Market research has shown that consumers prefer efficient, low-fare airlines with easy internet distribution systems, fresh new service concepts and friendly employees and this demand continues to grow every year. Research also indicates that consumers are extremely dissatisfied with the quality and level of service offered by the traditional airlines (Avitas, 2004).
A fare structure that is simple and straightforward. Management at Classic Airlines must develop its own fare structure based on research done on its own customer base. The airline can ask customers to fill out brief customer satisfaction surveys after each trip in exchange for extra frequent flier miles. In the survey Classic can ask customers what they like and dislike about their current fare structure and what they would change. This can be implemented within three months and the cost would be determined by the amount of frequent flier miles offered in exchange for the surveys. Keep in mind that this cost is shared among all tactics that use it thereby making it an efficient method to use.
The airline can also data mine its own historic sales to see which fares attracted the most sales and which ones produced flat sales. This can be performed by the marketing department in-house and should cost nothing. It should take no more than three months to perform.
Based on the above two research methods management at Classic Airlines can develop a new fare structure suited to the needs of its customers. This would take the initial three months waiting for the two research studies to finish and another three months to develop the actual fare structure for a total of six months. This should cost nothing to perform as it will again be done in house but this time by members of the management team.
Gradual expansion into new geographic markets. The airline can use information from customer surveys and market research it has already performed to find out into which markets to expand. Again this can be implemented within three months and the cost would be determined by the amount of frequent flier miles offered in exchange for the customer surveys.
The roll-out of the actual expansion plan comes next. Classic Airline’s must keep its aircraft in the air longer everyday as its competitors have done. This significantly reduces aircraft ownership and insurance-related costs and enables the airline to offer longer non-stop flights. The increased number of departures per day will lower Classic Airline’s lease cost per departure as well as increase the productivity of its airport staff as the same number of employees will now be able to handle more departure thus serving more customers and increasing profits. Pilots will be able to fly more hours without extra costs as they are salaried employees and ticket distribution costs will be pennies instead of dollars. All these cost savings will be passed on to Classic Airline’s customers in the form of lower fares, which, in turn, will stimulate even more travel (Avitas, 2004). This means that the airline would begin by offering full service coverage in each area indicated by the research, but only one area at a time, so as to keep its planes almost continuously in the air. The cost of this will be determined by how many airplanes of what class are needed to serve each particular geographic area. The rollout should take 6 months to complete for each area, and a full year to assess success for each area.
Additional flights in areas where rivals were cutting back services Again this will follow the same plan as other flight area expansions described above. An attractive frequent flyer program. Classic needs to do some benchmarking research to find out what kind of fare structure has worked for its competitors and why. Classic’s marketing department can do this through researching widely available trade and industry publications, which is the least expensive method costing nothing but employee time, which is already paid for in salaries. Another method is pay for research which can cost anywhere from $3,000 and up.
For example after quick research they will find that one of the attributes that makes Southwest Airlines successful is that Southwest has a very straightforward rewards program. Southwest customers who fly just eight (8) roundtrips in 24 consecutive months will get a roundtrip Standard Award valid to any of more than 63 destinations Southwest serves (Southwest.com). InsideFlyer magazine honored Southwest Airlines’ Rapid Rewards program at the magazine’s 2006 annual Freddie Awards for Best Program of the Year, Best Award Redemption, Best Award, Best Web Site, and Best Bonus Promotion Honors (Answers Corporation, 2007). This tactic is cost-free and immediate to adopt for Classic Airlines.
Offer more long nonstop flights. This is covered under the expansion bullet point. Strong emphasis on safety, high-quality maintenance, and reliable operations. This tactic ties into employee accountability and can be successfully implemented as an incentive/reward program. The employees with the best safety and performance quality records can be given monetary (performance based pay) or other rewards while those with the worst such records should be given warnings and then fired if they do not improve their safety and quality service records.
A software program can be used to track employees’ performance. Such a system can take up to a full year to deploy and will cost the HR department at Classic Airlines the majority of man hours in that year’s time to implement. The cost of the tracking software, which must allow managers to record employee performance on an ongoing basis rather than just once a year, can cost from the $400 range for one defined users to $8000 range for 50 defined users. If the HR department at Classic Airlines is larger than 50 people, negotiated bulk pricing on the software would give the airline better pricing on a per-user basis (Manager Assistant.com, 2007).
On-time performance. On-time performance will be part of the reliable operations tactic described above. It will be a performance criterion on which employees involved in on-time performance of flights will be rated. Again the performance of such employees will be tracked by HR using the same software as above so no additional time or resources will need to be added for this tactic.
Answers Corporation. (2007). Southwest Airlines. Answers.com. Retrieved November 14, 2007 from http://www.answers.com/topic/southwest-airlines-co?cat=biz-fin
Avitas, Inc (2004). Global Outlook for Air Transportation . Retrieved November 13, 2007From http://www.avitas.com/publications/GoatBook2004.pdf
Manager Assistant.com. ( 2007). Retrieved November 14, 2007 from http://www.managerassistant.com/buynow.html
Southwest.com (2007). Retrieved November 14, 2007 fro www.southwest.com/rapid_rewards/rapid_rewards.html