in he Information system was low which could not accommodate worst case scenarios. Spending only about 1.5 percent of revenue versus 5 percent like its competitors was a big mistake. Weather is only a contributing factor but the real problems faced by JetBlue were: Processing systems used for daily transactions were not scalable. The system JetBlue used was good for normal traffic and normal business conditions. However, the reservation system was not adequate to handle the increased number of customers using it when flights were cancelled. Information systems were not available to manage the crews. No adequate communication system was available for crews to call and get new assignments. Crews were stranded for days without any way for the company to contact them.

Cont…: 

Cont… The department responsible for allocating pilots and crews to flights was too small to handle the extra workload created during the crises. There wasn’t any system in place to manage the stranded, lost, or unclaimed baggage. In addition to an inadequate reservation system, the company did not employ enough people to staff its phones to handle the surge in telephone calls from customers. The Web site was also not scalable; people that called the company were directed to the Web site. Unfortunately, it couldn’t handle the surge either.

Systems & Business Functions Involved: 

Systems & Business Functions Involved Transaction processing system: ticket sales, baggage handling reservation system Management information system: system for managing planes, crews, and scheduling Decision support system – We don’t come across this in the case Executive support system– We don’t come across this in the case There wasn’t any evidence of integrated systems like enterprise applications, customer relationship management, or knowledge management systems.

Response, Solutions & Recommendations: 

Response, Solutions & Recommendations Response: Mr. Neeleman took responsibility for the crisis and apologized on behalf of JetBlue. He admitted that JetBlue lacked strong management and has inadequate communication system . Solution and Implementation: Deployed sky solver. Also introduced new software that sends recorded messages to check the availability of pilots and flight attendants. Trained 100 employees to serve as back for various departments. Enforced standards for customer treatment and airline behavior.

Cont…: 

Cont… Situation After Implementation: Cancellation of 215 flights, which accounts to a third of its total daily flights. Early cancellation ensured that flight crews were accessible and available when needed. About 10,000 customers faced inconvenience due weather related breakdowns. Alternative Solutions: Computerized systems could be introduced for recording and tracking lost bags. A new system could be configured to accommodate more agents at a time. To deploy new systems which could handle the traffic during festival seasons.

Road to the Future: 

Road to the Future Though JetBlue has initiated a series of actions in the technology and staff standpoint to improve the situation, but still these are not very effective. This is evident from another snow fall crises which followed which again proved that there is lot to improve for JetBlue. It still has to make a lot of investment in the Information System sector in order to really match up to its competitors and to tackle the future weather situations and other festival related rush in a more efficient way. There’s a reason why its competitors are spending 3.5 percent more of their revenue on information systems—they’re necessary. Except perhaps crew management, most of the same problems are likely to re-occur and are most vulnerable to breakdown: reservations, baggage, plane maintenance, and communications. The new customer bill of rights is a step in the right direction as far as sales and marketing and customer relations are concerned. But it won’t mean much if the company doesn’t create the proper infrastructure to support the policy in the next crisis.

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