This paper examines Classic Airlines' deteriorating marketing performance and argues that the company's overreliance on price cuts and promotional tactics is failing to address the root cause of customer attrition. By framing Classic Airlines primarily as a seller of experiences — encompassing safety, comfort, security, and timeliness — rather than a mere transportation provider, the analysis contends that a customer experience framework would more effectively rebuild loyalty and reverse financial decline. The paper also evaluates the role of loyalty programs as relationship indicators, demonstrating that pricing strategies alone cannot restore trust or long-term customer engagement.
The paper applies the concept of demand inelasticity to challenge Classic Airlines' price-cutting strategy, citing Oliveira (2003) to argue that raising prices in inelastic markets can actually improve profitability and differentiation. This counterintuitive economic reasoning is used to support a broader marketing reorientation, demonstrating how theoretical frameworks can inform strategic recommendations.
The paper opens with a framing introduction that establishes the analytical lens (experience marketing). The first body section critiques the price-focused strategy and proposes a customer experience framework. The second body section shifts to loyalty program data as evidence of relationship deterioration. The conclusion synthesizes both threads, urging Classic Airlines to invest in exceeding customer expectations as its path to recovery. The structure is compact and thesis-driven, suitable for an undergraduate business analysis.
Classic Airlines faces the daunting task of turning around its marketing strategies while simultaneously contending with increased government regulation and compliance requirements. Classic Airlines delivers a service that is considered an experience for business and leisure travelers alike. This goes beyond selling mere transportation; it is the safety, security, comfort, and timeliness of travel that customers are willing to pay ticket prices to receive. This marketing analysis evaluates Classic Airlines from the context of its being a marketer of experiences first and a provider of transportation second.
Classic Airlines is losing its relationships with customers and resorting to pricing, promotion, and other short-term marketing strategies in an attempt to win them back. None of these strategies will work because customers are not getting the results they expect or want. Classic Airlines' senior management team needs to rethink its marketing approach to focus more on the experience and on exceeding customer expectations, and less on price or promotional programs (Le Bel, 2005). If the company can create its own customer experience framework, it will be far more effective in managing marketing strategies to regain its customers.
The financial performance of Classic Airlines continues to deteriorate as the company focuses on price, which only drives losses deeper and illustrates how inelastic the demand curve is in the airline industry (Oliveira, 2003). Studies have shown that raising prices in inelastic markets can actually increase profitability and create greater levels of differentiation — points that Classic Airlines' management needs to consider (Oliveira, 2003). Today, however, the company is caught in a spiral of price cuts and promotions that is hurting top-line revenue growth more than helping it. Classic Airlines needs to be re-centered on the customer experience and must re-establish relationships with its customers, rather than simply throwing pricing deals at the customer base in the hope that they will return.
As the financial analysis of Classic Airlines shows, the focus on pricing and away from relationships is causing the company to lose more ticket sales and growth than these tactics enable. The customer loyalty program data further illustrates how rapidly Classic is losing customers. All of these factors point to widespread customer dissatisfaction with the airline's service. Customer loyalty programs have an amplification effect: when relationships are strong, programs soar, and when relationships deteriorate, program participation comes plummeting down (Dekay, Toh, & Raven, 2009). What Classic must do is reverse the perception that its service falls below customer expectations, and commit to auditing its own performance to identify where the shortcomings lie (Dekay, Toh, & Raven, 2009). Only by doing this can the airline chart a roadmap to recovery for its most loyal customer segments.
Like many service businesses, Classic Airlines sells not only a transportation service from one location to another; it is also selling an experience. The approach of dropping prices and attempting to win customers back purely through the fundamental elements of the marketing mix continues to fail. This is because Classic has not recognized the customer relationship as the catalyst of trust in its services. Until Classic realizes that investing to exceed customer expectations is the best strategy available, it will continue to languish and perpetuate a price war within its industry.
Dekay, F., Toh, R., & Raven, P. (2009). Loyalty programs: Airlines outdo hotels. Cornell Hospitality Quarterly, 50(3), 371.
Driver, J. C. (2001). Airline marketing in regulatory context. Marketing Intelligence & Planning, 19(2), 125–135.
Le Bel, J. L. (2005). Beyond the friendly skies: An integrative framework for managing the air travel experience. Managing Service Quality, 15(5), 437–451.
Oliveira, A. V. M. (2003). Simulating revenue management in an airline market with demand segmentation and strategic interaction. Journal of Revenue and Pricing Management, 1(4).
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