Clasic Airline


Classic Airlines Problem Solution Paper
University of Phoenix
July 24, 2008
MBA 570 Sustainable Customer Relationships
Instructor: Dr. Ruediger Mueller, CTP

Classic Airlines Problem Solution Paper
Executive Summary
      Classic Airlines (“Classic”) is an organization with 32,000 employees, recorded $10 million in profits on $8.7 billion in sales last year.   While the airline is profitable, it experienced a decline in its stock prices by 10 percent.   Moreover, the employees’ morale and loyalty declined due to increase scrutiny from the media on the airline industry from all sectors of the economy; which is reflected by the 19 percent decrease in the number of Classic rewards members and a 21 percent decrease in flights per other remaining members.   Consequently, Classic is faced with a restrictive cost restructure due to poor forecasting and implementation of expansion plans based on anticipated repercussions of the effects of consumer travels post   September 11, 2001 (Scenario Two, 2005).
      The Board of Directors mandated a 15 percent cost reduction across-the-board for the next 18 months.   Within the constraints of the mandate, Classic will have to improve its frequent flier program with methods that are measurable and demonstrates a return on any investment (ROI) while meeting the cost reduction goals.   Classic is the only carrier which does not have a partnership with any outside entities, under the assumption that no one else can understand or meet the needs of its customers better than Classic.   Furthermore, Classic use of its customer relationship management (CRM) system focuses primarily on the company’s cost reduction strategies, not the needs of the customers.   Currently, one of Classic’s main problems of its CRM system is the inability to network its internal configuration (i.e. phone channels) with web channels.   In addition, the segmentation methods currently used by Classic are...