Classic Airline's Marketing Solution Essay Example | Topics and Well Written Essays - 2250 words

Classic Airline's Marketing Solution - Essay Example Classic Airlines is the world’s fifth largest airlines and has witnessed a steady growth in the 25 years since its inception. However, though profitable, the airline has not been spared from the challenges that affect airlines. For instance, increased uncertainty about flying negatively affected the stock prices which saw Classic airlines recording a 10 % decrease in the share prices in 2004. Its negativity has resulted in low employee morale where consumer confidence seems to be declining. Loyal customers also seem to be jumping ship and those remaining are flying less frequently. The airline has come under spotlight as a result of the seemingly mounting problems hence this essay seeks to identify as well as to define the problem bedevilling Classic Airlines. A problem solving model will be applied in a bid to try to address the airline’s current crisis. A close analysis of the case shows that there are both internal as well as external pressures contributing to Classi c Airlines’ current crisis. The airline is operating in a competitive environment that is characterised by rising fuel while it is already incurring high operating costs. In a competitive environment, it can be noted that the companies will be fighting for the same customers hence the one with favourable services is likely to appeal to the interests of many customers. Whilst it has been observed that competition is fierce in the airline industry, it has also been noted that a closer look at the profiles of the other competitors shows that to a certain extent, some of them have a competitive advantage over Classic Airlines. The major strengths of the three given competitors indicate that they are dominant players in the industry and they have a global presence and a strong existing network in different destinations they ply. It has also been noted that these players have successful loyalty programs in place which is currently a problem that is affecting Classic Airlines. Its c ustomer loyalty base is waning and a holistic approach has to be taken in order to revive its diminishing fortunes. Another notable strength possessed by the competitors is that they have worldwide brand recognition and they are likely to appeal to a large number of customers. There are also internal factors contributing to Classic Airlines’ current crisis and these include labour costs. The firm is paying top salaries especially to pilots and other employees while other competitors are cutting back pay on such professions. Priority is given to the needs of the workers and this has increased the operating costs of the airline. High salaries offered to the employees are not commensurate with the actual economic state of affairs obtaining on the ground. The stance to give the employees the autonomy to decide destinations through a bidding system is also a contributory factor to the current crisis being faced by the airline. The high operating costs have limited the airline†™s ability to compete for valued frequent flier given that it is now confined in a restrictive cost structure. Thus, as noted by Ben Sutcliffe, Classic’s General Counsel, the main problem related to this approach by the airline is that it has one of the highest labour costs which are likely to jeopardize its future. This has mandated a 15 % cost