Interventions under Market Plan
The contribution of the travel agents was well understood and therefore they were treated as partners. Their feedback was taken on adding new destinations. They were paid incentives over and above the normal commissions for sales above certain volumes. Bethune and other executive wrote to company executives and made personal calls to tell about their offers and their newly adopted service standards. Bethune held parties for high mileage travellers and their spouses too. Every employee was made to sell the services of Continental.
To grow business, Continental added more destinations to its hubs and more flights to the existing destinations. Continental made its website a ticket-selling platform; it was both a distribution channel and an advertisement medium. In 2000, 54% of sales came from the sale of e-tickets through its website. It had also partnered with Delta, United, American and North-West to create a comprehensive travel planning website, through which a traveller got a host of services like hotel, local conveyance and so on. Feeder to Hubs
To feed its three hubs, it created a separate subsidiary called ‘Continental Express’. By 2000, it was operating 1000 daily flights to 85 cities in US, Mexico and Canada. Its fleet consisted of regional jets which allowed more frequent service to small cities and contributed to higher load factors. They had better customer acceptance too. Interventions by Finance Plan By renegotiating lease payments at lower interest rates, the interest payments were reduced to $117 millions in 1996 in the place of $202 millions in 1994 and they would go further lower.
Continental recovered the loss on cancelled new plane orders to an extent of $29 million from Boeing because of good relations between Bethune and Woodard of Boeing; Woodard used to appreciate the good intentions of Bethune. Cash flows were further improved by renegotiating maintenance contracts and also selling excess spare parts inventory. It also entered into code-sharing agreement with other airlines, to share costs and revenues, on certain routes to save on costs when fully occupancy was not definite.
Larry Kellner, the new chief finance officer, had streamlined financial information systems to give a true feedback on Continental’s performance on a day-to-day basis on 40 most important cost parameters. By 10. 00 a. m. everyday, all important executives were supplied information about the occupancy, maintenance costs, fuel costs, food, route-wise economics and the like. Such information helped them to decide which flights and which routes were profitable. Based on such information only, more flight were added to many destinations, particularly, in Europe; on such flights, higher fares also were collected to the benefit of Continental.
Continental had reduced the training and maintenance costs by reducing the number of types of aircrafts from 9 in 1994 to 5 in1999. It reduced the average age of planes which determined the maintenance costs. By 2000, it successfully completed the program of bringing the employee wages and salaries up to industry standards. Later, it launched a program to bring employee benefits like paid holidays, retirement benefits and the like to the industry standards. Continental repurchased its stock at a cost of $1. 2 billions through December 2000, which demonstrated that it was on track.