MS project

JETBLUE AIRWAYS

JetBlue Performance Improvement Project

Aw HuiEe

Table of Contents

Executive Summary 3 Introduction 3 Company Overview Current Performance of JetBlue Company Proposed Changes 4 Real Time Insights Products and Services……………………………………………………………………………5 Connected Platforms………………………………………………………………………………5 Project Selection Process………………………………………………………………………….5 Continuous Improvement 7 Accounting Rate of Profit 7 Repayment period………………………………………………………………………7 Reduced Cash flow……………………………………………………………………………….7 Asset risk and thoughtfulness analysis…………………………………………………………7 Preferred Criteria………………………………………………………………………………7 Considering real time insights………………………………………………………………….8 Products and services……………………………………………………………………………8 Changing Products and services………………………………………………………………….8 Approaches Used in the implementation of services……………………………………………9 Potential risks and risk management measures Literature Review 10 Risks Expected…………………………………………………………………………………11 References……………………………………………………………………………………..12

Table of figures.

Fig. 1 Factor analysis for project selection

Fig.2 Project Selection Justification

Figure: 3 Business Process Re-engineering and Continuous Improvement

EXECUTIVE SUMMARY

The report is intended to provide JetBlue with a useful and pragmatic project idea to improve their business performance. JetBlue Airways provide carrier services at an affordable cost to operate more than five air bases In order to pick on a more helpful project aimed at improving the performance of JetBlue Airline, a task assortment was performed using research quantified into literature reviews. The project choice was determined by evaluating Cost, ROI, Risk, Benefit, Time and several outcomes proved Mint service would be the most appropriate.

INTRODUCTION

Working for a successful and reputable organization can be more fulfilling and inspiring. Being in a position to communicate effectively, travel, meeting clients brings a more exciting experience and significant stake in the corporation’s growth. For this reason, I choose to familiarize myself with JetBlue Airways. The employees at JetBlue look smart committed and value customers. It therefore loves and fun identifying with the company.

JetBlue Airways is a passenger carrier company providing air transport services across the United States of America, Latin America, and Caribbean. The corporation operates various aircrafts such as Embraer E190, Airbus A321 and Airbus A320. The company also provides transcontinental products known as Mint. The headquarter of JetBlue Airline is located at the Island of New York, while it is at the same time centrally based at an International Airport called John F. Kennedy . The airline serves flights to Costa Rica, Mexico, the Dominican Republic, Colombia, Jamaica, Bermuda, the Bahamas, Barbados, Grenada, Peru, Trinidad, Tobago, Puerto Rico, and their costs are highly affordable. JetBlue airline was founded in 1999 by David Neeleman, a former employee at the Southwest Airways. (Laura, 2013)

The airways provide low- cost travel to the passengers. They also provide in- flight amenities such as television, entertainment, and satellite radio, free gate to gate Wi-Fi, branded snacks and non- alcoholic beverages and drinks. Mint is a premium service provided on first class Caribbean routes on a designed Airbus A321 structured with fully lie- flat seats, private suite and a sliding door. For the last years JetBlue has registered a declining performance. Since JetBlue Airline stream of traffic has been lagging behind its aptitude growth, utilizations have downed for three consecutive months. The airways utilization fell by zero point three percent points to eighty seven point one percent for the subsequent month of August 2017. Equally, JetBlue Airline’s income per available seat mile fell by four point eight percent in the first quarter of 2017 following the degeneration in yields. The plunge in performance is significantly caused by rising fuel cost, low fares, and numerous amenities; operational issues making JetBlue become less competitive. The airways being the fifth largest United States of America based carrier, it focuses on three key areas to improve their competitiveness and provide a splendid service to their customers. The company’s priority is based on connected platforms, real time insights; products and services. To achieve a long lasting growth the three fundamental areas need to be changed.

Proposed Changes

This section provides a concise prologue and elaborates the potential changes that are obtainable JetBlue Company that would lead to the progress of the entire business

Making changes is concerned with indicators and performance of the investment which is aimed at sustaining the company’s success over a given period of time. According to Uwe, Deryl, and Peter (2015), an investment is a series of currency influxes and discharges, starting with cash discharge then followed by cash incursions. They further argue that supplementary investment can be put into different categories which include growth, variation or inevitability investment. Growth leads to a rise of capacity of a company; variation investment modifies certain features of the company, while certainty investment aims at reducing risks. Uwe, Deryl, and Peter (2015), further argues that the other aspect to be looked at keen is the functioning area that energize the venture. Investments are therefore, grouped as either intended for creation, attaining, management, transactions or study and improvement.

Baliira and Sardar (2013) assert that organizations undertake arduous threat management assessment before determining whether to go ahead with the projects or not. Companies also develop new capital budgeting model with inter-disciplinary impacts, multiple objectives, and agency costs. Asset Review model provides a dependable approach to capital investment appraisal. Various models asses the feasibility of a project and the value it produces. The Appraisal model support central finance making it easy to understand the decision making process for each capital project in totality. Each model has an exceptional intricacies relating to different types of income and costs companies require.

A research done by Dr. Peter (2013) it is advisable to estimate the benefits of a project in financial aspect. He highlights four main techniques that can be comfortably applied while starting up an airline business. The Evaluation Facsimiles are not limited to; bookkeeping rate of return, the repayment period, reduced cash flow, and speculation risk and sensitivity analysis.

JetBlue follows the practice of never cancelling flights despite the prevailing weather conditions. The airline is therefore forced to keep a number of planes on the ground, and passengers kept waiting. This leads to huge losses when the company is eventually forced to cancel most of its voyages whenever ice storm hit their routes.

JetBlue Company has been facing reliability problems with some of its aircrafts such as Embraer 190 compelling the management to hire other airline operators to manage the fleet. The corporation has in-inflight facilities that add to the wait of the airbuses, leading to high fuel consumption.

JetBlue operates in one hundred and one destinations with five bases for crew members and pilots. The terminuses are in South, North, and Central America. The company has also entered into agreements with other carrier providers such as Aer Lingus, an Irish carrier, South Africa Airways, and American Airlines. This should be changed because it leads to creation of quasi- hubs by a third party company, which is Lufthansa, which offer the service of transferring passengers and luggage between the two carriers.

Project Selection Process

Three possible changes identified above would improve the performance of JetBlue Airways. The subsequent stage is considered vetting process (Shtub et al (2014) in which only one option is settled on then improved. Shtub et al (2014) further state that a lot of resources are exhausted by companies every year on projects which add no value to the company when implemented.

FIG: 1 Factor analysis for project selection

The evaluation and the subsequent results from the literature review section reveals that the five factors mentioned below are the most common of all influences which must be considered when considering any project:

· Return on Investment (ROI)

· Time

· Risk

· Cost

· Benefit

Seeing the literature review it can be gauged that ROI was the most important of all factors as this factor appeared in almost five of the seven academic sources which were reviewed.

To select which project shall be used in action planning for implementation, the impact of the five key influences shall be evaluated. The impact shall be given a value on 1-3 dependant upon what the extent of the impact shall be. Whichever project will score shall be the one which is the most viable to JetBlue Airways and will be the one selected to initiate. Morris (1997) explains that a weighting loss of two shall be applied to those influences which have the most impact and are the ones most crucial in improving the performance of the business. The results justify the following:

Key:

3.will represent the highest benefit and the quickest ROI, the best use of time on the timescale, the least risk and the least costs.

2. shall represent some benefits, some ROI, mediocre use of time

1.represents the least benefit, the slowest ROI, inefficient management of time, the highest costs and the highest risks.

Fig.2 Project Selection Justification

The results of the tests conducted show that purchasing a balancing machine upgrade shall be the most effective project for JetBlue Airways. The weighting given on ROI and benefit is the primary reason why the project could accumulate so many points during the process of justification. Contrasting this with the balancing machine project posed as the most extravagant which is something that will require some particular care in case the ROI succeeds. There was no other project which shall require such care.

Figure: 3 Business Process Re-engineering and Continuous Improvement Comment by Nik: Did you realize that this table is the same one on p13-15?

The table and analysis in the above figure illustrates that Continuous improvement is the most appropriate approach of the two when the chosen project has to be implemented at JetBlue Airways Project Plan. Because of the nature of the balancing machine project, Continuous improvement project fits the bill the most appropriately.

Continuos improvmentwill be the most applicable while making changes to JetBlue services. The company has gained customer trust, and is one of the United States of America’ airlines that has built client satisfaction. A progressive change, such as expanding Mint services, True Blue points, branded snacks and non-alcoholic beverages and drinks to other crew members that are currently not accessing the same require a series of steps updated as necessary.

Project Implementation

Using the different forms of research and analysis in the previous sections, it is decided which out of the three possible projects shall be implemented. It is also decided that which method out of the two projects evaluated is a demonstration of the most suitable form of project implementation. The next section shall be used in devising a step by step draft plan for its implementation.

Draft Project Plan

Microsoft Project software was used in preparing the draft project plan and shall also be used for the final plan, this is one of the most powerful tool that most businesses use easily and allow for project managers in devising a step by step project plan that can be very easily.

Cost Estimation Comment by Nik: Should be done in MS Project format. Refer to sample report

Percentage complete: 0%

Project scope is everything that is written about a project and must include all the expected outcomes but be detailed as well. There must be proper detailing about what must be included in the outcomes. The importance of the project scope is to be supported by the content which shall be inclusive of all the activities that are to be carried out, the resources that must be carried out the final goal must be supported with the considerations about the limitations and constraints. The project scope must not only include the tasks which are required to complete the project and identification of the scope is the responsibility of the manager and also suggests that the execution of the project relies upon the scope of the project.

Milestones are an integral part of any project plan. He further suggests that milestonesare important for any project. They are beneficial in enabling the project manager in monitoring the timescale, quality and the amount of inputs to be given, manage the performance of the supplier and other measures as well. They are termed as road markers. They can also be understood in terms of cost monitoring, checkpoints are to be understood in reviewing the plan of the project and this shall then allow for all kinds of corrective action.

The milestones and the “scope” of the project are to be reflected in the “Summary Tasks” in the Microsoft project plan, the scope which is outlined in the project given below and title all step by step actions within the important tasks.

Figure 5. Project Scope

1. Initial Project Investigation

There is always a level of capital and risks when applying employee time in investigating the likelihood of projects. Before beginning any projects the project manager shall investigate and forecast if the project is worth investing into.

2. Research of Possible Suppliers

As is the business case suppliers shall also be needed for budget or costing information, supplier research is required. Discussions can begin with the potential supplier in improving the services going in with the airline.

3. Next the project manager shall need to include the results of the project for the required research. Due to the two main tasks the project shall require more meaning. The operations manager will be able to make better decisions. The project manager will have to talk to the operations manager.

4. Machine Information

The project gets accepted and is signed off before the first step has been decided. Since there are no major machine requirements hence no machinery has to be bought but improvements made in several areas of the functioning of the airline.

5. Raise Purchase Order

After the requirements have been decided and the price agreed upon the accounts department shall require details of the account and payments of the materials to be bought, the approval of the value has been granted already. Everything shall be in the form of a contract before the invoice’s are finalized.

6. Design Installation

A seminar or workshop has been designed to make sure that the employees of the organization have an idea about services to be improved, business processes to learnt and everything else that needs to be improvised upon.

7. Plan the processes

The processes shall have to be planned before they are operated.

8. Marketing

The continuous improvement processes have to be marketed well so that they help reach out to new customers and can help the company earn money.

9. Review

The operations manager must review the processes for their functioning.

Draft Project Plan Costing

Lock(2013) has explained a number of methods to explain the rank risks as per their probability occurring and the severity of the impact that has to occur, this shall help the project managers in identifying the risks which pose the highest threat and hence require attention and are able to distinguish those risks/ threats better.

He further explains that quantitative risks are better than qualitative risks as it quantities the risk outcomes and gives a numerical score to the projects.

Risk Method Evaluation

It can be understood from above that the failure and effect analysis is the best method of analysing risks in the literature chosen. All the other chosen methods supported FMEA as a useful tool for project managers. This shall be the preferred method for risk assessment for the following section.

Risk Factors to be considered

The highest risk factors which shall be considered are:

a. Budget

b. Communication

c. Cost

d. Culture and economy

e. Environment

f. Environmental

g. H&S

h. Legal Changes in the management

i. Management support

j. Organizational performance

k. Personnel Allocation and resources

l. Quality

m. Political

n. User Acceptance

Lock suggests that it is always cost beneficial in identifying the risks at the commencement of the project as the financial impact of risks can augment when the project starts.

Quantitative Risk Assessment

Adapted from Meredith and Mantel (2011),

Revised Project Plan

The analysis above has presented with multiple risks related with the risks which were evaluated earlier and also incorporating others which were not considered serious originally.

(S,L,D,RPN)

S= Severity, L=likelihood, D=Detection of risk

Scale of risk: 1-5,

5= high severity

1=low

RPN= severity of risk*likelihood of risk*probability of detection

RPN Reduction Overview

It is evident that the scope of the project has been devised in order to get rid off any surprises, in a contingent way that all the tasks can be foreseen. Tasks might require deviation from the original plan is kept at a minimum risks. Even though the plan has been developed the project shall still be open for continuous improvement.

Accounting rate of profit

The rate of profit relates the revenues the company expects to make from a venture to the amount that is required for security. Accounting rate of return results from the average yearly profit a business expect over the lifespan of a stock project, in comparisons with the average amount of principal spent (Richard, 2013)

Repayment period

Reimbursement period is a system used when calculating an asset by the magnitude of time required achieving the repayment (Hillary, 2011)

Reduced cash flow

Reduced cash flow model relates to a reduction rate to graft out the contemporary day correspondent to a forthcoming cash flow. The ideal can be divided into core degree of profit, and disposable current price. Dr. Peter further posits that managers using net present value technique raised or lowered the discount rate to allow for risk rather than altering the money circulation (Peter, 2009)

Asset risk and thoughtfulness analysis

Evaluation of risks and setting up of mitigation measures are vital in starting a business.

According to Paul (2017), fleeting planning involves solving a multi- dimensional problem of significant complexity where the condition is changing almost every day.

Preferred criteria

From the literature review, Accounting Rate of Return is the most preferred criterion to be applied while making changes to JetBlue Airways.

Considering real time insights, the company should reconsider the practice of never canceling flights. This is because in the event of forced cancelation, the airline incurs loses out of the materials and time used while processing new air tickets.

Products and service offered by JetBlue include carrier services, environmental preservation, and aircraft maintenance among others. The purchase of fleets, provision of in- flight services to attract more customers is plausible since it is aimed at increasing customer satisfaction. This has also contributed to high return rate of customers using JetBlue services. Therefore, the strategy is more profitable.

Connected platforms involving partnership with other carrier provides, expanding JetBlue destinations and bases is among the returning to profitability approach launched by management

Changing products and services

JetBlue’s products and services can easily be changed. This will include; removing a row of seats from some of the airbuses such as A320 to make the aircraft lighter, and also reducing the number of flight crews. Lighter aircrafts consume little fuel compared to heavier ones.

Approaches used in the implementation of changes

Research done by Mahadevan (2010) states that when companies opt for product and service changes, there are two approaches which are likely to be used: the first improvement takes place step by step, while the second one takes a large step and happens so abruptly. The first approach is continuous improvements, which is predictable, controlled and can easily be reversed when the desired goal is not achieved. However, the second approach is more explorative and focuses on and radical improvements on service delivery.

In continuous improvements, the management focuses on coaching the processes which are carried out by team members. Actions are conducted stepwise while monitoring performance measure very closely. The task force responsible for the implementation of the changes documents their target, expected outcomes and the actual results. Radical improvement however, is regarded as an explorative approach that makes deliberate changes without involving several steps (Tor 2013).

According to Andrew and Joseph (2013), there are several occasions when internal improvements are required aimed at increasing productivity. There may also be external customers who induce changes depending on their level of loyalty, and the amount of profit they contribute to the company. Radical change is characterized by episodic occurrence and fundamental improvements. The process intends to redesign the existing structures and the way in which the company operates.

Hermann, Ralph, Klaus, Gregor, &Dimitris (2017), argues that if a continuous improvement strategy is used, there will be limited risk analysis and verification process, whereas, using radical improvement considers risk analysis in order to find limits stability and capacity growth.

Potential risks and risk management measures

Literature review

Risk management entails identifying risks, developing strategies to manage risks, and assessing the risks. A risk management plan is a pre requisite for any investment. According to Gregory 2010, types of risks vary from business to business; however, steps involved in preparing risk management plan are similar. Therefore, risk management plan should detail strategies specific to a given business. It is paramount to allocate resources, time, and budget for designing business impact analysis and risk management plan. Before identifying risks, one should access business activities, resources, key services, and staff. This will help in eliminating aspects that are not necessary (Jonathan, 2012). Risks should be identified, analyzed, and then ranked in the order of priority, after which the methods of management are applied.

Assessment of Margaret 2012 reveals that treatment of risks requires different considerations. Some risks require immediate treatment, while others may be addressed later.

There are different options for treating the risks. Donald 2012 highlights them as follows; reducing the likelihood of the risks through quality control processes, regular maintenance, staff training, minimizing exposure as well as public relations

Risk expected

One of the biggest risks expected to be encountered by JetBlue Company as a result of the intended changes is the concentration in the airport. This will expose the airline to events that affect traffic. The changes will lead to increased return rate among the customers considering also that the costs are highly affordable.

The risk can be addressed by expanding bases of operations as well as purchasing more aircrafts. Several criterions can be used in managing the risk at JetBlue Airways, but tracking company’s cash flow would be more appropriate. By expanding the bases, purchasing more facilities and increasing the company’s destinations can be more risky and lead to huge deficit if not well undertaken.

Conclusion:

This project was aimed at familiarizing with JetBlue Airways. JetBlue is one of the most successful businesses in the USA. However, inspite of its runaway success there are a number of issues that it is beset with. The most potent form of change and analysis that can be brought about in the company is through a process of continuous improvement. The entire paper looks at different ways and means through which change can be set.

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