Introduction

A quality air transportation system has always played a predominant role in determining the economic progress of the country in the current time. A well-managed system of air transport acts as a catalyst for economic transformation. All the sector involving swift movement of resources like men, machines and material would come to a halt without air travel. So, a well-established and sound customer relationship management (CRM) along with good marketing practices have become a necessity for the airline industry to offer world-class services to its customers.

SpiceJet

SpiceJet is a low-cost airline headquartered in Gurgaon, India. As of October 2017, it is the fourth largest airline in the country, with a market share of 13.3% by number of domestic passengers carried. The airline operates 312 daily flights to 55 destinations, including 47 Indian and 7 international destinations from its hubs at Delhi, Kolkata, Mumbai and Hyderabad. Established as air taxi provider ModiLuft in 1994, the company was acquired by Indian entrepreneur Ajay Singh in 2004 and re-christened as SpiceJet. The airline operated its first flight in May 2005. Kalanidhi Maran acquired a controlling stake in SpiceJet in June 2010 through Sun Group which was sold back to Ajay Singh in January 2015. SpiceJet opened bookings on 18 May 2005 and the first flight was operated between Delhi and Mumbai on 24 May 2005. By July 2008, it was India’s third-largest low-cost carrier in terms of market share after Air Deccan and IndiGo.

SpiceJet was on the verge of shutting shop few years back. With delaying salaries, layoffs, delay in payment of statuary due. In 2012, SpiceJet suffered a loss of over ₹39 crores (US$5.4 million) owing to increase in global crude prices. SpiceJet declared its biggest ever net losses of ₹1,003.24 crores for the financial year 2013-2014. A majority of airline’s cost is dependent on the rupee exchange ratio and it did not help that the currency depreciated in that year. SpiceJet reported losses of ₹1,031 crores in 2014, about ₹2.82 crores per day. In 2015, the reported profit was ₹356.64 crores, almost a crore a day.

Issues with SpiceJet

Chennai based Sun Group acquired SpiceJet in 2010. The inconsistent profits were set off with investments by media baron Kalanithi Maran. Maran invested close to ₹1500 crores in the airline and ended up owning 58% shares. The hope of looping in an overseas investor led to overlooking of losses in the airline. With no investors and burgeoning losses, SpiceJet was forced to return planes, cut man power and consequently cancel flights. This made the airline to default on fuel payments, clearing vendors outstanding and other debt. DGCA came into action and prevented booking of tickets from more than 30 days and ensured immediate refund to passengers whose flights were cancelled. Cash inflows declined and  on December 15, 2014, the SpiceJet management told the DGCA it was about to suspend operations.

Various initiatives for customer attraction such as low fares and frequent flyer programme for customer retention did not work out in favour of SpiceJet owing to stiff competition from other established airlines such as Jet Airways, Indigo (in the low cost segment) and GoAir. This is a direct up market stretching strategy for SpiceJet as it is regarded as a no-frills and all-economy service airline, thus venturing into a segment it is unfamiliar with. Much of the strategy was aimed towards cancelling out the differentiation offered by competing airlines and not focusing on customer specific strategy, thus, it failed to garner enough interest amongst its customers. Loyalty by mere low prices cannot be achieved and it struck them quite late.

On top of that macro factors played a major hand in the plummeting share prices of SpiceJet, oil prices prevailing at that time which accounted for about a third of airline’s cost was at its peak. The Rupee exchange rate was a 10 high, denting its bottom line.

The change in Fortunes:

A major overhaul in the leadership and a clear-cut strategy helped SpiceJet revive its fortunes. Though the macro factors improved considerably, it was the strategy within the organization which resulted in such a massive shift in its profitability numbers. The leadership ensure the below points to overcome its liquidity crunch.  

1. Operational efficiency – on time take off, effective baggage handling
2. All customer touching interfaces worked smoothly for ex Websites, airport counters
3. Shutting down non performing sectors for costs optimization
4. Special offers offered outside holiday, festival period to improve its brand perception

Main idea behind these strategic changes was to overcome the issue of loss of trust amongst the customers and thus working on these set SpiceJet on the path of redemption.

The Road Ahead

These steps have ensured a quick turnaround however, it is not sustainable in the long run. Macro factors may again affect the profits of the airline which already runs on wafer thin margins.

However, SpiceJet will find it hard earning trust from its customers. Trust depends on reliable service and dependency over a period of time. To reach that level, it needs to continue its operational efficient processes along with a few initiatives for customer centricity.

The entire airline industry is going through a shift from a traditional transactional marketing approach i.e. focusing on volume of sales rather than developing a relationship with customer which forms an important cog of the trust factor. In order to have a long standing relationship with its customers, this has to change to a more relationship marketing approach. Hence, CRM implementation in SpiceJet will ensure they elevate in the eyes of customers and thus thrive in any given macro conditions.

How CRM can bring in change

Customers will value SpiceJet only and only if their perception of SpiceJet’s products or services are better than what they had expected. To understand this, the airline needs to understand the industry standards to set the baseline parameters, which it needs to meet to be in the race. With advent in various data SpiceJet collects, it can provide customized services to customers to satisfy or go one step further in delighting them. Ensuring the entire customer journey has minimal negative episodes, the brand perception can be enhanced. However, specific data needs to be collected from the customers who avail the services to understand what is valued and what is not. Below are some of the metrics that it can collect from its customers to focus on pain points if there are any in customer journey.

The points (Exhibit 1) will let know SpiceJet about what are the important parameters that SpiceJet needs to look into for better customer experience. Prolonged service of this kind will improve its brand positioning and thus continuous commitment to it will imbibe in the Trust factor.

Loyalty program based on CSAT survey:

The CSAT survey has been taken for the customers with high LTV. The sample data(screenshot) is displayed below. Sample data contains the data field such as Customer Id, Customer Name, Loyalty Program, Customer Reviews, Average Revenue, Customer frequency, LTV generate by customers for the 2 years.

Representation: Customer Satisfaction (CSAT) Survey Sample Data

Benefits designed for Loyalty card customers for effective Customer Relationship Management:

Based on the satisfaction survey (CSAT) taken for the high LTV members we have come up with enterprise wide CRM through the implementation of the loyalty cards. Touchpoints have been identified right from the time customer arrives at the terminal till the time customer exits the destination terminal. These touchpoints have been further classified granularly into sub sections comprising all the episodes related to the customers.

Customers have been segmented based on the LTV into platinum, gold and silver categories. Based on the feedback from the CSAT, facilities and services have been provided to different segments.

Check-in

Check-in is the first customer touchpoint that comprises of episode points such as counters for hassle free check-in, selection of the seats at the boarding pass collection desk and web check-ins when the customers cannot make to the airport on time. 

We have identified and included all such touchpoints during check-in and have come up with services such as special counters for privileged customers, seat selection on arrival and web check-in facilities. For the Platinum loyalty card members all the three aforementioned options would be available. For the gold loyalty card members, the web check-in would be available but they would be charged a nominal amount for the same. For the silver card members, the seat selection services would be chargeable but the free web check-in service would be unavailable as most of their complaints were regarding the inflight experiences in the CSAT survey.

Baggage Handling

This section deals with how the baggage is handled in terms of providing extra baggage to customers depending on the band in which they are in. A maximum of 25 kg is provided to Platinum class customers, and up to 20kg for Gold and 18Kg for silver. Baggage forms an essential factor for Indian customers who generally like to carry a lot of stuff while they are travelling. Excess baggage is charged to the customer at a very nominal rate for all the three class customers.

Owing to certain complaints from higher end customers, special cargo space inside the aircraft and while loading will be provided and eventually prioritize luggage collection on arrival for dedicated customer class. However, this special feature is not available for Silver customers, while it is available to Gold and Platinum customers with no additional cost. This allows higher end customers to feel privileged and saves their time spent in baggage handling and thus improving the touchpoints in the customer journey

Ground Staff (Inside terminal)

There are exclusive highly featured trolleys offered to the Gold and Platinum card customers at free of cost and to silver card customers at nominal price. These trolleys are exclusive in nature in terms of comfort and luggage capacity with add on benefits like two water bottles placed inside it. This welcome gesture is offered to the exclusive loyalty card customers in order to build a robust customer relationship management system. This offering will add value to the customer experience and will attract silver loyalty card customers to upgrade their membership to Gold and Platinum rating cards.
Overall the exclusive experience provided to the loyalty card customers will set the goals in mind of non-loyalty card customers to have a similar treatment for them as well.

Lounge Arrival

Welcome drink and Greeting to Customers

Welcome Drink offered to Platinum and Gold loyalty card customers on their arrival to the waiting lounge for SpiceJet, along with being greeted by the ground staff. This would make the customer feel welcomed and privileged. Thus, increasing the overall customer journey for the fliers from the very first interaction with the flight. This welcome would be also be offered to silver loyalty card customers which would be chargeable at nominal prices.

Seat Reservation for privileged customers

Exclusive seats would be reserved for Gold, Platinum, and Silver card customers with varying leg space and other facilities. SpiceJet being a low budget flight have known to cut down on the leg space and seat comfort. This could be improved for the loyalty card holders, by exclusively reserving the premium seats for the customers based on their membership level. Since this is a major part of the pre-flight and in-flight experience, thus this will motivate the non-loyalty cardholders to upgrade to a premium membership.

Sources of Entertainment & Inflight Experience

High speed internet service (Wi-Fi) with unlimited access for the platinum customers as they have a high LTV (life time value) so in-order to retain them we need to provide such services. The Gold card customers will have a limited access for basic web surfing and limited web streaming but will also act as an attractive offer to upgrade their loyalty. There is display screens facility with unlimited preloaded movie selection for customer loyalty card holders of Platinum, Gold card holders will have limited movie selection preferences. The Choice of cuisine was an important customer touch point as an inflight experience and will be addressed in a way that silver card holder could also select from the many offered variety by paying an extra charge for it. Prioritize the food service for the platinum customers would provide a better experience and hence delight.

Representation: Loyalty Program Sample Screenshot

Exhibit 1

1. providing information about the change of flight schedules

2. Facilities at the enquiry counter

3. Professional appearance of employees

4. Time taken at the check-in counter

5. Training given for the ground staff

6. Helping mentality of the employees

7. Personal attention at the check-in counter

8. Clarity of boarding announcements

9. Handling the passenger requirements, when the flight is delayed

10. Friendly welcome at boarding time

11. Special attention to passengers according to their requirements

12. Professionalism and courtesy of cabin crew

13. Informative announcements and its clarity

14. Magazines and newspapers in the flight

15. Cleanliness of the cabin

16. Maintenance of washrooms

17. Quality of food and

18. Quantity of food

Exhibit 2:

Key pain Areas for the SpiceJet customers on the basis of CSAT Customer survey

1. Entertainment Insufficient: magazine only
2. Baggage Handling: poor service, process improvement
3. Baggage damaged no reimbursement
4. Leg space Insufficient
5. Inflight Service: no response to call button, button broken
6. Below avg service
7. Limited food options
8. Support staff not friendly
9. Check-in issues

References:

[1] Customer relationship management and marketing practices in airlines industry- An empirical study. A Kumadha et al. ISSN Print: 2394-7500. ISSN Online: 2394-5869.

[2] “Spic(e)y flight: Delhi-Mumbai for Rs 1,599”. Times of India. 10 August 2005.

[3] Shukla, Tarun (25 June 2008). “SpiceJet, Modi call truce; to sell 11.5 mn shares”. Live Mint.

[4] Sahu, Ram Prasad (8 February 2012). “Fund infusion critical for SpiceJet”. Business Standard. Mumbai, India.