Running Head: Classic Airlines Solution
Classic Airlines Solution
Classic Airlines Solution
Classic Airlines (CA) is the fifth largest airline in the world. CA currently has a fleet of over 375 jets and serves 240 cities worldwide. CA also currently has over 32,000 employees and last year earned $10 million on $8.7 billion in sales. However, CA saw a 10% decrease in share prices last year and the frequent flyer program, Classic Rewards, has experienced a 19% decrease in membership and a 21% decrease in flights per member. These downturns are coupled with an overall industry decline due to 9/11 and rising costs on both fuel and labor and are threatening the potential survival of CA. ...view middle of the document...
CA is currently employing a fuel hedging program that has reduced the overall fuel costs by 12%, a total of $158 million, over the last year. By continuing this program and having a price guarantee on fuel prices over the coming year, CA will be able to meet the 15% cost reduction goal (UOP, 2010). In reviewing the Classic Rewards program, CA's focus will be on growing membership by 20% over the next year. This will recoup the members lost over the past year and show that CA is once again a growing organization.
CA has several ways to measure the success of the program. Once the changes to the Classic Reward program are implemented, CA will be able to monitor how many people are joining the program and how many flights are being purchased. This can be done through the use of daily reports that are delivered via email and text messaging to leadership. The email reports will give an in-depth breakdown of the sales and what destinations are trending as popular destinations. The email reports will also show the number of Classic Rewards members and allow leadership to see if the program is growing or shrinking in membership. The text messaging reports will give a brief overview of the sales over the last 24 hours, the last seven days, and the last 30 days. These reports are key in the process as the reports will allow leadership to see if any further investigation needs to be done into the status of the sales or if changes need to be made to the CRM or the pricing structure. Another measurable item for CA will be an increase in share prices as the budget cuts and revamped Classic Rewards program are rolled out. Because it is key that CA recover the market share lost over the last year, being able to see the progress of the share price will allow leadership to make changes to the marketing plan as necessary to drive the price back up. Being able to measure the goals set forth will also allow leadership to see the return on investment of the changes made.
Setting attainable goals is a key factor in the SMART process because if the goal is too lofty, it will fail causing potentially negative publicity for CA. CA is suffering from negative publicity over the price of its market shares causing it to be viewed negatively internally by the employees and externally by the general public. The goal of growing Classic Rewards membership by 20% is attainable because over the last year 19% of the members dropped out of the program. This gives CA customers that have previously done business with CA and understand the value of the airline. It also means that only 1% of the growth needs to be new members who have never done business with CA in the past. The first step in this process is improving morale through the use of a vigorous internal marketing campaign. The first step in this program will be to empower the frontline employees by giving them flexibility with the Classic Rewards program to make justifiable exceptions in the program as well as teaching...