Classic Airlines is the world's fifth largest airline. The company was established 25 years ago and has grown to include a fleet of more than 375 jets which serve 240 cities with more than 2,300 daily flights. Though profitable, Classic Airlines has struggled in recent years because increased costs and reduced consumer confidence. By estimating the market demand, marketing executives are able to revisit the marketing plan by determining the marketing potential, total industry sales, and market shares (Kotler & Keller, 2007). The airline industry has decrease in industry share prices, and Classic Airlines is no exception, seeing a 10% decrease in the past year. The airline industry has been under a microscope recently. The negative press from Wall Street, consumers and media has resulted in poor employee moral for the Classic Airlines team also.
The negative factors have limited Classic Airlines ability to compete for the valued industry frequent flyers. With rising costs and a competitive marketplace with new and emerging carriers, Classic Airlines is in need to developing a Customer Relationship Management (CRM) program to counter any further financial distress. Classic Airlines customer loyalty is on the decline as evidenced by the 19% decrease in the number of Classic Airlines rewards members and 21% decrease in flights per remaining member as of January 2005. The company is also facing a restrictive cost restructure due to overly optimistic expansion plans based on anticipated rebound of post September 11, 2009 travel. Classic Airlines, Board of Directors recently mandated a 15% across-the-board cost reduction over the next 18 months (University of Phoenix, 2009).
Within the constraints of the mandate, Classic Airlines 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. Classic Airlines is the only carrier which does not have a partnership...