The Role of Customer Relationship Management in the Airline Industry

Abstract

In the status quo, airlines are unable to maximize profits, partly because of the lack of transformation in customer management over the decades. In this study, we inherently showcase a part of the reason that airlines are not heavily profitable and how it can be averted. This study employs a critical review method of literature and economic theory analysis to explore the significance of Customer Relationship Management (CRM) in driving sustainable growth within the airline industry. Customer acquisition, retention, and churn management are critical imperatives, with personalized experiences and loyalty programs playing key roles. The discourse underscores the transformative potential of CRM in shaping the airline industry's future trajectory, fostering sustainable growth, and ensuring long-term profitability. The study also illuminates the intricate interplay between CRM practices and demand-supply dynamics, demonstrating how enhanced CRM practices lead to increased demand for airline services and cost savings. With foundational economic theories as the basis, the study highlights how improved customer relations can result in relatively inelastic demand curves, thus reducing sensitivity to price changes and enhancing revenue stability. The study provides practical insights for airlines to leverage CRM strategies, stimulating revenue growth and expanding market share. Moreover, the study acknowledges its limitations and proposes avenues for future research within this domain.