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Issue

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Submitted By nadiyong
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Issue
The airline industry is facing one of the most challenging environments in its history. A global economic slowdown, punctuated by the events of September 11th, has led to a decline in passenger traffic, continued yield reductions, decreased load factors, and burgeoning fleet, insurance and labor costs.
As airlines grapple with how to deliver a consistent and distinctive customer experience while maintaining low operating costs, they have turned to the promise of CRM. Although operational and security issues became top of mind immediately after September 11th, CRM has gradually come back into focus as airlines recognize the importance of effective customer management in establishing long term competitive advantage. CRM’s promise is indeed compelling strengthened loyalty driving increased revenue, with lower acquisition costs and improved operational efficiency. For full-service airlines, CRM is an essential component of their corporate strategy, the means of differentiating themselves from competitors in the eyes of the customer. And although low cost carriers may be less reliant on CRM as a means of driving competitive differentiation, even they must invest in fundamental CRM technologies and processes to manage the customer efficiently over the course of the travel experience. Increasingly, airlines are recognizing that CRM is a long term investment, with the true benefits reaped through profitable lifelong customer relationships.
Although many airlines understand the significance of CRM to their bottom lines, such programs as they exist today are suboptimal. Few airlines truly exploit CRM analytics to segment their customers based on value rather than miles flown, instead, they are using only simplistic segmentation models. CRM investments are largely driven by the competition rather than the needs of the airline’s most valuable customers. In a bid to

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