Situation Analysis: Classic Airlines

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Situation Analysis: Classic Airlines

Classic Airlines has grown to an organization of 32,000 employees since starting operations. Last year the company recorded $10 million profit on $8.7 billion in sales. While the airline is profitable, the stock prices have decreased by 10% in the past year and employee morale has been at its lowest due to increase scrutiny on the airline industry from all sectors of the economy. (Classic Airlines, 2008) Classic Airline's customer loyalty is on the decline as evidenced by the 19% decrease in the number of Classic rewards members and 21% decrease in flights per remaining member. The company is also facing a restrictive cost restructure due to overly optimistic expansion plans based on anticipated rebound of post 09/11 travel. Classic’s Board of Directors recently mandated a 15% across-the-board cost reduction over the next 18 months (Classic Airlines, 2008). Within the constraints of the mandate, Classic also needs to improve the frequent flier program with methods that will demonstrate a measurable return on any investment (ROI) while still meeting the cost reduction goal. Classic is the only carrier which does not have a partnership alliance agreement, under the assumption that no one else can understand or meet the needs of its customers better than Classic. In addition, the carrier implemented a pricing strategy that put the company in direct competition with younger airlines, which do not have the same cost structure as Classic, resulting in an advantage for the competition. The ability of Classic to accurately predict changing market and consumer trends will enable the carrier to augment marketing campaigns, adjust budgets, and reallocate resources to take advantage of prevailing tr...

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...ve met the needs of their consumers and offered small businesses a new portal for accessing airline information remotely. This was achieved through a partnership with a smaller company. Classis Airlines satisfied the stakeholders, beats the Wall Street analyst projections for market share and other companies admire the overall performance along with the measures put in place to ensure continued wealth maximization. Voted Best in Class for customer service, Classic Airlines has truly emerged into a global resource.

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