Roles of Customer Relationship Management (Crm) in Airline Industry: Tis Concepts and Implication

Roles of Customer Relationship Management (CRM) in Airline Industry: Its Concepts and Implications 1. Introduction In today’s global marketplace, airlines are countered with unstable and highly competitive business environment. Most airline companies perceive that it is increasingly important to react quickly and effectively to changing demand patterns of the customers. The challenge is maintaining profits in the face of forceful competition. The opportunities are in managing customer relationships to earn customer profitability that can contribute to the firm profits. If airlines do not know the information like who are the customers? What are the customers’ expectations and needs placed on the airlines’ services? Then, how can airlines guarantee that they are serving their best services to the customers. Therefore, many airlines are turning their focus on utilizing customer relationship management (CRM) as a vehicle for building and maintaining good relationships with its customers. The deeper the relationships the airlines build with the customers, the more opportunities the company can boost the overall profit margins. 2. Global Picture of Airline Industry Air transportation industry remains competitive globally. The average growth rate of world air travel is approximately 5% per year over the past decades, with substantial annual variations due to instability of global economic conditions and differences in economic development in different parts of the world (Chitnis, 2006; Deloitte Touche Tohmatsu, 2009). Historically, the annual growth in airline industry has been about twice the annual growth of global GDP. However, the dramatic downward trend of airline industry’s record was between 2001 and 2005. This downturn is basically influenced by the combined effects of the global economic shrinking that began in early 2001 and the incidents of terrorist attacks of 11 September 2001 in America. This contributed to the decreasing customer demand for air travel

References: Aspect Communications Corporation (2000), Customer Service in the eCRM Market, http://callcentres.com.au/icc/Cust%20Svc%20In%20eCRM.pdf, Accessed: 8 May 2010. Caudron, S. (1995). Create an Empowering Environment. Personnel Journal, 74, p. 28. Chitnis, Afsheen (2006), Satisfaction Formation Process for Iranian Airline Passengers: Case of IranAir. Master Thesis: Luleå University of Technology. Deloitte Touche Tohmatsu (2009), Throttling Back Midyear Outlook for the Global Aerospace and Defense Industry, http://www.deloitte.com/assets/Dcom7|Page Serbia/Local%20Assets/Documents/rs_Throttling%20back_09.07.09.pdf, Accessed: 7 May 2010. Gale, Bradley and Swire, Donald (2006), Value-Based Marketing & Pricing, www.cval.com/pdfs/VBMarketingAndPricing.pdf, Accessed: 8 May 2010. IBM (2001), A Blueprint for Customer Relationship Management in the Travel Industry, http://www-07.ibm.com/businesscenter/sg/pdf/ablueprintforcrm.pdf, Accessed: 8 May 2010. Jiang, Hongwei (2003), “Application of e-CRM to the Airline Industry,” Proceedings to the Ninth Australasian World Wide Web Conference. Lake, Laura (2010), Customer Relationships Are Key to Your Marketing Strategy, http://marketing.about.com/od/relationshipmarketing/a/crmstrategy.htm, Accessed: 7 May 2010. Riggs, Joy. (1995). Empowering Workers by Setting Goals. Nations Business, (January), pp. 6-8. Viaene, Stijn and Cumps, Bjorn (2005), CRM Excellence at KLM Royal Dutch Airlines, Communications of the Association for Information Systems, 16, 539-558. Wilkerson, Scott (2009), “Marketers Must Understand Customer Value to Make Segmentation Pay”, www.managesmarter.com/.../e3id519a27d3f06495a245f2e14bb67 f027, Accessed: 6 May 2010. 8|Page