PROBLEM SOLUTION: CLASSIC AIRLINES

Problem Solution: Classic Airlines



Executive Summary

Classic Airlines is one of the largest airlines in the world. They have more than 375 jets and make over 2,300 flights per day. Since serving more than 240 cities, Classic Airlines experienced tremendous growth during their 25 years in business. They have 32,000 employees, $10 million in profit, and $8.7 billion in sales. However, like many of their competitors, Classic has seen some problems recently that leave them struggling to stay afloat. Their share prices are struggling with a 10% decrease. Customer satisfaction is down. They have seen a 19% decrease in the number of Classic rewards members. Their remaining members are not flying as often. The number of flights per member has decreased by 21% in January of 2005. Employee satisfaction is suffering and morale is down. Classic is finding it hard to compete for loyal customers all the while trying to lower costs. Classic must find a way to improve their rewards program and meet recent cost reduction goals.

Problem Solution: Classic Airlines

Report -Part A

Introduction

A critical appraisal of the necessity to solve the chosen problem

Classic Airlines is facing a situation that is faced by many others in their industry. They see a need to cut costs. As a result, they are not properly addressing the needs of their customers. One such example of this is their focus on cutting call time for their customer service representatives. While this is a way to reduce costs and improve efficiency, it is not allowing the representatives to develop and cultivate a relationship with the customers. In fact, customer satisfaction is decreasing. (Berkowitz, 2006, 102-113)

Another issue facing Classic is dissatisfaction with their Rewards Program. Customers are no longer feeling that Classic's program can compete with the perks offered by their competitors. As a result, Classic has seen a 19% decrease in the number of Classic Rewards members and a 21% decrease in flights per remaining members. This added to the rise in costs of fuel and increased labor severely impedes Classic's ability to maintain and attract customers in this competitive market. Management is proposing more cost reductions to come. Classic must be able to balance these cuts while providing a more competitive product to customers. (Berkowitz, 2006, 102-113)

While these are serious issues facing Classic, they can use these situations as an opportunity to promote change and growth through the company. By carefully researching their market, they can determine the most important aspects of a Rewards Program. They can redesign their current program to meet these needs. This process will also allow them to develop better relationships with their customers. By developing an effective marketing and growth strategy, Classic will be able to capitalize on their competencies and better serve their customer population. Better training in the customer service area is also necessary. This will allow them to better serve the customers as well as cut down on talk time. Once this is successful, Classic will be able to make the necessary cuts to recognize ...