The founder of US low-cost carrier JetBlue has been ousted from his post as chief executive in response to problems suffered earlier in the year (BBC, 10th May 2007).Back in February, there proved to be little love lost between the budget airline and its passengers.A snow storm on 14 February triggered hundreds of cancellations, with knock-on effects lasting for many days beyond the original weather problems (BBC, 19th February 2007).Over the six days affected, it is estimated that 100,000 customers suffered delayed or cancelled flights (BBC, 20th February 2007).After thousands of complaints made to the firm, the BBC reported that:
“The firm admitted that its problems were not only caused by severe weather but also by the fact that it had no alternative plan of action in place to reroute so many stranded flight crews”. (BBC, 20th February 2007)
Insufficient contingency plans resulted in the need for the business to suffer huge costs to salvage their damaged customer service.Under what the firm called their”Customer Bill of Rights” it pledged to issue vouchers to compensate people hit by delays, costing the firm up to an estimated $30m (£15m).
$30m sounds an enormous cost to restore consumer confidence.However for a service sector firm, this is important.
The Times 100 case study describes how the business Enterprise Rent-A-Car holds high customer service central to its corporate strategy.The case study states: “This is a characteristic that it shares in common with every successful service company, large or small”.
Although the recent events have been a painful lesson for JetBlue, perhaps the $30m bill is a worthwhile price to pay for the long term benefits of happy customers.
Potential Study Questions:
What is meant by the term contingency planning?
Discuss the view that the founder of JetBlue was ousted from office as a result of insufficient contingency planning.
What is a service company?
How does Enterprise Rent-A-Car maintain high levels of customer service?