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Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

Trans Western Airlines


Problem
There is no direct air service between Phoenix, Arizona and Las Vegas, Nevada by Trans Western Airlines.

Objective
1. To attract tourist assengers by o!!ering low cost !ares and increasing nu"ber o! !lights.

#. To attract business travelers by roviding the" "ore services.

$. To increase the sales in %ee ing the balance between business and tourist assengers.

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

Alternatives
1. &ncrease the nu"ber o! !lights !or business travelers during wee%days.

#. &ncrease the nu"ber o! !lights !or tourist assengers during wee%ends and "idnight with low cost !ares.

$. Provide tourist assengers with so"e tour ac%ages !or laces li%e Phoenix, Arizona and Las Vegas, Nevada during wee%ends so as to attract "ore tourist assengers.

'. (uring "idnight, airlines should start !lights !or tourist assengers with "ini"u" !are and "ini"u" ti"e ta%en in the )ourney with no additional services *li%e !ood and

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

alcoholic and non+alcoholic beverages,. This will reduce the cost o! servicing and !light crew and will increase the nu"ber o! assengers by -./ because o! the low !are costs and ti"e ta%en during the )ourney.

Consequences
A. Fixed costs
1. Annual lease cost o! an aircra!t 0 1$,2..,... 3ence, lease cost o! an aircra!t er day 0 $2.....4$50 11.'11 #. Annual ground service costs 0 11,-..,... 3ence, ground costs er day 0 1-.....4$50 1'11.

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

6round costs er wee% 0 '11.78 0 1#288.

B. Variable costs
1. 9osts o! !light crew 0 1'.. er hour o! !lying ti"e

#. 9ost o! !uel 0 1-.. er hour o! !lying ti"e There!ore, total costs o! !light crew and !uel 0 '..:-.. 0 1;.. !lying ti"e. 9osts !or business !light 0 ;..711 0 1;;.. *<ince a business !light runs between 8 a" to 5 " i.e. 11 hours, er hour o!

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

9osts !or tourist !light 0 ;..71$ 0 1118.. *<ince a tourist !light runs between 5 " to 8 a" i.e. 1$ hours,

$. 9ost o! rocessing 0 1$ er assenger 9ost o! rocessing associated with an aircra!t with 1#. assengers 0 $71#. 0 1$5.

'. =ood and beverage costs borne by the co" any in business !lights 0 18.2. er assenger Total !ood and beverage costs 0 8.2.71#. 0 1;$5

C. Costs associated with a business li!ht


1.

Total

cost

o!

leasing

and

o erating

business

!light

1.'11:;;..:$5.:;$5 0 1#15.8.

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

". Costs associated with a tourist li!ht

1. Total

cost

o!

leasing

and

o erating

tourist

!light

1.'11:118..:$5. 0 1##'81

Positive Consequences
1. &ncreasing nu"ber o! !lights during wee%days !or business assengers will attract and !acilitate the" "ore to reach the destination early and it will be bene!icial to the airlines.

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

#. <tarting !lights during "idnight will not only increase the nu"ber o! assengers, but also will reduce the cost o! !ood > beverages. Also, it will reduce the nu"ber o! !light crew, thus saving the cost there also.

$. <tarting tour ac%ages will be bene!icial !or both airlines as well as the tourist co" any and will end u in the increased sales and nu"ber o! assengers to the airlines.

'. Advertise"ent will hel in airlines in increasing their inco"e. Also, it will hel the" in getting o ular a"ong advertisers, which in turn will also rovide the" with so"e business travelers.

#e!ative Consequences

Business Problem Framing Airline Industry Case Analysis Sakshi Gupta Sathi Paul

Group8

Shitiz Gupta Nikhil Ra at Barkha !ig Bhumika "athuria

1. Airlines have to invest "oney !or advertise"ent 11,##- er wee%, i! co" any decides to start !lights during "idnight !or tourist assengers.

#. Providing "ore services to the tourist assengers will increase the nu"ber o! !light crew, which will increase the o erating cost o! !light.

Trade o
&t is the a"ount o! the next best choice. As we are incurring losses in both the cases, i! we go with the second o tion we will incur co" aratively less loss *i.e. 1$8'-.,.