570 Classic Airlines Problem Solution

Problem Solution: Classic Airlines

University of Phoenix

Problem Solution: Classic Airlines

Classic will come out ahead and be able to maintain a conservative fuel price margin. Added CRM benefits would immediately be felt by the ability to interact with customers thought the phone channel and the Web channel simultaneously. With the implementation of these changes to Classic, Classic can reap the benefits that maintaining its position as the fifth largest airline company can provide.

Describe the Situation

Issue and Opportunity Identification

Classic Airlines is the world’s fifth largest airline. Its fleet consists of more than 375 jets serving 240 cities with more than 2300 daily flights. Classic has grown to an organization of 32,000 employees in its 25-year inception and last year earned $10 million on $8.7 billion in sales. Classic Airlines has sustained profits even though it has been plagued with numerous problems. Classic has seen a 10% decrease in share prices in the past year. Employee morale is at its lowest because of scrutiny from the investment community, negativity from Wall Street, the media, and the public. Customer confidence is also declining as well as Classic’s Rewards program, which measured a 19% decrease in the number of Classic Rewards members, and a 21% decrease in flights per remaining members. Rising fuel and labor cost have hindered Classic’s ability to compete for the valued frequent flier miles. The 911 aftermaths have caused Classic to face a restrictive cost structure unlike younger airline companies. And if that is not enough, Classic is facing a 15% across-the-board cost reduction over the next 18 months (Scenario: Classic Airlines, 2007). Albert Einstein once said that in the middle of difficulty lies opportunity. Some of the best opportunities often originate from problems. Classic Airlines has the ability to turn its problems into opportunities through carefully defining the situation so that the statement reflects the reality of the situation. Classic should target frequent business travelers who expect a higher level of individualized service than they might receive on competing airlines. Catering to these customers would help Classic Airlines increase customer confidence, reduce negative press, and increase profitability. This could be done without incurring additional cost keeping in line with cost reduction and the challenge to do more with less. Happy customers are the best form of advertisement for any organization and the basis for repeat customers.

Classic Airlines should revamp its Classic Rewards Program by partnering with another airline to improve the customers’ flight experience. This would increase the frequent flyer mile purchase and partnership opportunities, which in turn would make Classic’s frequent flyer program more rewarding for the customer creating value. Since Classic Airlines cannot keep the cost of fuel from increasing it must developed a way to enhance its fuel efficiency. Installing winglets on Classic Airlines’ carriers can do this. A winglet is a small extension on the end of an aircraft wing designed to reduce drag and thereby increase fuel efficiency.

Stakeholder Perspectives/Ethical Dilemmas

Classic Airlines’ stakeholders are its stockholders, management, employees, union, cities and towns where Classic’s terminals reside, and its customers. These stakeholders stand to gain or lose from the success or failure of Classic and their perspectives need to be taken into account. Stakeholders can have positive or negative views regarding a given project, and often do not agree with one another, making it a challenge to reconcile their varied viewpoints. The stockholders want the decrease in share prices to reverse itself and head toward an incline. An increase in customer confidence would also help to raise stockholders’ stock price. Classic’s management wants it to succeed as a business and be a viable part of the airline industry. Management wants to increase the stature of the company by making Classic Airlines a corporation that creates opportunities for its employees. Classic’s employees want the negative publicity from Wall Street to discontinue. The union must protect the benefits, salaries, jobs, and rights of Classics’ employees. The cities and towns where Classic has its terminals want the continued revenue that the airline affords them. Classic’s customers want renewed confidence void of scrutiny and negativity.

When stakeholder’s perspectives exist, ethical dilemmas also exist. Management must balance the needs of the business