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June 12, 2001 was the start of a company called Jetsgo Corporation. It was an industry which served primarily in Canada and the United States. They had 19 destinations across Canada and 10 in the United States. It was the 3rd largest airline at the time, and had 10% of the domestic market. (Wikipedia, 2010) The company was a Canadian-based company based in the Saint-Laurent area of Montreal. Aside from the regular flights which occurred for Jetsgo, they also had weekend charters which would go to the Caribbean. On March 11 2005, Jetsgo decided to cease operations. They left all the passengers who had booked flights or have been flying stranded at whatever location they were at. They brought hate to their company as people lost many jobs due to not being able to come back as their scheduled time.
Jetsgo’s main objective was to become the largest low-cost people carrier. One of the biggest reasons this failure happened was due to their competition from another low-cost people carrier called, Westjet. Westjest’s costs were incredibly low, and their overnight rate of return was at a high of 40% in the stock market. Jetsgo’s goals were to beat Westjet, but they were unable to do so which led them to cease operations in the late nights on March 10 2005. (Macklem, 2005)
In terms of the nine areas of project management:
Project Scope: Jetsgo’s project scope was to have planes, and low costs in order for their customers to be able to travel to where they needed to go. The main idea for Jetsgo was to beat their competitors’ price so that they would be the largest people carrier. Project scope is defined as, “the work that needs to be accomplished to deliver a product, service, or result with the specified features and functions.” Therefore, it is shown that Jetsgo tried to do this by having their fleet of planes, but failed at the low cost perspective due to their competition.
Project Title: Largest Low-Cost People Carrier
Date:Oct 27 2010 Prepared by: Kishan Shah
Project Justification:To be the largest airplane company and provide flights at a low cost.To have additional staff on hand in order to make the company more successful.To offer low rates for the customers so that people would want to fly more.Keep customers happy,and make sure that they want to come back and use the services again.
Product Characteristics and Requirements:
Have a fleet of airplanes
Have well trained staff
Have the customers who want to use this services
To be aware of competition; but know when to react to them
Summary of Project Deliverables
Project management-related deliverables:business case,charter,team contract,scope statement,WBS,schedule,cost baseline,status reports,final project presentation,final project report,lessons-learned report,and any other documents required to manage the project.
Product-related deliverables: research reports,design documents,software code,hardware,etc.
Research reports of the market share
Design documents of the type of aircraft needed
The times of the year which are busiest for travel
Upgrade of aircraft to make sure it is at standards for comfort and convenience
Project Success Criteria:
The project will be successful if it meets the criteria above.People would use Jetsgo services worldwide.We will offer cheap flights across Canada,USA,and the Caribbean.We hope to achieve success and become the world’s largest low-cost carrier.
Time: This area consists of gantt charts, network diagrams and critical path analyses. It brings together company. In Jetsgo’s case, they must’ve had a gantt chart as it is a critical part of business. It illustrates a project schedule. Jetsgo’s must have had their business idea and ideas of how they were going to operate with dates and times clearly written down, and this was most likely via a gantt chart. This also ties in with the project scope because the work breakdown structure would also includes start-finish times of elements within the project including what must be done prior to the next step. Ex: Jetsgo must have their own planes prior to setting up schedules for flying.
Cost/Budget: This is a big part on why Jetsgo failed as a business by mid-2005. They had their competitor, Westjet who was doing a much better job at their cost/budget. Jetsgo was in debt by $ 55 million within the last year before closing. This is due to poor management on controlling the budget of the cash.
Quality Requirements: Jetsgo’s quality of service was decent. This is because people did book their flights through them. Some were already on vacation, while some were travelling. The quality difference between Jetsgo and Westjet in my personal opinion was nearly the same. The major problem which Jetsgo feared from Westjet was the price issue, which is what took Jetsgo out.
Human Resources Requirements: Jetsgo’s human resources didn’t help them at all. Over 3 500 staff members that were employed by Jetsgo were affected by the closure of this company. Human Resources should have placed motivation techniques, have empathic listening, or at the very least management should have informed the staff as to what was going on, rather than leaving them stranded as well. It was bad enough that the customers who were flying using this airline were lost, but their own staff should have been a little informed. Jetsgo could also use quality control charts to meet requirements, while also making sure that they won’t be beat by any competitors in price and/or product.
Communications Plan: Communications management plans are vital in an organization because it is important for staff to communicate with management to see what they are doing right vs. wrong. If Jetsgo had done this, their staff would not have been stranded at the end of May 2005. Having regulatory meetings as a management team would also help an organization come up with better solutions on how to handle any problems they may be occurring. Progress reports could have been done to see their standings as a business in comparison to their competitors. Therefore, it is clear that communication is important within an organization.
Risk Issues: This area talks about the risk that may occur for a business while in the process of implementing a plan. Jetsgo must have looked at the risk for when starting their business to be the number one low-cost carrier of that time. They should have known there was competition in the market, and they it would be difficult because Westjet had been operating since 1996, 5 years prior to the start of Jetsgo. Not only have they been a steady business, but they were making revenues. It is important to know that Jetsgo must have a solid plan on how they were better than Westjet. Their management team did not show that.
Procurement or Outsourcing Issues: This is the make-or-buy analysis. Jetsgo’s objective was to buy a fleet of planes in hope that people would pay to fly to their destinations which worked for a while, until the competitors found ways to get cheaper. They should also take in the requests for proposals or quotes on how to better their company. By listening to their staff or other people within management, they could have altered the company for the better and possibly still have been around today.
How the project was integrated: This takes into consideration all aspects of the project. In Jetsgo’s case, the selection methods they chose, the charter, any plans they had made initially, and any change control plans which were not forecasted. And last but not least, the lessons-learned report. This is important because if they ever decide to bring Jetsgo back, they are able to see what they did wrong, and fix their problems before even launching the business again.
Stakeholders Analysis for JetsGo Corp.
Role on project
Founder &CEO of Jetsgo Corp.
Customers using services
Unique facts about stakeholder
Found Royal Aviation
Created 7 failed airlines in 20 years
Fly frequently using service
Level of interest
Level of influence
Suggestions on managing relationships
Very low – has little to no management qualities
Provide feedback of service
Have no direct affect on business
These are two of the many stakeholders apart of the business. Some more stakeholders would be the project sponsor, project team, support staff, users, suppliers, and also the competitors. Anyone that is affected by this project launching is considered a stakeholder. Everyone contributes in different ways. Customers would be the ones using the service and pay for it, therefore they add value to the business. Support staff runs the business making sure each department is running smoothly, therefore they influence how the business is ran. When customers purchase tickets and use the service, it benefits the project because they are getting closer to their ultimate goal – ultimate success in becoming the largest low-cost people carrier. Each stakeholder contributes to the problems as well as the success. In Jetsgo`s case, the staff and management didn’t mange which caused a problem, but the customers also contributed because many people also fly with the competitors. The overnight rate of return also has an important factor when it comes to dealing with why Jetsgo has to cease operations.
What went wrong
Jetsgo Corporation’s project to maximum success in being the world’s largest low-cost people carrier was a complete fail. It led to complete failure due to their high debt. They had many problems which were occurring in management that led to this downfall in this company. They had also planned for a re-launch of the company but later cancelled plans. The Standish Group Report states that 94 of 100 businesses will try and re-launch. The downfall in restarting a business would be the major issue of high cost overruns and high time overruns.
First, some of the physical causes that Jetsgo had were due to man-maid errors. For example the people working on the plane had maintained it so poorly that it caused the plane to forcefully land at Toronto Pearson Airport. (The Star, 2006) What caused this immediate landing was that the hydraulic lines that were temporarily installed failed within 2 flights, causing the aircraft to lose the hydraulic fluid which runs the aircraft systems. If the workers were able to take a little bit more time and fix it correctly, this situation could have been avoided altogether.
Second, the problem for Jetsgo is that the staff didn’t give the plane a proper check prior to flight, which led Jetsgo to have repeated engine failures. According to the Transportation Safety Board, on April 2005, Jetsgo’s plane had a clogged oil filter which caused for emergency landing in Winnipeg. Stefania Urbisci – a flight attendant for Jetsgo who had been crying stated that, “I did feel by the end of it that at any moment we were going to have an evacuation of something, it shouldn’t be like that every day.” This statement also shows the public that Jetsgo was not doing everything in their power to even try and fix their problems. (The Star, 2006)
Third, the multiple engine failures were not last for this company. It looks as if they took no action to fix the problems, because as the months progressed they had many more emergency landings. Not only was it for a similar reason it was slightly worse. This time it was due to dropping oil pressure in the left engine. In each incident, Jetsgo blamed cracked lines. But after research was done, it is clear that it is more than just a cracked line, it ties hand-in-hand with the clogged oil filter issue they previously had. The oil filter had been constantly leaking, which led oil to get into the engine causing for leaks, and the crack they blamed it on was a separate issue altogether. This shows the public and media what kind of service they’re promoting.
Fourth, the CEO and founder of Jetsgo was oblivious to the problems that his company was having. He thought everything was okay, and that it is normal for companies like this to have such problems. “We’ve had issues, every airline has had issues,” said Michel LeBlanc. If the CEO doesn’t seem to make a big deal of his planes’ engines crashing and causing emergency landings, why would other people want to use this service? Cheap? In my personal opinion, I think customers would much rather pay a higher price when it comes to their safety, because they do not want their vacation to end up being their last. If he had realized this, and without a doubt fixed the problems at whatever the cost, they public may think of the company differently, and sales may have actually boosted causing the company to still be running today.
Lastly, this seems like the biggest issue that Jetsgo was facing. Problems within their own company. Pilots would argue amongst other pilots. An incident of this would be when pilots would disagree with other pilots about the safety of the plane. One pilot refusing to take a flight due to the aircraft being unsafe, while the other pilot saying it was okay to fly. This should make everyone wonder, if both pilots are experienced pilots, they should definitely have the same judgment to what a safe plane should be. Rumors had said that Jetsgo was not training and recruiting properly, so perhaps the pilots weren’t as experienced or as trained as they should have been. This is important because this company had upwards of 15 000 lives in their hands. If they can’t simply figure out if a plane is safe of unsafe, it causes a huge risk for those individuals who are going to be using their services to go on vacation, or business etcâ€¦
Overall, those five areas are key factors to why Jetsgo Corporation failed as a business. They could have taken some sort of corrective action to fix the problems they were having but the management team did not care, or seem to see any problems. It was wrong of them to let the problems continue onwards after one incident. If something severe were to happen, they would surely get sued. It is important for a business to be running smoothly and strong in itself before publicizing it. Jetsgo was not, which is mainly what caused this company to cease operations and file for bankruptcy.
Every company has good and bad to itself, using the nine area of project management we can see where Jetsgo had been smart, as well as where they could have improved to be a better company.
Scope Management: It is clear that Jetsgo did well in their scope management because they had aspiration and a goal to be the largest low-cost people carrier. They had a goal to beat the other competition in the same market. A company this large must have some sort of idea and work breakdown structure on how they’re going to conduct business. Also they price of their flights were incredibly cheap. An example was $1 for a flight. That’s really good for bringing in customers as well. They looked at the requirements for potential clients to use their services, got a great product at a great price and followed the deadlines to get the business running and stable for a little while. GOOD
Time Management: According to customer reviews, Jetsgo was doing a horrible job at being on time for their flights. 5 of 6 flights were delayed from ranges between 1 to 4 hours while only 1 flight left on time. (airbus320, 2000) (CBC , 2010) Also, along with time management is the time taken for a mistake caused by the company itself. A good example of this is found in a forum. This scenario is about a lady who lost a lot of time and patience and importantly money when dealing with Jetsgo.
While in Mexico I spotted (not for the first time) JetsGo one-way tickets (Cancun to Toronto) on sale on itravel2000.com’s web site for $216 CDN.
On March 31, I purchased a ticket for Sat. April 3, leaving in the evening. Unfortunately, when I got to the JetsGo counter at Cancun airport that night, both JetsGo and SunWing Vacations staff (SunWing apparently charters these flights) told me that I could not possibly have purchased a ticket (even though I had my online confirmation) as it is illegal to sell northbound one-way charters.
Not being able to board that flight on the eve of Holy Week (the busiest holiday time in Mexico), I went to Air Canada counter and had to purchase a one-way ticket for $650 US. Yup. $650 US.
I was stuck in Cancun until April 7 (A/C flights full), so I tried to communicate by phone and email with all of the companies involved. The online travel agency sent proof that JetsGo credited my credit card, not them, and provided the confirmation page information from JetsGo’s system.
Please note that I rec’d neither help nor answers from JetsGo while stranded in Mexico.
When I returned to Canada I immediately contacted JetsGo and was told that my card had been credited for the full amount of the original purchase.
So, after a lot of buck passing in Cancun (and suspicions thrown at the online travel agency), JetsGo finally took responsibility for their mistake.
However, the company has not responded to my request for an explanation or compensation for my out-of-pocket travel expenses as a result of their not providing a service for which I had paid. (After three months of travel in Mexico, I did not have 650$US lying about for a flight to Canada. Also, I could have taken Air Canada in the first place!)
I have filed a complaint with the Better Business Bureau and, if no resolution occurs, intend to take legal action.
After reviewing customer review it makes you want to never take such a service because of the hardship they this person went through. That’s why all aspects of time management are important when conducting a good business. (S., 2004) POOR
Cost Management: Apart from the odd scenario where someone purchased a one way ticket, the costs that Jetsgo were providing were really good. They had flights starting at $1.00. You get find round-trip tickets ranging from $250-$400, which is still hard to find these days. Jetsgo had good prices for their customers, but they didn’t allocate the funds for their equipment very well. They should have used some of the money to fix their planes, provide better service, train their employees and hire more experiences staff. Overall, they were making very little from their customers to keep them happy, thus not having enough to fund themselves in keeping their planes in perfect shape, causing the company to lead to failure. GOOD & POOR
Quality Management: Jetsgo’s quality was terrible. It was crystal clear to the public that Jetsgo Corporation had no idea what it was doing. They had cheap flights and that was all. There were numerous incidents about how the engines failed on their aircrafts, pilots were unsure about if the plane was safe to fly, and even several emergency landings. If a plane has one emergency landing, the company is in fear of losing many customers. Jetsgo had 60 incidents in the duration of their company. The quality of the flight was really poor, the service was not good at all as the customer review also showed. POOR
Human Resources Management: Human Resources are an important part of every business. Jetsgo’s Human Resources team did not do the best job they could when it came to recruiting new staff for their company. Not only did they not recruit well, they also didn’t’ provide proper training for their staff. This was shown earlier in the incident of the two pilots. They should’ve screened their candidates for the job openings and going through the hiring process in depth making sure they hire the right people for the jobs because of the number of lives at risk. Also, when it comes to maintenance, they should yet again hire the best possible people because if something happens in the air due to a maintenance issue, the whole company can collapse like it did in Jetsgo’s case. Therefore it is important that Human Resources make the right decisions because the company’s success of failure can solely depend on them. POOR
Communications Management: Communication is important to make sure all departments of a business are merging together to reach their ultimate goal. Jetsgo’s goal was to be the world’s largest low-cost carrier. Communicating with other managers and staff can aid to making changes for the better. (Macklem, 2005) Also, communicating with the customers could help the business grow as well. Learning from their mistakes is one way to increase growth in a company. Jetsgo’s communication amongst staff members was persevered well, but there was no communication with their customers. If they had listened to customer issues and problems with the airline, Jetsgo could’ve made some changes to alter their business model allowing for them to gain success. GOOD & BAD
Risk Management: There was far too much risk in the Jetsgo Corporation. CEO & Founder, Michel LeBlanc knew there were problems with some of the airplanes and did nothing about them. (The Star, 2006) This is worrisome to people who choose to fly using Jetsgo services. The risk of something happening while you’re on the flight are increased, the risk of getting on the flight if something occurs, and even the risk of being stranded in another country because of the high debt the company accumulated. There should be little to no risk when dealing with a business for any purposes. Jetsgo Corporation had nothing but risk in their company. Risk in their equipment (airplanes), risk in losing all customers, and risk of losing the business as a whole due to debt. POOR
Procurement Management: Jetsgo started off strong as a company. They purchased a fleet of planes to conduct business. They hired a lot of staff; they had ample employees’ on-hand around the clock to work which is really good a business starting up. Looking at the company in a financial perspective it is as if they were sourcing the funding to keep this business afloat rather than using money from the profits. This is true because they were not making profit. According to CBC News, Jetsgo had been in serious financial stress for quite some time, and in the middle of that they decided to take on Westjet in a price war. (CBC , 2010) If Jetsgo didn’t worry about going to a price war with west jet, and just primarily focused on getting out of debt and keeping good fair prices, they could have gotten out as a successful company. But, nonetheless Jetsgo purchasing strategies were good, it was the decision to beat competitors during a financial crisis for their company which led them to a downfall. GOOD
Project Integration Management: Jetsgo’s integration was a fail. This is where every aspect of the business plan come together in hope that the business is successful and will be prosperous in the future. Jetsgo came to realize at this stage that it has failed. The quality of the flight was not near as good as the competitors, and the time management was also poor, which led customers who did fly with Jetsgo to turn away to the competitors. The Human Resources also make this company worse because they staff behind this business were not the “right” staff for the job. There were many internal errors as well as external errors causing this business to sink. The only positive part of the integration management process that may be of help to Jetsgo in the future is the lessons-learned report, as they can make changes and alter their business plan in order to be more prosperous, but in order to do this, they must be out of their debt which initially caused them to cease operations. POOR
After going over the different project management knowledge areas its clear what Jetsgo did good, and what they did bad. All of those areas should be done well in order to have a successful and prosperous business, and it is clear that majority of them were not done to the best of their ability. They could have taken the initiative to make changes in their business and listened to other people and turned the business around to make it better for them in the long run. One major change they should have done was not go to a price war from Westjet. The reason for that is because Westjet was already in the market and were making lots of profit. They had the stability to drop prices, where as Jetsgo did not. Westjet knew what they were doing because they wanted Jetsgo out of their market.
Scope management, cost management, communications management, and procurement management are the areas where Jetsgo did well on to a certain degree. There is always room for improvement which they could have done. If Jetsgo had clear and precise decisions on where to spend their money, and how to communicate with others within the business on how to spend the money, they could have used it much more wisely. Money could have been allocated to match the scope in where they wanted to be in the next 5 year time frame. Also, training was a big issue for Jetsgo, as their staff needed to be properly trained.
Time management, cost management, quality management, human resources management, communications management, risk management, and project integration management are components which Jetsgo lacked in. Some of these knowledge areas are also duplicated because they did parts of it well, and parts of it were not done well at all. It can be difficult to judge if a company did well based on just a simple knowledge area because all those these areas come together to make the business successful.
Conclusion and Recommendations
If I was the project manager for Jetsgo, and I had the benefit of 20/20 hindsight, I’d change a few aspects to the company from the beginning. I would’ve started out by clearly stating a work breakdown structure of what I want to accomplish with clear dates and times and budgets for each activity in the duration of getting the project started. This would be a fairly large project to consider at one look. Therefore, my objective would be to get the company started with a few planes rather than such a large fleet. I’d focus the company to be local, focusing on mainly Canada and possibly border to the states. The company’s main focus would be business related. As profits start to increase, the next project would be to consider expanding into the Caribbean.
I would do intensive amounts of research and make sure the quality of my planes and services are immaculate to say the least, while making sure customer reviews are satisfied. In my opinion, customer satisfaction must be met in order for a business to gain maximum success. There are many parts during this project where I’d change a few things in order to better the company.
To get a more clear perspective, it can be seen through the nine knowledge area:
Scope Management: I wouldn’t make many changes in this section of the business because I think Jetsgo had done a decent job. They knew what they wanted as a business, and they were able to start the business. I would’ve done more research if I was the founder & CEO, because I knew there was already competition in the market before entering. This is important because then I can learn from their mistakes and make a better company which will take the lead and become more prosperous in the future.
Time Management: I would focus on my flights departing and arriving on time. This is important because often people don’t plan for delays. It would be my goal to have the most accurate times for my business. I feel that any delays would be solely the airlines fault. This could cause problems for our customers. Any problems of our customers are our problems, this is the way Jetsgo should have been thinking in order to minimize problems with their company.
Cost Management: Jetsgo fares for flights were cheap, there is no need to change that, but the only aspect I’d change would be how the money was spend in the duration of this company. In the beginning, I’d focus on spending on fewer planes and mainly flying within Canada and border of the United States. This way the company will be profitable rather than being in debt from the beginning. My second project would be the expansion into the Caribbean, which would be steady because there would be more funds from the local flight business which we would’ve initially been in. Also, money spent in human resources would be a big asset, because well trained professionals make any company a better company.
Quality Management: I would change the quality of the business and services offered from the day the business began. I’d focus the business to have immaculate planes and service for each flight. I would think of the flight as, “a vacation to the real vacation.” It has to be enjoyable and memorable. The prices are already fair, it would be in my best interest to make sure the customers are happy and enjoy their time on the aircraft.
Human Resources Management: I would have spent more value in the Human Resources department. This is important because they are the department they bring in the candidates who get offered jobs. With a little more budget, they are able to go to agencies to seek people in need of a job. They are not obligated to take the first person who says they can do the job, but then have no experience. They can also train the staff to follow company policies and methodologies to make sure the staff do the jobs in the correct by-the-book procedures and comply with company practices.
Communications Management: The communications were done well amongst management parties, but I would have quarterly meetings with all staff apart of the company to get a feel of concerns and ideas on what the company can do in order to be better. Also, this gets more input and ideas, while making everyone feel needed. This would have also enabled the staff to know that the company was going to be ceasing operations rather than leaving them stranded without a job.
Risk Management: Risk would have decreased right from the beginning because I would fix the planes so that there would be no problems with the engines. People would feel comfortable to fly and they would have an enjoyable time without having to worry about any aircraft faults. Also, simplicity of the flight would make it a lot easier. Any problems with customers would be taken care of without a hassle. There would be a lot less risk and issues with the company if the problems were fixed and if they had taken their project one step at a time. Local, then expand into the Caribbean.
Procurement Management: I would have had fewer purchases from the beginning, which would in turn keep me out of debt or in a lower debt. This is because it is a new company. There is the need of making sure the company will survive before going completely into it. It brings up the idea of starting out locally then expand into the Caribbean. Also price matching and beating Westjet’s price was not a good idea for Jetsgo. It is one of the major reasons they are bankrupt today. They were selling seats at a loss and not making any money. Therefore it is important to buy what you need, rather than buying everything.
Project Integration Management: If my ideas were implemented from the beginning of this project, I feel that there would be a more successful company today. It is very likely it would be in debt today but probably much less debt than it had in 2005 because the company would have taken baby steps to get where it tried to get upon opening the operation. Any project must not be rushed. If you w
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