Airline Reservation


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airline reservation Word Count: 2462

Companies must have satisfied employees to satisfy customers. Continental Airlines is a perfect example of how a company can succeed by putting the emphasis on the employees and customers. Continental demonstrates remarkable turnaround from a disastrous performance.
In the early 1980's, the management of Continental believed that the only way to save the company was to lower airfares, and to reduce all possible expenses. In doing so, it demolished the product and their quality of service. For instance, in the early 1990s, pilots could earn bonuses if the fuel burn rate on their airplane fell below a specific amount. The program motivated pilots to fly slowly, which often resulted in missed arrival times. Because of the delays, it was sometimes necessary to divert customers to the competition. Another example of this horrible "low-cost" approach was the CALite program. Continental replaced all first-class seats in some airplanes with coach seats to lower the cost-per-seat. This failed when airplanes were swapped during adverse weather conditions; the business class seats were not available to the passengers that had paid for them. Moreover, CALite eliminated all food on flights, all travel agent commissions, and all corporate discounts. This infuriated many of their very important customers. After 15 years of this "low-cost" approach, Continental had succeeded in creating services that nobody wanted.
Continental's organizational culture was terrible. Many of the employees felt ashamed to work for Continental. Some employees were so ashamed, that they removed the logo from their shirts. To make matters worse, Continental had put in place a horrible communication structure: Nothing was told to the employees unless it was absolutely necessary. Most employees found out about company activities, plans, and performance through the public press. They did not have ways to share their ideas nor ask questions. For example, if an employee came up with an idea for improving service for the first-class passengers, there was a useless form to fill out. The information was hardly ever collected, and was never used as a source of possible improvements for the company. Furthermore, there were so many rules to follow that employees could not possibly do what was the best for customers.
The Department of Transportation ranked Continental tenth out of the ten largest U.S. airlines in all key customer service. Especially abysmal scores for on-time arrivals, baggage handling, customer complaints, and voluntary denied boarding. Continental had been through two bankruptcies and ten presidents over ten years. It also had not posted any profit since 1978.
The "Go Forward" plan was implemented under Gordon Bethune, Continental's chairman and CEO, and Greg Brenneman, president and COO. This plan had four components: (1) "Fly To Win" as a marketing plan, (2) "Fund The Future" as a financial plan, (3) "Make Reliability A Reality" as a product plan, and (4) "Working Together" as a people plan. In "Fly To Win", the plan was designed to build up Houston, Newark and Cleveland markets by drawing more business fliers than leisure fliers. The "Fund The Future" was designed to restrict the balance sheet to gain liquidity and to sell on strategic assets. The "Make Reliability A Reality" showed business travelers that Continental is reliable and regained trust and confidence of customers. Finally, with "Working Together," the purpose was to change Continental's organizational culture to an environment in which people enjoy working together for the company.
With Go Forward plan, Continental begged forgiveness from the customers they had previously treated poorly. The "forgiveness campaign" had two parts. First, they collected angry letters from customers and then divided them amongst the officers-executives through the rank of vice president. Furthermore, Continental assigned one officer to each city in their system. Then they started making phone calls. The goal was not only to apologize, but also to explain their plans to fix the company. Each phone call took easily an hour, since the customer was invariably frustrated and wanted to let them know just how badly. Customers usually appreciated the time and effort.
To improve the level of customer satisfaction, Continental concentrated on what frequent business users had to say. These customers regularly paid full fare and traveled often. Their demands were simple: airplanes and terminals that are safe, comfortable, and attractive. Other ... more

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The airline industry has been subject of intense price competition since it
was deregulated, and the result has been a number of new carriers which
specialize in regional service and no-frills operations.  These carriers
typically purchase older aircraft and often operate outside the
industry-wide computerized reservations system.  In exchange for these
inconveniences, passengers receive low fares relative to the industry as a
whole.  This research examines two low fare air carriers, ValuJet and
Southwest Airlines.  By investigating these air carriers, we can better
understand the economic impacts of price versus service in the airline
industry as a whole, as well as, the impacts on passenger and investor
confidence.   Until 1978, air transport rates were approved by the
government, which meant that price was not a primary competitive factor.
Instead, airlines would compete on service and image.  The airline
industry was dominated by giants (American, United, TWA) which offered
nationwide and some international service, and by regional carriers, such
as Southwest, which offered short trips between airports not served by the
nationals.       Deregulation of the airline industry brought about in 1978
introduced a situation in which the national and regional carriers were
suddenly able to compete in an environment that resembled a free market.
Rate schedules were lifted, price fixing was eliminated and route
management was removed.  The main factors that affected whether an airline
could serve a particular city was whether or not that city had enough
gates for the new carrier, and whether the carrier was able to afford to
purchase them.  Companies such as Southwest recognized potential for low
fares, and began building a niche for themselves by offering low fares
with equivalent low levels of service.  Southwest's success gave rise to a
new generation of low fare airlines, with ValuJet entering the market in
the early 1990's.  Unfortunately, ValuJet suffered a string of accidents
which brought the future of this air carrier into question.  ValuJet is a
low-priced airline that offers inexpensive tickets for regional travel.
Based in Atlanta, the airline serves the Southeastern United States and
competes with Continental Airlines as well as with other small regional
carriers.  It serves 31 cities primarily in the southeastern United
States. The airline began its service with flights to Tampa and Orlando
from Atlanta in 1993.  The no-frills strategy paid off for the fledgling
airline, which posted half again as many revenue passenger miles in April
1996 as it did in April 1995.  However, the company announced that it was
slowing the expansion of its services, voluntarily, at the same time that
it posted this impressive revenue mark  (Cole & Pasztor, 1996, p.  A6).
Perhaps due to overexpansion or to poor luck, Valujet experienced a series
of mishaps in its short history.  In January 1994, a DC-9 skidded off a
runway in Washington which resulted in the entire airport being shut down.
In June 1995, a ValuJet flight went through an emergency evacuation after
an engine failed and shrapnel flew into the cabin.  Additional incidents,
including one where the landing gear collapsed after a particularly
forceful landing, led the FAA to begin an intense review of ValuJet in
February 1996.  This review found that ValuJet was in compliance with FAA
regulations, but cited concern about pilot training and aircraft
maintenance (Larson, 1996, p.30).  In May 1996, Valujet flight 592 crashed
in the Everglades, killing all aboard and resulting in a shutdown of the
carrier for several months.  When ValuJet began flying again, it did so
with a reduced schedule, and considerable speculation about whether the
company will be able to continue operations long-term.  The company is
also involved in litigation resulting from the crash, and the long-term
prospects for the company are questionable.  The following chart
identifies key operating statistics for Southwest (seat miles are in
millions, cost factors are in cents)  (Shammas, 1996, p.  5541P):
     1995  1994 1993  Revenue Passenger Miles (RPM)     2,624      941
44  Available
Seat Miles (ASM) 3,813 1,471 63  Load Factor 68.8 %      64.0 %     69.7 %
Revenue
per RPM     13.4 13.8  13.1  Cost per ASM    6.8   6.8   9.8    Because
Southwest's
flights are generally an hour or less in length, the airline saves money
by not having to serve meals.  It has a liberal work rule arrangement with
its unions, so productivity is high, and overall costs are low.  For
example, Southwest gets 672 hours per year on average from pilots versus
371 for American Airlines pilots, and 60 percent more passenger miles per
flight attendant (Levinson, 1993, p.  34).  These figures enable the
company to realize profits during years in which the industry as a whole
was suffering.  The following chart identifies key ... more

airline reservation

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  • I: Business Practices I: Business Practices Word Count: 2462 Companies must have satisfied employees to satisfy customers. Continental Airlines is a perfect example of how a company can succeed by putting the emphasis on the employees and customers. Continental demonstrates remarkable turnaround from a disastrous performance. In the early 1980's, the management of Continental believed that the only way to save the company was to lower airfares, and to reduce all possible expenses. In doing so, it demolished the product and their quality o...
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  • The airline industry has been subject of intense p The airline industry has been subject of intense p The airline industry has been subject of intense price competition since it was deregulated, and the result has been a number of new carriers which specialize in regional service and no-frills operations. These carriers typically purchase older aircraft and often operate outside the industry-wide computerized reservations system. In exchange for these inconveniences, passengers receive low fares relative to the industry as a whole. This research examines two low fare air carriers, ValuJet and So...
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