crm in air

7/29/2019 CRM in Air

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Avinash Kuldeep-u208012 Bijay Kr.Jena-u208014 Nishit Parida-u408028(W)

Suresh Daniel-u208056



Agenda

Air Line Sector After 9/11

Why CRM

CRM In AIR LINE Sector AIR FRANCE

KLM

AIR CANADA Way Forward



Air line Sector After 9/11

The effects of the worldwide economic slump and the aftermath of September 11th attacks have severely impacted airline economicsand viability.

the U.S. and certain European markets were most severelyimpacted, airlines worldwide are striving to both regain and improveprofitability

Many have focused on operational improvements to reduce costs Customer relationships must be fostered for airlines to maintain

competitive advantage and profitability in the long term Airlines’immediate focus is on cost reductions in driving to more efficientoperations. However

On a global basis, airlines saw a US$12 billion operating loss in2001 before taking into account various government bail-outs.



Why CRM In Airline Sector

Customer segmentation: Airlines need to recognize that mileage-basedsegmentation is inadequate, whereas value-based and needs-basedapproaches can help guide investment decisions and drive greater insightinto the needs of high-value Customers

CRM initiative development—In order to differentiate themselves

from the competition, airlines must abandon a “fast follower”approach to CRM initiative development, in favor of investing ininitiatives with a high return, which respond to the needs and desiresof their own customers

Organizational design and management— Airlines need to instill a

service mentality in their employees, empowering them with acomplete view of the customer and clearly articulating the

employee’s role in the CRM strategy.



CRM in Air Line Sector



Air France

Air France carries 130,000 passengers on a daily basis. The companyinteracts with these customers via 15 touch points

Frontline personnel – including booking agents, check- in staff, lounge and on-flight staff. Air France employs 25,000 such personnel.

A new initiative handled by frontline operatives is “ROC” (Rappel Operationnel

des Clients), a proactive problem-solving and re-booking service analogous toUnited’s “Make Amends” programme touched on in the previous section

3rd party travel agents, both on- and off- line. Most travel agent booking activityinteraction with AF is managed via the Amadeus booking system.

To date, approximately €51m have been spent on Air France’s “Commercial

Information Systems”. A further €22.9m are specifically budgeted for the CRMproject, through until the end of 2004.

AF admits this in its own strategic outline but suggests that “on a scale fromone to five, an increase of 0.1 in customer satisfaction currently represents

40M€ additional revenues”



KLM

KLM, as most incumbents of the European airline industry, wasfacing declining revenue per seat and increasing competitivepressure during the last several years because of deregulation inthe European airline industry and unfavorable economic conditions.

In December 1992 the European Union passed legislation toderegulate the airline industry. Opening up Europe’s skies broughtabout newly energized competition in the European airline industry

Unfavorable economic conditions, triggered by external events suchas the terrorist attacks of 11 September 2001, the SARS epidemic in

Asia during 2003, and the start of the war in Iraq in 2003,exertedfurther pressure on the airline industry.

KLM realized that it could differentiate itself from its competition byoffering a superior customer experience at every interaction pointwith its customers

KLM Group carried more than 23 million passengers and reported anet income of €24 million on €5,877 million revenue



KLM : CRM Objective

Implementation of better customer identification and recognition capabilities atall customer interaction points throughout

KLM; Improvement of customer data gathering,

integration, and use;

Creation of a well architected, strategic ICTplatform that would replace the current,organically grown ICT legacy infrastructure7.



Air Canada

Air Canada is a Canadian-based international air carrier, providing scheduled and charter air transportation for passengers and cargo. TheCorporation is Canada’s largest air carrier.

The airline’s route network, including regional airlinesubsidiaries, provides air transportation to 120destinations worldwide, with a combined fleet of over 230 aircraft.

Together with the Star Alliance partners, Air Canadaoffers customers service to over 600 destinations inmore than 110 countries.



AIR CANADA

Par ROI Data*

Key Profit Drivers Year 1 Y YY Business

Deviation

PAR ROI

Average

Profit

Real Market Growth Rate 8 0 4 3.62 10.98 0.18 4.38 0.7884

Rate of Product Price Inflation 8.02 # 8 8.02 6.17 0.22 0 0

% Customers =50% Sales 42.39 # # 42.39 26.65 0.02 0 0

% Employees Unionized 42.22 # # 42.22 33.57 -0.07 0 0

If Purchase Amount<$_____

1 if Low Importance 0 0 0 0.08 0.28 6.06 0 0

1 if High Importance 0 0 0 0.06 0.23 5.42 0 0

If Puchase Amount> $_____

1 if Low Importance 0 0 0 0.03 0.17 -6.96 0 01 if High Importance 0 0 0 0.07 0.25 -3.84 0 0

%Ind. Exports-%Ind.Imports 2.6 3 3 2.6 8.51 0.06 0 0

1 if Customized Product 0 0 0 0.22 0.41 -2.44 0 0

Market Share 40 0 # 23.82 18.17 0.34 16.18 5.5012

Relative Quality 40 5 # 25.18 28.13 0.11 14.82 1.6302

% New Product Sales(3yrs) 12 1 8 8.34 14.63 -0.12 3.66 -0.4392

Marketing/Sales 9.22 # 9 9.22 7.01 -0.52 0 0

R&D/Sales 5 2 2 2.05 2.5 -0.36 2.95 -1.062

Total Inventory/Sales 19.77 # # 19.77 11.48 -0.49 0 0

N.B.V. P&E/Sales 18.19 # # 18.19 15.62 -0.55 0 0

N.B.V. P&E/Gross Book Val 54.33 # # 54.33 15.12 0.07 0 0

Capacity Utilization 85.7 # # 75.7 16 0.31 10 3.1

Adj. VA/Employee 50 # # 36.65 24.77 0.13 13.35 1.7355

Value Added/Sales 55.42 # # 55.42 15.79 0.26 0 0

1 if FIFO 0 0 0 0.52 0.5 1.3 0 0

Sum= 11.2541

Intercpt= 22.2

PAR= 33.4541



Way Forward :

Integrated CRM strategy if they are to pursue

competitive differentiation and profitability

effectively in the future

Drive better operating decisions Yield management and pricing

Empower the organization

Develop a vision Set targets and success metrics

crm in air

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