PROBLEM ANALYSIS DEFINITION: CLASSIC AIRLINES

Problem Analysis Definition: Classic Airlines

Problem Analysis Definition: Classic Airlines

Introduction

Classic Airlines, one of the most profitable airlines, is the one which is not facing financial downfall although the industry is facing it. This airline has the strength to bear financial crisis due to its strong financial controls and customer retention rate.

By an increased uncertainly about flying there has been a concerned investment community on the watch, the airline industry operates with a microscope watching over them. The consumers' confidence appears to be waving. Classic's declining rewards program measured a decrease in reference to the lower number of Classic reward member which, turns to the lower amount of flights. The loyal customer's that Classic Airlines has had are not been happy and they are going somewhere else. Rising costs, such as labor and fuel has limited Classic's ability to compete for a valued perk for the frequent flier.

Classic is now facing a mandated cost reduction to take place over the next year and the Board of Directors has not released much information on the company's current state and this may be lending fuel to the rumors that classic may have to file bankruptcy if they are not able to control costs (University of Phoenix, 2009).

Issue and Opportunity Identification

In this scenario multiple issues face Classic Airlines and are part of the decisional reasons the company is planning on making. The first issue Classic Airlines faces is a reduction of customers flying by showing a decrease of 20% and losing their customers to competitors.

In addition to the reduction in their customer base, the cut in flight prices over the past year has placed Classic right above acceptable margins. The company is facing a price war with other airlines, but have no ability to lower their prices any further.

Classic seems to be facing a lack of trust in their image and brand. The company has realized a continuous drop in their stocks over the past year. Classic Airlines is also mandating a cost reduction of 15% over the next 18 months. This cost reduction will hinder the ability of the company to market effectively to the public. Each section of the company is working with reduced assets while trying to grow the business.

An existing conversation with Kevin Boyle and existing customers was recently released through the customer loyalty report. Management found customers are unhappy with a number of items including customer service and help desk within the rewards program. The CRM system needs to be revamped in order to represent the true data of their customer base.

Classic Airlines has many opportunities to move itself forward towards a positive resolution. The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) of the company are focused on using available funds to hedge the fuel prices for the upcoming year (Chiltern, 2004).

The executives seem to be unsure about trusting marketing to pay off on the dollars they use to grow the business. One of the first opportunities facing Classic Airlines is the using ...