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Problem Solution: Classic Airlines Essay

1463 words - 6 pages

Classic Airlines is the world's fifth largest airline with a fleet of over 375 jets operating in 240 cities. The airline operates over 2300 each day. The airline has operated for 25 years and has grown to an organization of 32,000 employees. The airline is profitable despite the stock prices having decreased by 10% in the past year. The concerns about the stock price and the airline's future have caused employee morale to be at its lowest. The loyalty of Classic Airline's customers is declining. The decline is evident by the decrease in the number of Classic rewards members and the decrease in flights per remaining members. Optimistic expansion plans have forced a restrictive cost restructure plan based on an anticipated post 9/11 rebound of travel by its customers. Classic Airlines' Board of Directors has mandated a 15% cost reduction over the next 18 months in every aspect of the business. Classic is also charged to improve the frequent flyer program. The program will need to include methods that have measurable returns on its investments (ROI). The airline will also need to meet the cost reduction goal. Classic does not benefit from a partnership alliance agreement. The airline has implemented a pricing strategy to compete directly with younger airlines. The idea is to generate an advantage over the younger airlines with a cost structure different from Classic's. The airline's ability to accurately predict the changing market and consumer trends enable the company to implement marketing strategies, adjust budgets, and allocate resources to adjust to trends with informational and promotional marketing during off peak travel trends. The airline needs to collect accurate data from existing customers to predict and meet customer needs. The methodology and operational philosophy of Classic must be aligned with the data collected. Classic Airlines' has many issues to address. Resolution of the airline's issues will allow the airline to understand its customer base and develop marketing strategies to retain its customers, increase employee morale, and increase the company's profitability.Describe the SituationIssue and Opportunity IdentificationClassic Airlines is faced with declining stock prices resulting from failed customer service programs. The failed programs have caused the stock to fall 10% from the previous year. Issues related to the fallen stock price are the 19% decrease in Classic Rewards members, rising fuel costs, labor costs, and the mandated 15% cost reduction over the next 18 months. Classic Airlines is quickly responding to the issues begin faced. Classic Airlines has created a Classic Rewards team to redesign the rewards program without lowering the price or incurring more costs. The Reward team agrees that customer service is the main issue to address. Classic Airlines implemented a customer relationship management (CRM) system to address the customer service issues, but the Classic Reward team decided that the system has not...

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