...Frequent Flyer Miles Essay The new policy with regards to frequent flyer miles has upset many employees at our office. This might take its toll on their performance and overall satisfaction levels at work. Therefore, in the interest of our employees as well as the company, I would request you to kindly reconsider the new policy. The job of a typical travelling-employee entails stress and additional time owing to the frequent travels. Frequent Flyer Miles has been a great incentive so far to make the trips worth the effort. In fact, it was listed in the top five most valued benefits of this kind of a job. Withdrawing this benefit might affect the satisfaction levels of the employees and in turn, the profitability of our office. Coordinating and monitoring the new policy involves additional resources from our office. With the last year’s reduction, the administrative staff feel’s already overworked. Handing over the new policy’s additional duties would further decrease their morale. On the other hand, hiring a part-time person would barely offset the cost-savings resulting from the new policy, thereby defeating its purpose. The airline policy with regards to listing a company for the Frequent Flyer Miles is specific to the carrier, and is subject to change. A source, I spoke with, revealed that Northwestern, the major carrier out of Detroit, might change its policy and thereby not allow the listing of a company. Moreover, frequent flyer miles might not be honored during...
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...FINANCIAL INFORMATION ANALYSIS Accounting Analysis Application Exercises Question 2 Most airlines have frequent flyer programs that promise customers free flights once they have accumulated 25,000 miles of travel with the same airline. Using the simple definition of assets, liabilities, revenues, and expenses presented in the lecture, how should these programs be reflected in the airlines’ financial statements? Promises that require future expenditures are liabilities even if they cannot be measured precisely. According to the definition, liabilities are economic obligations of a firm arising from benefits received in the past that are: (a) required to be met with a reasonable degree of certainty; (b) at a reasonably well-defined time in the future; Airline companies have economic obligations to serve frequent flyer program passengers due to ticket sales (benefits) in the past to the frequent flyer program passengers. These obligations are: (a) likely to be met[1]; (b) fulfilled within a well-defined time in the future[2]; A frequent flyer program has an impact not only on the balance sheet but also on the income statement. In principle, the costs associated with benefits that are consumed in this time period are estimated and recognized as expenses (matching concept)[3]; However, it is not easy to measure the costs associated with frequent flyer program accurately. At least the following three cost categories should be considered in the estimation: 1. The administrative...
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...Marketing Solution MKT/571 Marketing April 25, 2011 Dr. Bea Bourne Marketing Solution Classic Airlines, one of the largest airlines in the country, “commands a fleet of more than 375 jets that serve 240 cities with over 2,300 daily flights” (University of Phoenix, Classic Airline Scenario, 2011) and has gained 32,000 employees with earnings of $8.7 billion in sales. September 11, 2001 was the start of the economic crisis for the airlines, along with the rising costs of operations. Classic Airlines has internal and external factors, which also contribute to the airline’s crisis. Addressing the crisis, Classic Airlines should consider using a ten-step basic problem-solving method as well as seek suggestions from the airlines internal and external resources. Define the Problem The first step in the method is defining Classic Airlines problem by determining the purpose of the project. Classic Airline’s shares are declining even though the airlines still earn a profit. A problem found is Classic Airline’s reward program offered to customers has declined, which could be because the customers are traveling less because of the economic times or the customers are traveling on other airlines. The decline could also be linked to the lack of customer satisfaction. Employee morale is another contributing factor to the airlines problems. The morale has decreased because of the September 11, 2001 attacks, referred to as 9/11. After 9/11 the airline was criticize...
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...indicate that Marriott Hotels and Resorts had the highest occupancy rates in the surveyed years 1997-2001 (Case Exhibit 5) and had the highest percentage of people with incomes exceeding $50,000 per year who preferred the Marriott brand over hotel/motel brands in 2000 and 2002 (Case Exhibit 6). Also, the target market can be defined as "the average upscale traveler who, on average, takes 12 to 14 trips a year", corporate travelers in particular (Case Page 13), as it is the business traveler who usually is the primary decision maker for business trips (Case Exhibit 6). The point of parity between Wyndham's ByRequest program and the Marriott Rewards program is that both reward guests for their frequent reservations and brand loyalty with a free membership and perks such as frequent flyer miles and special offers. However, it is the points of difference between the ByRequest program and the Marriott Rewards program that really adds significant benefit to Wyndham's value proposition. Where Marriott Rewards program offers points to guests which can be accumulated to be...
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...Classic Airlines: The Situation University of Phoenix MKT/571, Marketing Classic Airlines: The Situation Problem Solution: Classic Airlines In order for Class Airlines to overcome its current conditions, the company must undergo a very structured problem solving process. The nine-step problem solving process is just the process that Classic Airlines need. The nine step process consists of the following: • Step 1: Describe the Situation, o Involves identifying key concepts, issues, and opportunities in order to determine the overall focus of the project (McNeese, 2004). • Step 2: Measure the Problem, o Requires that baseline data be collected on the present processes and that the problem be observed and analyzed from a broad perspective so that many problem solving possibilities may be examined (McNeese, 2004). • Step 3. Set End-Goals, o This step will help provide vision and direction and help make choices as to which path Classis Airlines should take (McNeese, 2004). • Step 4: Identify Alternative Solutions, o Allows Classic Airlines the opportunity to look at other companies as benchmarks in order to develop techniques that will help the company conquer disadvantages (McNeese, 2004). • Step 5: Evaluate Alternatives/Strategies, o Allows Classic Airlines to examine the best strategy that will solves the company’s current problems and avoid future occurrences (McNeese, 2004). • Step 6: Identify and Assess Risks, o Allows Classic Airlines to develop...
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...Company Background Aeroplan is a leading partnership loyalty program situated in Canada, and is owned by Groupe Aeroplan Inc. It is the prominent loyalty management organization in the world. The head offices for Aeroplan are situated in Montreal, Toronto. It also has two call centers, one in Vancouver and the other in Montreal. Aeroplan started as a promotional tool for business travelers for Air Canada in 1984. After a period of one year, the organization had amassed about 100,000 regular flyers. In 2004, Aeroplan adopted its own identity separate from Air Canada, and it emerged as the leading loyalty initiative in Canada (Boer & Gudmundsson, 2012). In 2008, Aeroplan converted its Income Fund to growth oriented, which is a worldwide loyalty management organization referred to as Groupe Aeroplan Inc. In 2009, Air Canada transferred its Vancouver and Montreal call hubs to Aeroplan. This move made approximately 800 agents who were affiliated with the CAW Union to join around 350 employees who used to serve as administrative staff at Aeroplan. As a result, the company was forced to adopt a key culture change in order to cope with the workers who previously worked for Air Canada. Presently, Aeroplan has around 4 million members who are awarded air miles based on the widening network that comprises of about 150 brands in the retail, financial and travel industries (Boer & Gudmundsson, 2012). The mission for Aeroplan is to stimulate the loyalty of its associates and partners,...
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...Classic Airlines marketing solution Classic airlines is one of the biggest airlines and instructions a fleet of more than 375 jets that assist 240 towns with over 2,300 every day air journey. They extend to be a moneymaking business, but with increasing overhead charges and the present state of the finances, classic airlines have known-how some set back. Numerous interior and external stresses assist to Classic Airlines present crisis. In alignment to address this urgent position, Classic Airlines should use the rudimentary difficulty explaining method. They should furthermore utilize their interior trading assets and discover external trading choices to find a moneymaking solution (Arnoult, 2004). These few of the challenges faced by airline managers are also affecting the Classic Airlines. Classic Airlines is one of the worlds fifth largest with more than 2,300 flights daily to and from almost 240 cities in the world. They only earn about 0.1 percent net profit from their sales revenue of $18.7 billion Classic Airlines is operating with a very thin profit margin, which is not very sustainable in the end. A very low profit margin is insufficient for the airlines it makes it hard for them to have an up keep in their competitiveness. Unfortunately, like any other industry, the stock prices of airlines are directly impacted by the airlines ability to accrue money or design wealth for its stockholders. This paper will evaluate and analyze the issues faced by Classic Airlines...
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...Marketing Solution MKT/571 Marketing April 25, 2011 University of Phoenix Marketing Solution Classic Airlines, one of the largest airlines in the country, “commands a fleet of more than 375 jets that serve 240 cities with over 2,300 daily flights” (University of Phoenix, Classic Airline Scenario, 2011) and has gained 32,000 employees with earnings of $8.7 billion in sales. September 11, 2001 was the start of the economic crisis for the airlines, along with the rising costs of operations. Classic Airlines has internal and external factors, which also contribute to the airline’s crisis. Addressing the crisis, Classic Airlines should consider using a ten-step basic problem-solving method as well as seek suggestions from the airlines internal and external resources. Define the Problem The first step in the method is defining Classic Airlines problem by determining the purpose of the project. Classic Airline’s shares are declining even though the airlines still earn a profit. A problem found is Classic Airline’s reward program offered to customers has declined, which could be because the customers are traveling less because of the economic times or the customers are traveling on other airlines. The decline could also be linked to the lack of customer satisfaction. Employee morale is another contributing factor to the airlines problems. The morale has decreased because of the September 11, 2001 attacks, referred to as 9/11. After 9/11 the airline was criticize...
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...Satire In regards to authorization for the war and the continuation of the war in both Iraq and Afghanistan some argue it should end, arguing that it is bankrupting our country, the trillions of dollars we are spending to prolong this war will be a burden of debt left to our great-great grandchildren to deal with. They say that it is paralyzing our volunteer military with repeated, unnecessary tours of duty, saying that it is needlessly killing and maiming our young people. Others may bicker and dispute that the United States should not be in the Middle East because it is a civil war that is being fought, and we cannot resolve a conflict that has been going on for thousands of years. I find myself in the utmost disagreement with those positions. I mean where else could any one nation hope to send it's young to get a world view than a far distant mountainous or Desert region that is geographically isolated as well as culturally. By continuing the wonders of this endless war effort our politicians and their supporter are actually enriching our nation's youth with exposure to other cultures while simultaneously letting them revisit history. The critics of these amazing little countries that have tied up so much time and resources of much of the world's nation building efforts in history is in fact a walk backwards in time all by themselves. This experience that is offered to our young adults is very enriching in its own way. Where else could we ship self absorbed teens...
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...Air Asia Case: Q 1) Comment on business level strategy adopted by Air Asia? How has Air Asia achieved cost leadership? Answer 1) High aircraft utilization: Air Asia uses the aircraft in very high frequency and high turnover of flights; these add value to customer convenience and enable low cost. Air Asia has the fastest turnover in its region; is 25 minutes. a) Low fare no frills: Air Asia does not have frequent flyer miles program and private airport lounge. No free foods and beverages even snack in flight, additional meal and service required passenger to pay more. b) Point to point network: All Air Asia both short-haul (4 hours or less radius) and medium to long-haul are non-stop flight, by doing that; save human recourses cost, facilities cost, airport cost, etc. c) Air Asia changed all existing old aircraft Boeing B737 with Airbus A320, which has more capacity, more efficient fuel-consume and cost-efficient. d) By utilizing homogeneous aircrafts, the company is able to save human resources cost and reduce spare part stocks. These strategies have brought Air Asia as the lowest-cost airline in the world, with a cost/ASK (available seat kilometer) of US3.67. This great achievement was achieved without compromising safety. Air Asia’s highest priority is safety of all the operations. To keep the aircraft in best condition Air Asia partnered with the best maintenance provider. e) Air Asia R&D not only works on the aircraft utilization but also...
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...as viable, there is a lack of customer use in the airline industry since 911. Stock prices have declined 10% because customers are not as secure with flying as they were before the 911 tragedy causing shareholders to keep Classic under scrutiny to make changes. Classics’ Classic Rewards membership has declined 19 % and a 21 % decrease in flights per remaining customer which has caused concern for Classic Airlines. (University of Phoenix, 2012) Another problem for Classic is rising costs of labor and fuel has placed limitations on how Classic competes for frequent flyers. The board of directors has mandated a 15 % across-the-board cost reduction over the next 18 months. The information in this paper will discuss a nine-step problem solving strategy to help Classic Airlines regain customer confidence and satisfaction. The main problem addressed in this paper is maintaining a viable rewards program to lure frequent flyers back to Classic Airlines. Framing the Problem Classic Airlines must first understand that most of the problems the company faces are uncontrollable. Classic needs to determine why the company has been losing rewards members. One of the first steps would be to establish a survey with the existing and potential rewards customers asking questions that pertain to what the company is offering the program. Classic Airlines needs to maximize customer needs and increase brand loyalty to regain customer and investor confidence. Marketing has become increasingly...
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...MKTG7501 Consumer Behaviour “Loyalty cards cost shoppers millions” Introduction - Everyday Reward Card What is “Everyday Rewards Card”? The Everyday Rewards Card is an initiative from Woolworths that provide a series of benefit rewards to their customers. Such as fuel saving offers, exclusive offers and discounts of their products. Also, now it’s able to earn Qantas Frequent Flyer points when you shopping in Woolworths, BIG W, Dick Smith and Tandy stores. How to accumulate reward points? You can earn one point per dollar when spent over $30 in one transaction when you shop in Woolworths, BIG W and one point per dollar when spent over $50 in one transaction when you shop in the Dick Smith and Tandy stores. Pros & Cons of using Everyday Rewards Card Advantages There are three major advantages that Woolworths offers its rewards card holders : save 4c per litre on fuel at Caltex petrol stations, receive exclusive offers and discounts from all participating retailers, and earn Qantas frequent flyer points for a free flight ticket. Disadvantages According to a recent report from a consumer group Choice, consumers will unconsciously spend more than what they can gain from these kind of loyalty programs. First of all, paybacks are very "poor". Woolworths Everyday Rewards program averagely offers less than $1 return for every $100 a shopper spends. And if anyone want to collect points for free flight tickets, he or she will need to spend at least $22,030 to gain...
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...“The more you buy, the more you earn” – this is the logic each company sells to customers when introducing their loyalty programmes. Loyalty programmes offer gift redemptions, cash backs, discounts and privileges to customers who make frequent purchases. What is less known is that for every purchase, the data is recorded and used for unknown purposes, leading to privacy related issues. The benefits of loyalty programmes versus the related privacy issues have always been an item of debate. Benefits including customer satisfaction brought by customization, higher earnings for the company and savings for customers bring about higher welfare to both the company and the consumer, and therefore outweigh the privacy issues of data manipulation and information leak which will rarely happen. People often complain about receiving promotions and discounts on items that are worthless to them. Reward programmes address this issue by providing product customization thereby increasing customer satisfaction. Through in-depth analysis of consumer data and customer preferences, spending patterns that signal changes in shopping trends and customer behavior allow companies to customize products for their customers. The United Kingdom based retailer, Tesco PLC, employs this strategy by sending their members tailor-made coupons. This leads to 5 million different versions of mail promotions being sent to 12 million customers. Though customer habits are exposed in the process of determining suitable...
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...(FFP: Frequent Flier Program) The case deals with the problem of estimating cost and obligations of the United Air Lines frequent flier program. The major accounting issue with FFPs is how an airline accounts for their economic value. Since FFPs represent a present obligation for an airline to provide customers with air travel at a later date, they are considered a liability. Incremental Cost Approach: One approach can be to estimate the value of points that are going to be redeemed and the timing of redemption, with the cost being based only on the variable costs associated with the redemption of points, i.e. meal, drinks, ticketing. The provision for the variable costs is then recorded as a liability, moving to an expense once the points have been redeemed. A provision can be created for these liabilities based on the present value of the incremental cost estimate, net of any points that are deemed likely to expire. The provision is reduced as members redeem points from which it is recorded to expenses. This approach can be justified in that customers are redeeming their points for excess capacity on flights, an activity that is incidental to the process of generating revenue from passengers. The incremental cost approach is designed to maximize profitability and minimize provisioning levels, and so an airline using the incremental cost approach needs to be able to prove that flights flown by frequent flyers represent excess capacity and are incidental to the...
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...Requirements for Kudler’s Fine Foods Frequent Shopper Program Daniel W. Burgess, Richard Rives, Darrell Crosson, Warren Johnson, and Antoin Jenkins Axia College University of Phoenix Requirements for Kudler’s Find Foods Frequent Shopper Program Introduction In an effort to maintain a competitive edge in the gourmet food industry, Kudler Find Foods will implement changes to the company’s infrastructure and overall networking capabilities to create a shopping program for our dedicated customers. A system analysis team has been created to meet this challenge led by Daniel W. Burgess, Vice President of Operations, Richard Rives, Director of Information Technology, Darrell Crosson, Director of Human Resources, Warren Johnson, IT Specialist, and Antoin Jenkins, Program Coordinator. The goal of the project is to provide our customers with the best processing methodology to complete error free transactions; generate feedback from users; and address any issues from customers by upgrading our customer service operations. The scope of the Frequent Flyer Program (Service Request Form, SR-kf-013) will entail low-level processes that focus on the business aspects of our IT department and the processes that involve a RAD (Rapid Application Development) system. The program will be able to operate on a global scale with operations in Asia, China, Japan, and South America. Upgrades to our systems will represent different approaches that streamline and improve the system...
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