1. Continental Airlines Customer Analysis
Chris Dwyer, Meghan Murphy, Kassonga Mwamba

2. Overview Industry Trends Product Markets Domestic vs. International
Types of Passengers
Market Opportunities/Strategies
Potential Problems
Future

3. Trends ~ Airline Industry
Rapid Growth in International Demand
Steady Growth in Domestic Demand
Increased On-Line Distribution
Decrease in Airline Capacity (due to bankruptcy)
Increase Price per Flight
Continued Pressure from LCCs in Domestic Market
Alliance Agreements

4. Positive Growth2 Continued Growth for 32 of the past 35 years
1991 ~ Desert Storm
~ 9/11 Terrorist Attacks
Continued Economic
Growth
Continued Increase in
World Trade
Boeing · Current Market Outlook · 2005 · Demand for Air Travel
See Source 2

5. Product Markets Domestic International Point to Point Routes
Short-Haul Flights
Highly Price Sensitive customer segment
Increased Competition From LCCs
Lower RASM
International
Network-Hub Routes
Long-Haul Flights
Less Price Sensitive Customer Segment
Less Industry Competition
Higher RASM

6. Domestic vs. International
2004 International Growth Increased 13.9% vs. Domestic Growth 4.8%12
“Majors” Shifting to More Profitable International Segments
Typically Less Competition for International Travel
Growing Demand in Latin American, Atlantic, & Pacific Segments
International Yields Higher RPSM
Data taken from 05’-02’ 10K reports: See Sources #1,5,6,10,14
See Source 12

7. Types of Passengers Leisure Traveler Business Traveler Preferences
Lower Price
Willing to Sacrifice Service
Limited Route Needs
Business Traveler
34% of Domestic Revenue in 2000 (Only 10% of Capacity)11
Price Sensitivity Driven by Economic Conditions
Higher Class of Service
Seeing Shift Towards LCCs
See Source 11

8. Frequent Flyer (FF) ~ Demographics3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
Average FF takes 9 flights per year
Only 18% of Total Airline Travelers BUT Account for 58% of ALL Flights Taken
68% of FF have College or Graduate Degree
75% are Employed Full or Part-time
Majority are Male ~ Accounting for 58% of all FF
61 % of those are between the ages of years of age
See Source 3

9. Frequent Flyer Programs
American Airlines
AAdvantage Miles
Continental Airlines
OnePass
United Airlines
Mileage Plus
Southwest Airlines
Rapid Rewards

11. Market Opportunities International Segments Frequent Flyer Programs
Pacific/Asia
Latin America
Atlantic/Europe
Frequent Flyer Programs
Travel Industry Alliances
Miles Auctions
Higher Level of Service
Concierge

12. International Opportunities
Continental Has More International Exposure than any of the Other “Majors”13
Current Hub and Spoke System Ideal for International Expansion
Houston – Latin America
Newark ~ Serving Richest DMA in the U.S. – Europe and Asia/Pacific
Purchasing Power Growth of U.S. Hispanic and Latin American Market Segment
International Revenues Grew 29% in
See Source 13

13. International Strategies
Continental Plans to Expand International Routes by 15% Over the Next Several Years ~ vs 2-4% Expansion in Domestic Market13
European Routes to Lower-Traffic European Airports8
Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
Launch of Spanish-Language Web Site
See Source 13
See Source 8

14. FF Opportunities11
Frequent Flyers Make Up Significantly Large Portion of Flight Segments
Show High Level of Brand Loyalty
Focus on Online Booking
See Source 11

15. FF Strategies Forming Alliances with Other Airlines
Increase Route Availability
Allow Usage of FF Miles in Network
Decreases Need for FF to Go Outside Network
Enhance Web Site Booking System for FF
Checking Points/Miles Status
Booking Capabilities
Miles Auctions

16. Service Opportunities
Differentiation with High Service Levels
Adding Service When Other Airlines Cutting Service Costs
U.S. Economic Growth Trends Promising for Increased Service Requirements for Business Travelers
Segmentation of “Top-Tier” passengers

18. Service Strategies
Additional Focus on “Top-Tier” Customers and Business Travelers
Enhancing In-Flight Reports for Flight Attendants4
Corporate Hosting of Discussion Groups for Frequent Travelers
Gathering Complaints and Suggestions for Improved Service11
See Source 4
See Source 11

19. Potential Problems Increased Globalization
Liberalization of International Regulation
Domestic LCCs
Potential Terrorists Attacks

20. Future Strategy Enhance/Expand Transcontinental Routes
Continued Customer Service Focus
Strengthen Alliances for Customer Convenience
Focus on Top Revenue Producing Segments

21. References
American Airlines, February 24, Annual Report. [on-line] ~ citg April 2,
Boeing, Current Market Outlook [on-line] ~ citg April 2, 2006.
Bouvard, Pierre and Williams, Diane. August The Arbitron Airport Advertising Study. [on-line] ~ citg March 21, 2006.
CIO Magazine, February 15, Getting To Know Them. [on-line] ~ citg April 3, 2006.
Continental Airlines, February 24, Annual Report. [on-line] ~ citg April 2,
Delta Airlines, March 27, Annual Report. [on-line] ~ citg April 2,
1. Same site used for 2003 Annual Report
2. Same site used for 2003 Annual Report
3. Same site used for 2003 Annual Report

22. References
Donofrio, Susan. Cathay Financial, January 27, Continental Airlines: Initialing with Outperform Due to Low Costs & Strong International Presence.
Keeton, Ann of Dow Jones Newswires. March 31, US Airlines Seek Revenue From More International Flights. [on-line] MorningStar.com.
Lindsay, Greg. “Airworld Part 7: The ‘Demon Customers’: Inside the “FlyerTalk” Community.” Ad Age Magazine, September 20, 2005.
Northwest Airlines, March 16, Annual Report. [on-line] ~ citg April 2,
Standard & Poor’s Industry Survey’s: Airlines, March 28, Cited from The Center for Hospitality Research at Cornell University case study. Can Continental Airlines Continue to Work Hard, Fly Right & Fund the Future.
Standard & Poor’s Industry Survey’s: Airlines, May 19, 2005.
Standard & Poor’s Stock Report, April 1, Continental Airlines. The McGraw-Hill Companies.
United Arilines, March 31, Annual Report. [on-line] ~ citg April 2,
Same site used for 2002 Annual Report
Same site used for 2003 Annual Report