Classic Airlines is the world’s fifth largest airline serving 240 cities world wide. Although the airline is profitable, its stock prices have decreased by 10% in the past year and employee morale is low due to increased scrutiny on the airline industry from all sectors of the economy (UOP, 2005).
Over the past two years, Classic Rewards Members have decreased their number of flights which has created concerns as to the viability of the company. In addition to low employee moral and decreasing customers, Classic is also a facing a restrictive post 9-11 cost restructure due to overly optimistic expansion. Classic’s Board of Directors has recently mandated a 15% across-the-board cost reduction over the next 18 months (UOP, 2005). Adding to the complication is Classic is the only commercial airline that does not have an alliance agreement with another airlines.
Within the constraints of the mandate, Classic also needs to improve its frequent flier program with methods that will demonstrate a measurable return on any investment while still meeting the cost reduction goal.
Through the use of environmental scanning Classic will be able to more accurately predict changes in the market and consumer trends which will better enable it to change its marketing plans.
Describe the Situation
Issue and Opportunity Identification
Classic Airlines faces several critical issues with its current operation, customer confidence is declining as well as Classic’s Rewards Program, which measured a 19% decrease in the number of Classic Rewards members and a 21% decrease in flights per remaining members. Part of Classic’s problem can be tract to its under capitalized customer relationship management (CRM) system, although the existing CRM system is a powerful tool it is not being used in a way that is beneficial, preventing the capturing of valuable customer data.
Classic will need to use the CRM system the way it was meant to be, which... [continues]
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