Problem Solution: Classic Airlines
Classic Airlines is the world fifth largest airline employing 32,000 employees and earning 10 million dollars. In recent years, Classic has seen a decline in sales and their customer loyalty program, while there has been an increase in fuel and labor costs. The Board of Directors has demanded and cost reduction while increasing its profits. In spite of rising fuel prices, homeland security threats and the onset of online travel sites, Classic Airlines has maintained its position as one of the top five commercial airlines. As outlined here, there are various issues that affect any company at any one time. For Classic Airlines, the main issue is the current state of the frequent flier program.” By January 2005, Classic’s declining Classic Rewards program measured a 19 percent decrease in the number of Classic Rewards members, and 21 percent decrease in flights per remaining member” (rEsource, 2007).
This paper will provide suggestions that include avenues for improving customer satisfaction and loyalty, all of which start off with the identification of the major issues facing Classic Airlines.
Describe the Situation
Issue and Opportunity Identification
Identifying the issues and opportunities at hand is the first step Classic Airlines must take to overcome the current obstacles. Then, capitalizing on those opportunities will allow the company to regain its status as a formidable competitor in the commercial airline industry. One issue that haunts the industry is the similarity amongst the different carriers. “…product differentiation… involves a firm's using different marketing mix activities, such as product features and advertising, to help consumers perceive the product as being different and better than competing products” (Kerin, Hartley, Berkowitz and Rudelius, 2006). By setting itself apart from the competition, Classic Airlines will reap the benefits of those opportunities. The first major obstacle for Classic is the...