Classic Airlines is the world’s fifth largest airline, deploying an impressive 2,300 flights daily to 240 cities. Last year, it earned $10 million on $8.7 billion in sales. Despite the profits, Classic is experiencing negative media, declining stock prices, and rising costs of fuel and labor over the past year. In addition, to the destructive reports and low employee morale, Classic’s Board of Directors is requiring a 15 percent cost reduction over the next 18 months. Leadership must implement a nine-step problem solving method to identify the challenges, opportunities, solutions, and desirable end results to restore customer loyalty, employee morale, and stock prices.
The nine-step problem solving method is defined as: step one, developing a problem statement; step two, identifying the potential cause of the problem; step three, verifying the likely causes by gathering data; step four, identifying possible solutions; step five, evaluating alternative solutions; step six, determining the best solution; step seven, identifying and assessing the risks; step eight, implementing the solution; and step nine, evaluating the results (http://www.managment-hub.com). These steps will be explained in detail to assist Classic Airlines with the challenges faced today. Step One: Describe the Situation
Classic Airlines is suffering from self-inflicted operational issues. Expanding too quickly created a financial crisis with a domino effect. Falling stock prices, declining customer loyalty, and low employee morale have resulted. In addition, the media has nothing positive to say about the airline industry because of increasing fuel and labor costs. As a result, the Board of Directors is mandating a 15 percent across-the-board cost reduction over the next 18 months (University of Phoenix, 2011).
Classic offers a rewards program to its frequent flying customers, however the program is difficult to understand and frustrating for the employees to explain. Classic also recently purchased a Customer Relationship Management (CRM) system to capture valuable information about the customer’s experience, but the services features are not well integrated. Poor communication exists between the system’s phone and web channels, resulting in duplicate information from customers and collection of inaccurate data. If Classic does not increase sales or decrease costs; bankruptcy will be inevitable. Step 2: Identifying the Potential Cause of the Problem
Classic’s rewards program is much more restrictive than those offered by its competitors. Frequent fliers are allocated only ten seats per flight and some direct international flights are prohibited entirely. In addition, Classic’s reward program requires more miles for reward eligibility and imposes blackout dates during holidays. Also, rewards can only be redeemed for companion tickets once every two years and pre-boarding passes require the redemption of reward miles rather than accompanying every rewards flight. Employee morale is deteriorating because of negative press and endless complaints from customers. Explaining the rewards policy to customers is nearly impossible for employees that struggle to understand them. The time and energy invested in employee training has not benefited Classic or its customers. Employees do not have the authority to make previsions for loyal customers attempting to redeem reward points.
The CRM system has obstructed a high level of customer service. The system was supposed to decrease the amount of time the representatives spend on the phone or drive customers to the internet to avoid talking to them at all. The system has the power to seamlessly integrate the phone channel with the web channel. This application has not been well incorporated in the system creating the inability for Classic to determine if the customer has interacted over both channels (University of Phoenix, 2011).
Classic’s leadership team is not supportive of the...
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