November 20, 2012
Classic Airlines is the fifth largest airline serves 240 cities with more than 2,300 flights per day. The airline earned $10 million on $8.7 billion in sales last year (“University Of Phoenix Material”, 2008). . Although a profitable airline the increasing uncertainty of flying, Classic Airline’s stock prices have affected the company’s share price by a decrease of 10 percent during the year. The airlines Classic Rewards program measured decreases in membership and 21% in flights for remaining participants in the program. Encountering high fuel costs, tight competition, and low customer satisfaction, Classic airlines currently experiences difficulties to maintain its effective operation. The terrorist attack in the United States September 11th affected travelers, as they select other transportation methods and use air travel less. In addition, the reversal of the downturn experienced by the industry as a result of 9/11 was overestimated and Classic, like many other airlines, expanded too quickly. As the global economy becomes weaken, the airline industry has been under pressure to control costs by cutting down customers’ services program. As a result Classic Airlines face restrictive cost structure new competitors into the industry have not. In addition, before any further financial crisis, the airline’s Board has mandated a 15% percent across-the-board cost reduction over the next year and a half (“University Of Phoenix Material”, 2008). Within this mandate the airline must still find a way to maintain and attract more customers by upgrading and enhancing its frequent flyer program with strategic initiatives that will bring a significant return on investment (ROI). According to the rumor mill, there is a distinct possibility Classic Airlines will not meet the reduction proposal and will go eventually move into bankruptcy.
Discussions in this paper include Classic Airlines current situation and focus on challenges, opportunities, external and, internal pressures on marketing. By identifying the marketing problems, recommendations will be made to solve the marketing problem at Classic Airlines using the end-state goals.
Identification and Definition of Classic Airline Marketing problem
Employee morale is at an all-time low because of the negativity from the media, public, and Wall Street. Customers are not happy with the service provided and Classic Airlines Board of Directors does not have a resolution to remedy the issue. There is a decline in customer loyalty and issues with employee job satisfaction and retention. Classic Rewards program use has declined approximately 19% among the rewards members (“University Of Phoenix Material”, 2008). Due to rising fuel and labor costs Classic Air could not compete for their value frequent fliers. The solution is to enhance the rewards program with methods to increase revenue.
The end-state goal of Classic Airlines is to leading airliner in the industry by improving its customer service and market share through the frequently flyers program. End-state goals are precise, measurable, and achievable by Classic Airlines. The goals for the Classic Airlines will exist to for improved customer service; morale and increased revenue thereby (a)increasing new customer base (b) retaining loyalty customers (c) reducing costs (d) while providing quality customer services (e) making alliances with other airlines to serve additional fliers.
Customer services at Classic Airlines need improvement service levels to provide better and suitable services to all customers. According, to an article by...