Comments on: Jet Blue’s Strategy Behind the All You Can Jet Pass

By: Alia

Alia — Sat, 19 Dec 2009 04:06:36 +0000

Hi Sir,
i read you essay about jetblue Airline http://thestrategyblog.com/index.php/archives/2...
and i like you way of analyzing the information.
i am an MBA student and i have next week exam about jetblue airline case,
through my preparation and reading for the exam , i come up with one question in my mind.
What is the disadvantage of jetblue strategy ,,, it can continue in next years with the same success ?
please help me to answer this question
Thanks
Alia

By: Alia

Alia — Fri, 18 Dec 2009 20:06:36 +0000

By: matthewbward

matthewbward — Wed, 02 Sep 2009 17:33:42 +0000

Good topic. One thing that I haven't seen talked about is the effect of this campaign at scale. I agree that this is a stunt designed to get slack out of the system, targeted at consumers, over a short period of time. Since the marginal cost of selling an empty seat is near zero, the economics of this campaign can probably be made to work out – either in current or expected revenues. But my question is what is the secondary effect of this promotion should it be taken to scale? Presumably, the demand created is mainly new demand and not demand transferred from other suppliers. Since this is a limited-time promotion, demand shifts will probably be temporary and soon return to normal. But if JetBlue offered this on an ongoing basis, how do you think competitors would respond? If successful, it seems like it would effect the oligopoly that the FAA maintains on routes and gates because you would see a fundamental shift in the system. It would have to create some sort of competitive response but I don't know what that would be. It seems like there is some game theory at work here but I'm not sure what it is. The same model could probably be applied to lots of other highly perishable, highly substitutable, low marginal costs business such as hotels and cars. Thoughts?

By: Taylor Davidson

Taylor Davidson — Wed, 02 Sep 2009 11:25:10 +0000

You're spot-on about @jetblue 's #AYCJ targeted customer segment, consumers, not business travelers.

But the great thing is that the value created by the promotion, the mass of people pouring into JetBlue's schedule, is an asset that will stay in many people's minds for a long time; the cost of the promotion (lost revenue and marketing $$) a small price to pay for entering deeper into the consideration set for many people.

And think of it in this term: JetBlue, empowering cool people to use their promotion to do cool stuff that other people would love to do? An airline as a force of good? Brilliant. I hope Jet Blue is working out ways to highlight people using the AYCJ (all-you-can-jet) pass and how they have used it to help their lives.

It would be cool if you could have a special marker if you were a passenger flying on the AYCJ pass; a marker on a seat, a VIP badge, some kind of social object that fellow passengers could see, to create temporary rockstars on every plane with a AYCJ passenger.

Can one put a $$ value on marketing that good? I'd hazard a guess Jet Blue is surely trying to :)