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1. BUSINESS ETHICS GOVERNANCE & SOCIAL
RESPONSIBILITY
CASE STUDY REPORT-2
ON
JetBlue- Bringing Humanity back to Air
Travel?
Submitted By: Group3 (Section B)
Jahnavi (21080)
Jahnavi De (21081)
Jakkampudi Moulithya (21082)
Kavana K (21083)
Kelvin Francis (21084)
Kuntal Mandal (21085)
Kushagra (21086)
Mullapudi Teja (21087)
Suraj Maheswaram (21088)
Session 2021 – 2023
Submitted To:
Dr. Nilanjan Sengupta

2. Case Facts
 JetBlue Airlineswasestablishedin1999.
 DavidG. Neeleman,CEO,enteredthe airline industrywiththe greatestinitial capitalization
of $160 millionandaslewof advantages.
 Despite anunsustainable growthrate,JetBlue continuedtoexpandbypurchasingmore
aircraft.
 On Valentine'sDay2007, JetBlue Airwayschangedthe course of history.
 A wintersnowstormthatenvelopedthe New Yorkmetropolitanarea,includingJetBlue's
hub.
 It detainedhundredsof the company'spassengersforuptotenhours.
 It was a nightmare forbusinessandpublicrelations.
1) Were there any pre-crisissignsthat the company wouldrespond the way it did?If, so,
what were the indicationof a potential crisis?
By assessingthe currentconditionsof the organization,the pre-crisisstage fromthe initial approach
incrisismanagementassiststhe companyinlowering the recognisedrisksthatcanleadto crisis.Pre-
crisisindicatorsinclude Low-costoperatingstructure,insufficientpersonnel,dispersedworkforce,
communicationsystemonashoestringQuarterlyprofitfellfrom$8.1 millionto$2.7 million,
indicatingthatthe company'sgrowthrate wasbecomingunsustainable.Potential crisisindicators
include NewYorkisexperiencingasevere ice storm.There wasnoinformationfromairtraffic
controllersorpilots,andthe workforce wasnotwell trainedtodeal with unusual weatheroran
emergency.The companyexpectedthe weathertoimprove andtobe able to flyagain,which
allowedittocontinue toleadandkeepitscustomershappy.Asthe hurricane intensified,the
decisionprovedtobe quite serious.The planes landedattheirgates,hopingtoreceive newsof the
storm.Meanwhile,several airlinesdroppedoff,were loadedwithtaxis,andtookovermostof the
airline'sgates.Hundredsof JetBlue passengerswere waitingatthe airportfor flightsthatwere
aboutto be cancelled.FormerJetBlue CEODavidNeelemanadmittedthatthe company's
managementstructure wasinsufficient,andthattheircommunicationssystemslackedabudget,
leavingpilotsandoperatorsinthe dark.The businessalsoadmittedthatnoqualifiedstaff were
unavailable toleadthe pilots.One of the mostcritical pointswasthe terroristincidentonSeptember
11, 2001. While the companymade substantial progressfrom2002 to 2004, the impactof rising
gasoline priceswasunexpected,andthe company'squarterlyearningsdroppedsignificantlyin
October2005. However,ratherof evaluatingthe company'sinternal structure,JetBlueattemptedto
developbyacquiringmore planesandextendingroutes,whichresultedinmassive losses,commonly
knownas "The Valentine'sDaynightmare,on14 February2007." Exceptfor JetBlue,several airlines
have cancelledflightsinadvance whensevere ice stormsthreatenthe NewYorkareaas a preventive
stepfor passengersandaircraft.The companystatedthat keepingtheirairlinesoperationalwould
increase customerloyalty.Thiswasacostlyblunderthatseverelyharmedthe organization's
credibility.
The followingwere the pre-crisisindicators-
• Nopropertrainingforstaff / Employeeswere divided:Asthe stationwasinthe price competition,
it turnedtotrainingstaff to be of lessacceptable standard.So,afterthe fiascoatthe airport itwas
saidthat the crew wasfull of energy.
• Risingfuel costs:The external factor,whichisthe increase infuelcosts, hasplayedamajorrole in
organizingthe decision,asithas ledtoa dropin revenue of $2.7 million.TocoverthislossJetBlue

3. turns topilotinginbadweather,sacrificingthe promise of comfortandsatisfactionforcustomers/
passengers.
• Inactive Database Transfer:When10 JetBlue wasstrandedonthe runway,flightcontrolsfoundit
difficulttocommunicate withpilots,whodidnotreceive furtherinstructions.
• Insufficientstaff:Forpassengerswhowere luckyenoughtostayinside the airport andnotthe
networkcompany,theywere nottreateddue toshortagesif theirJetBlue affiliateswere ableto
answertheirquestionsandprovideinformationabouttheirflights.Therefore,addingcustomer
dissatisfaction,discomfort,andconfusion.
• Poorinfrastructure:Evidenceof thiswasthe inadequacyof the JetBlue handle problem.For
example,where the JetBlue number1-800 can handle the floodof currentcalls.The profitable
companyinfrastructure isexpectedtohave bettertechnologyandsupportinfrastructure todeal
withthe crisiscalmlyandconsistently.
Recommendations-
• A central place where all aspectsof the airline maybe coordinatedmustbe constructedforan
EmergencyCommandCentre.Regardlessof theirlocationorjob,the commandcentre must
developacommunicationnetworkandassistall members,includingcrew members.
• Provide basicmultitaskingtrainingtoall staff sothat theycan respondtospecial assignments.
Everymemberof the team(fromairport operationstomarketingandcorporate real estate,as
well asall crewmembersinall sectors) shouldhave adistinctandvaluable role toplayin
addressingthe issue duringacrisis.Theymustbe able tomultitaskandsupervise the workof
otherdepartmentstoensure thatthe flightdepartsontime.
• Drillsandtable-topexercisesshouldbe done onaregularbasisthroughoutthe yearto keep
emergencyrespondersontheirtoes.
• All crucial internal messagesshouldbe archivedonthe JetBlue Internetthatshouldallow search
• Expandthe JetBlue.comPressRoombeyondnewsreleasestoinclude backgrounders,leadership
biographies,andwhite papersontopicssuchas airportflightlimitsandproposedpassengerbill
of rightslegislation,amongotherthings.
• To fostera sense of familyamongall staff presentoraffiliatedwiththe crisismanagementteam,
as well asto safeguardandgive additional help.Employeeretentionisimprovedevenmore
whenthe companyremembersandhonoursemployeesduringchallengingtimes.
• Make sure everyone onthe crewhasaccess to companye-mail andInternetinformation.
• Continue toexplore fornewwaystoreachout to innovativestakeholdersviasocial media.
• Keepall vital informationinaresource "lockbox,"includingcontactlists,prioritystakeholders,
emergencycontacts,insurance plansforvarioussituations,andotherbusinessinformation.
JetBlue Airlines,forexample,mighthave usedcloudservicestocreate akindof lockbox.
Conclusion-
Thissequence of eventssuggeststhatthe companydidnoteffectivelytrainitsemployees,hada
primitive communicationssystemthatkeptpilotsandflightattendantsinthe dark,anda reservation
systemthatwas too small.Due tothe company'sfinancial troubles,JetBluemanagementwas
obliviousof the long-termconsequencesandwasonlyconcernedwithshort-termaims,sothey
failedtoconsidertheirstakeholders.Unexpectedcrisespresentthe modernfirmwithseveralissues,
includingfinancial insecurityandorganizationalunpredictability.A crisiscanbe justas damagingto a

4. company'simage andreputationasa decline inproductivity,adropin stockprice,or the lossof
importantcorporate assets.
2) Evaluate JetBlue’shandlingofthe ‘aftermath’ ofthe event.What actions wouldyou take
as CEO ofthe firm ifyou were to handle the situationfor containing the crisis from the
stakeholders’perspective?
The occurrence that happenedwasunpleasantandcanbe describedasa "suddencrisis,"
but itis importanttorecognise thatall of the chaosthat occurred wassimplythe resultof all
of the company'skeydecisions.The organization'smanagementandsystemslackedthe
capacityto handle sucha massive problem, the corporationhadnotkeptupwithitsgrowth,
and itwas inexperiencedwhenitcame tomakingsuch quick decisions.The employeeswere
not properlytrained,andthe numberof employeeswasinsufficient.Foryears,the company
was able tomanage withlittle personnel,butitwasnot preparedforan unexpected
calamitylike the "Valentine'sDayBlunder."
The original Valentine'sDayblunderswere createdbyaninadequate communication
system,whichhasbeendubbedthe "shoestringcommunicationssystem,"butthe disaster
alsorevealedfundamentalmanagementfaultsinthe corporation,whichcontributedto
JetBlue'stroubles.JetBlue'sobjective istoexpandswiftly,butasthe companyhas
developed,itsmanagementprocessesandcommunicationshave notkeptup,resultinginall
of the problemsthatthe companyhadto deal withduringthe crisis.To make mattersworse,
JetBlue hadneverdealtwithacrisisof thismagnitude before,makingitdifficultforthe
airline tomake fundamental operational decisions.However,the problemsstemmedfrom
the company'sleanand meancost structure,whichkeepscostsdownwhilesimultaneously
reducingthe numberof staff available toassistinacrisis.
The issuesfacedbycompanycan be explainedthroughCrisisManagementApproach.
a) Firstapproach: Pre- crisisthroughresolution
Accordingto thismodel,acrisisconsistsof four stages
 Prodromal (pre-crisisstage):Warningsymptomof the case wasthat even
thoughthere wasa warninggiventoall of the airlinesaboutasevere ice-storm
hitthe NewYorkare. All the airlineshadcancelledtheirflightaheadof time asa
precaution forpassengersandaircraft.ExceptforJetBlue’s,whoignoredthe
warninganddid notcancel the flightswhichresultedinthe Valentine’sDay
“CustomerDisaster”.
 Acute Stage (Crisisoccurs):10 JetBlue airplanesfoundthemselvesfull of
passengersandunable totake off.Planesliterallybecame frozentothe tarmac
and couldnotget back to the gates.There were communicationproblemsfaced
by the airplanes. Damage hasalreadybeendone inthe secondstage,acute
crisis.The goal is to keepasmuch of the damage undercontrol as possible.This
isusuallythe shortestof the levels.
Passengerswere frustratedbecause theywere detainedinthe runaways,there
was nofood,no air ventilation,flightcrewsstoppedanswering,andthere were
no busestoevacuate the passengerssince JetBlue airlineignoredthe warning
signal.Thisdecisioncostthemheavilyandalso,theylostcustomer’strustinthe
process.
 Chronic Stage (lingering):The corporation,asstatedinthe case,had a
shoestringcommunicationnetwork,whichmeantthatitsnetworkwas

5. constrainedbyfunding,time,anddataavailability.The failure of the
communicationsystem,accordingtothe case study,wasone of the keyfactors
for the crisis'mishandling.
Anotherreasonthe airline'sreputationwastarnishedisthatitfailedtooffer
customerswithstraightforwardanswers.Asaresult,thisdemonstratesalackof
consistencyincommunication,castinganegative picture onthe organisation.
Furthermore,anytype of riskshouldnotbe acceptedamid adversityinorderto
avoidrepeatingsuchunpleasantevents. Anotherkeycause of the calamitywas
a lack of trainedpersonnel.
1000 flights cancelled & $30 million losses for refunds, travel vouchers,
incremental costs. Loss of reputation
 ResolvedStage (healthrestored):
CEO tookthe responsibility andalsoapologisedwithformal letter.
Theyunderstoodthe problemfacedwithoutpropercommunicationsystemand
had learnttheirlessonsandthe eventlendtothe implementationof new policy
calledCustomerBill of Rights.Companyrevieweditscode of ethics.
JetBlue createdaCustomerBill of Rightstoformalise whatcustomersshould
expectfroman airline andtodemonstrate the company'scommitmentto
responsibility,whichiscritical inestablishingorre-establishingcustomer
confidence.Neelemanappearedonmorningandeveningtalkshowsto
personallyapologiseanddiscusswhathadoccurred,how sorry he and the
leadershipteamwere,andthe purpose of the Bill of Rights.
Stakeholder management
Mapping StakeholderCoalition
• Basedonthe stakeholderanalysismatrix,we maydeduce thatcustomersmust
be movedfroma non-supportivetoa supportingphase.Theyare gravitating
towardcompetitorsbecause theyare dissatisfied.
• Mappingactual stakeholders(customers) withpotential stakeholderssuchas
advertisingagencies,outsourcingservice providers,andaviationconsultancies
mightaidin repairinganddevelopingthe company'slostimage inthis
circumstance.
• Acceptfull responsibility,apologise,andensure thatmoral orethical
commitmentstocustomersare met.
• Attendtocustomersandrestore losttrust inthe company
• Establishcommunicationobjectivesforconnectingwithinternalandexternal
stakeholders
• Create Corporate Communications-specificprotocolsforformallyrecognising
crisesand emergingthreatstocompanystability
• Collaborate withthe Marketinggrouptopromote the CustomerBill of Rights
withkeyexternal stakeholdergroups,particularlyexistingandpotential
customers.

6. Recommendation:
Understandingthe reasonsof mistakesandlearningfromthemiscritical
• The importance of an effectivecrisismanagementteamandeffective
communication
• Maintainingstakeholderconfidence whilebalancingthe businessis critical
• It isacceptable totake moral responsibilityforthe problemsthatcustomers
have caused.
• For a company'slong-termgrowth,credibilityismore crucial thanmoney.