Technology and Customer Loyalty Strategies of Alaska Airlines: A Comprehensive Review

Topics: Airlines, Loyalty, Technology Words: 1148 Pages: 5

Background

Alaska Airlines is an organization that operates since the 1930s. I was considered to be one of the top ten largest American airlines at the end of the 20th century. The company is rather expanded and operates in 36 cities with the main hub in Seattle. Operating together with Horizon Air, it managed to serve the population of more than 35 additional destinations. All in all, this company created the most profit for Alaska Air Group. It accounted for about 80% of its revenue.

Unfortunately, the company faced a range of operational challenges that deal with (see Exhibit 1):

baggage conveyor belts
counter space
wage increase
resistance to change
customer loyalty

Vice President of Customer Service believes that innovative use of technology can help it to overcome existing problems and improve performance. However, he, Ed White, also presupposes that such an approach is not the only best possible initiative to drive competitive advantage. Even when focusing on technology, he was not sure which processes should be person-to-person, hybrid, and completely automatized; how this approach will work; and how the use of technologies should be evaluated.

Those issues and initiatives are critical for the organization because they affect its operations, profit, competitiveness, and the level of customer satisfaction. It is critical to consider that additional teams will be needed to focus on the use of technology, and current personnel will require training.

Recommendation

In the very beginning Alaska Airlines’ share in the framework of the Burbank-Oakland market, for example, was more than 20% but now it is 0%. To improve its competitiveness and overcome main issues, the company should resort to new technology and consider the automation of some processes. In addition to that, it has to reconsider customer loyalty initiatives and improve communication with them (see Exhibit 2). Other companies may also follow this plan but, in general, mentioned technologies are selected to overcome specific issues faced by Alaska Airlines.

Basis for Recommendation

It will be advantageous for Alaska Airlines to resort to new technology and improve customer loyalty initiatives. Such actions will meet current organizational needs, providing an opportunity to reach its mission. They will make both clients and personnel change their behavior to achieve benefits. Other companies may also resort to such technologies, but this recommendation tends to focus on already existing clients. Having an opportunity to serve more people, Alaska Airlines will reach break-even soon.

Discussion

Alaska Airlines may also avoid any changes at all or develop more effective interventions that do not raise any doubts and resistance to change. Still, it is better to focus on technology and loyalty currently as they reflect the main problems (see Exhibit 3).

Next Steps

The company should not stop the implementation of new technologies and loyalty initiatives if it wants to ensure constant competitiveness. Routine assessments should be maintained to identify potential issues and areas for improvement to enhance organizational performance. Opportunities for performance enhancement will alter due to the changes in the market and client preferences. Thus, it will be advantageous to design additional solutions except for the discussed ones to drive a competitive advantage over time.

Exhibits

Exhibit 1

Issues that Trigger the Change

The Source of Issue	Description
Baggage conveyor belts	Alaska Airline’s baggage conveyor belts reach their capacity rather often, which affects the quality of provided services. The clients’ luggage falls off and fails to be put on the necessary flight.
Counter space	Even though it seems to be strange, the issue faced by airports is the increase in passengers. In general, this alteration can be seen as a positive fact that proves that Alaska Airlines is valued by many clients and becomes more popular and competitive. However, the counter space tends to reach its capacity, which affects the company’s routine operations adversely. Additions are required but not provided.
Wage increase	Baggage handlers want a wage increase but the agreement on subcontracting is not reached, which leads to employees’ displeasure with the contract.
Resistance to change	The same party is opposed to the implementation of new technology and supports its view with the remote position of Instant Travel Machines in comparison to ticket counters.
Customer loyalty	Freight customers are not yet included in the loyalty program adopted by Alaska Airlines. In addition to that, the company fails to improve customer loyalty as it does not obtain enough customer information and does not share information with them.

Exhibit 2

Recommended Changes

IMAGE Project	After four weeks of training, all employees will be able to serve clients using new software and there will be no necessity to hire separate professionals.
Self-Service Check-in	Using a kiosk, Alaska Airlines can streamline customer service, obtaining an opportunity to work with the increased number of clients.
Alaskaair.com	Customer loyalty can be improved and the company’s competitiveness enhanced if it enhances its website allowing to book and buy tickets, check the status of departing, provide feedback, gather information, etc.
Laptop Computers	Using laptops at ticket counters the company can address the lack of space, ensure the possibility of seasonal migration, and provide clients with the possibility of convenient check-in.
Changing the Behavior of Passengers	Clients can be motivated to use the kiosks due to the provision of additional benefits, such as a provision of miles as incentives.
Airport of the Future Team	A new team that consists of four committees should be gathered to focus on the use of new technology and simplify organizational processes.
Future Technological Initiatives	Apply new tools to identify passengers because photos tend to become not actual with the course of time and clients are not willing to provide their driver licenses
New Technology Development	Support the Future team to design.technological initiatives that can improve the airport’s performance and reduce expenditures. Ensure the ongoing technical support for new technology.
In-flight Technology	Use a heads-up display not to cancel flights because of fog.
Customer Loyalty Initiatives	Use profiles to document customer experiences and preferences. Use a valuation algorithm to define main characteristics (frequency, class, customer type). Resort to database marketing to distribute promotions among clients.

Exhibit 3

Options Grid

	Option 1	Option 2	Option 3
Description of Option	Resort to new technology and improve customer loyalty initiatives	Stick to the current practices	Wait and think of other options that can drive competitive advantage
Overall Assessment	Recommended because of improved performance, competitiveness, and customer loyalty	Not recommended. Issues will remain	Not recommended. First steps for improvement already exist
Strategic Fit (Core Competencies)	Focus on innovative technology. Overcome organizational issues and weaknesses	The company will operate in the same way and will reach its capacity soon. Clients will be dissatisfied	Focus on the future possibilities is beneficial but the company may fail before they are identified
Financial Attractiveness	Break-even can be achieved in a year	No. Possible losses.	Only in perspective. Possible losses currently
Noteworthy Risks	Competitor’s reaction	No competitive reaction	No competitive reaction