Reference no: EM131152755

Case Assignment

Like many airlines around the world, leading Australian airline Qantas is facing very difficult times in spite of having a 65% market share in its home market of Australia. Due to rising fuel costs and a slow world economy, Qantas has recently been losing money and its CEO, Alan Joyce, has some tough choices to make.

One difficult decision for Joyce is whether or not to sell Qantas's frequent flyer program. It may seem odd for an airline to sell its frequent flyer program, but Qantas's program is much more than just an airline reward program. Members of this program can gain points not only by flying on Qantas but also through other means such as shopping at one of Qantas's corporate partners or using one of their credit cards. Points can be redeemed not only for free flights, but also for products from numerous retailers. Over 10 million Australians belong to this rewards program, almost half of the population.

The frequent flyer program is Qantas's most valuable asset and a sale of this program would help Qantas get out of its current financial troubles. However, selling the program would also mean allowing another company to have access to Qantas's most loyal customers, including their business-class and first-class customers. In the long run, there is potential the sale could backfire and prove unwise.

Do some research on CEO Joyce's current choice of whether or not to sell the frequent flyer program, and also thoroughly review the background materials on intuitive vs. rational decision making, including Rao (2010) and Kourdi (2003). Your assignment will be to apply the background material concepts to Joyce's current big decision.

Some specific articles on Qantas to get you started:

Ross, K. (2014, Aug 27). Qantas CEO faces tough choices. Wall Street Journal [Proquest]

Ironside, R. (2014, Aug 15). Qantas warned to ground plans to sell frequent flyer program. The Gold Coast Bulletin[Proquest]

Gilder, P. (2014, Mar 29). Loyalty future cloudy. The Gold Coast Bulletin [Proquest]

Australia: Qantas frequent flyer hits 10 million member mark. (2014). MENA Report [Proquest]

Once you have finished reading about Qantas and reviewing the background materials including Rao (2010) and Kourdi (2003), write a 4- to 5-page paper addressing the following questions:

1. Is the decision whether or not to sell Qantas's frequent flyer program a strategic or operational decision? Is it a programmed or non-programmed decision? Explain your answer using references to Rao (2010) or Kourdi (2003).

2. Suppose Alan Joyce decides to take a rational approach to the decision whether or not to sell the frequent flyer program. List a step-by-step approach you would recommend and include specifics regarding what kind of information or choices should be considered at each step. Do not just list the steps, give detail at each step and use material both from your research on Qantas and from Rao (2010) or Kourdi (2003) to come up with these steps.

3. Joyce has been the CEO of Qantas for six years and is an experienced airline executive. Given his experience, do you recommend Joyce use a rational or intuitive approach to this decision? If a CEO who comes from another industry and does not have this airline experience were to make the decision, would you recommend a rational or intuitive approach? Explain your reasoning, and make references to Rao (2010) or Kourdi (2003) as appropriate.