Classic Airlines Case Analysis

Classic Airlines Case Analysis

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Introduction

Classic Airlines, like many airline carries have many challenges to confront in an extremely competitive market and tough economic times. Despite the economy’s financial condition, Class Airlines must emphasize customer value that meets and exceeds customer expectations whereby Classic Airlines will generate a reasonable return on shareholder’s investments.
Top 3 Problems Facing Classic Airlines

One major problem plaguing Classic Airlines is the company’s position on customer service. Classic Airlines has “lost touch” (UOP, 2008) with its customers. Management has failed to establish “service elements, operational procedures” or innovative “marketing programs” that will retain loyal customers, attract new consumers and grow business (UOP, 2008) Last but not least, Classic Airlines membership rewards program decreased over the past year by 20%. “More than 160,000 allegedly loyal customers are flying other than Classic airlines” and Classic’s frequent flier program is not innovative and attractive enough to sustain Classic current frequent flier clientele. (UOP, 2008)
Another challenge facing Classic Airlines is the organization’s customer relationship management (CRM) system. Although, Classic Airlines CRM platform was the best in the market, the system was not set up for seamless cross departmental integration, multiple channels and to effectively impact Classic Airlines customer service and satisfaction. Classic Airline’s CRM system was implemented as a cost save for management that produced reports and reduced productivity time between customer service representatives and consumers and not a successful marketing tool.

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Classic Airlines like its competitors, senior management might have take measures to protect itself and file for bankruptcy protection if it fails to reduce the “mandated 15% across-the-board cost reduction over the next 18 months” by Classic’s Board of Directors. (UOP, 2008)
Classic Airlines Most Serious Problem
Although “the airline industry is in the midst of a dramatic restructuring worldwide and especially in the United States, set in motion in part by the events of 9/11 and by subsequent events such as wars, SARS, soaring fuel prices and bankruptcies,” (The Sloan Foundation, 2008) Classic Airlines biggest problem is its lack of customer service. Classic Airlines has to creatively identify how to “to deliver enough value to make a subsequent get-together attractive” (Brandenburg, 2007) between Classic Airlines and consumers that will “provide safe, dependable, and friendly air transportation to our customers, along with numerous related services, in the hopes that you will fly us again and again.” (American Airlines, 2007)
3 Ways Classic Can Address Problems
Classic Airlines can address their problems by first addressing its customer service issue. Classic Airlines can benchmark other organizations with similar situations such as Classic and adopt best customer services practices. For instance, Classic can analyze Jet Blue Airlines True Blue ® Customer rewards programs and take out what ideas that will please Classic customers and increase competition. Jet Blue’s True Blue ® program “is the flight gratitude program of Jet Blue Airways where customers can earn free travel, access special features on jetblue.com (such as managing credits from canceled flights), and be among the first to know about great deals and news about Jet Blue.” (Jet Blue, 2007)
Another solution for Classic Airlines in correlation to its (CRM) platform is to customize the (CRM) system into an e-CRM solution for Classic. “e-CRM is a business strategy that should guide airlines to increased profitability by creating customer loyalty.” (Prete, 2001) If Classic Airlines “make strategic e-CRM investments and align processes, strategies, and technology around customers,” they will be in a “better position to deliver a seamless, high-quality customer experience across all channels.” (Prete, 2001)
Finally, Classic Airlines management can make the critical decision to file bankruptcy as a survival strategy as the company re-structures financially and internally.
Bankruptcy strategies have proven to be less about immediate financial redemption and more about which ones have a more fundamental appreciation for their customers-- which ones can retain those customers over time. Bankruptcy with customers, there is at least a possibility of a turnaround. (Sturm, Jr., 2005)

Classic Airlines can take the position like its competitors and “focus on customer retention in times of crises. The most expensive strategy in any industry is customer acquisition; the least expensive is customer retention.”(Sturm, 2005) Similar to United Airlines, Classic can take “small steps continued to recognize the imperative to keep customers over time and to make them believe that, despite the company's woes, it has a focus on its customer.” (Sturm, 2005)
3 Problems Classic Airlines should Address First
Classic Airlines should address the entire customer experience and satisfaction as the company’s top priority problem. Money invested improving Classic Airlines customer service will lead to bigger profits for all Classic Airlines stakeholders. The improvement of airline service i.e. in-flight experience, on-time arrivals and departures, gate agents, flight attendants, baggage carriers all play a crucial part in Classic Airlines success.
Classic Airlines should address the company’s (CRM) system and customizing the system so that Classic Airlines can effectively respond to its customers' needs and to market to them on a one-to-one basis using the Internet. Classic Airlines can give their customers self-service solutions through e-CRM. As Classic Airlines offers self-service solutions to consumers, “the Web provides airline with a cost-effective way to get valuable insight about them-allowing airlines to target individual customers with specific, relevant marketing information.” e-CRM suites fulfill an important need-to provide a consistent experience in electronic channel the customer uses; and to track and understand customer preferences to drive better business decisions.
Classic Airlines will have to address the airline’s union leaders and employees and its contractual commitment and keep talking without cutting wages and benefits for Classic Airline personnel and reducing mandated cost by 15% percent. Classic Airlines management and airline union leaders will have to work together to find an acceptable level of concessions and a business plan that gives Classic Airlines some sort of future. (Horwich, 2006)
Resources Needed
“To maintain a positive long-term impact and project a fresh per¬spective to customers,”(Edgar, Dunn & Company, 2007) Classic Airlines management and marketing department will have to reinvent Classic Airlines frequent flier rewards programs at regular intervals possibly with innovative partnerships and alliances. Additional resources critical for Classic Airlines new frequent flier rewards program are exceptional expertise of customer information and a “robust connectivity and systems reliability.” (Edgar, Dunn & Company, 2007) Modern technologies are also needed which can be leveraged to imple¬ment Classic Airlines new approach to its rewards program, including RFID and smart cards.
Classic Airlines management will have to authorize the company’s (CRM) system to be customized and used not only for financials but as a marketing and customer satisfaction tool to reach desired goals and a return on investment (ROI).
Regarding Chapter 11 filing, Classic Airlines will need a sold restructure plan and essential union concessions as resources to that will save revenue annually for Classic Airlines.
Expectations and Outcomes
Classic Airlines can expect satisfying customers with an ideal airline and travel website and opportunities for growth through ‘soft’ benefits designed to enhance Classic Airlines overall customer experience, including recognition, preferential treatment, and, personalization. “Soft benefits enable differentiation. They are more difficult for competitors to replicate, and can be highly personalized, ensuring a unique experience with a particular company and/or customer segment.” (Edgar, Dunn & Company, 2007) In particular, e-CRM and automation will play a major role in Classic Airlines new operational model creating a simple and personable user experience.
Conclusion
Customers are critical to Classic Airlines survival whereby customer focus is critical to Classic Airlines success. Classic Airlines strategy and financial investments must eliminate everything consumers hate about air travel. Classic Airlines must re-create a company that delivers everything customer’s needs and wants in the airport and in the air. Without a satisfied consumer and improved customer experience, Classic Airlines has no chance of survival.

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References
Aberdeen Group (2007). Benchmarking the best in class. Retrieved on February 26, 2008 from
http://customerservicezone.tradepub.com/free/w_nc03/pf/w_nc03.pdf
American Airlines (2007). Customer service plan. Retrieved on February 26, 2008 from http://www.aa.com/aa/i18nForward.do?p=/customerService/customerCommitment/customerServicePlan.jsp
Brandenburg, B. (2007). Courting customers - from first date to marriage. Retrieved on February 26, 2008 from http://customerservicezone.com/cgi-bin/links/jump.cgi?ID=888
Edgar, Dunn & Company (2007). Future directions in building customer loyalty; creating a rewarding customer experience. Retrieved on February 26, 2008 from www.edgardunn.com
Horwich, J. (2006). Bankruptcy judge blocks Mesaba Airlines from canceling union contracts. Retrieved on February 26, 2008 from http://minnesota.publicradio.org/display/web/2006/05/18/mesaba/
Jet Blue Airline (2007). True Blue ® program. Retrieved on February 26, 2008 from https://www.jetblue.com/trueblue/FF_faq.aspx#q1
Prete, J., (2001). Interaction Management: The Foundation of Your CRM Strategy. Available online http://findarticles.com/p/articles/mi_m3257/is_9_59/ai_n15400067
Sturm, A.C. (2005). Bankruptcy's upside: bankruptcy is a strategy. And like most strategies, its success depends on the execution. Retrieved on February 26, 2008 from http://findarticles.com/p/articles/mi_m3257/is_9_59/ai_n15400067
The Sloan Foundation (2008). Global airline industry program. Retrieved on February 26, 2008
From http://www.industry.sloan.org/globalAIR.asp
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