Sunday, April 7, 2013

The Equilibrium of Services and Pricing

Pricing varies heavily on the quality and the amount of services that are being provided. Airlines, tend to keep the cost of travel as minimal as possible by doing few simple things:

Weight:

     Its sounds mean, but most airplane are over weight. unnecessary weight can increase the cost of operations, as the weight of the aircraft is directly proportional to to the amount of fuel it consumes. Today, fuel prices are as high as possible, and the the demand for light weight and fuel efficient planes are ever growing in todays society. Aircrafts are now being redesigned from the main frame to the engine to be as fuel efficient as possible. Thats how airlines like southwest airline are able to keep airplane fare as low as possible. Passengers are also required to pay extra if they bring more luggage than specified. This allows fares to be low as possible in todays hard economics time, which makes them more appealing to sell. 

Reductions: 

     Its one of the most painful things to hear, pay reductions. Employees often  have to sacrifice a small part of the pay in order to fight the falling economy. Further more, staffs are also reduced in some cases, as a result, the demand for pilots have decreased exponentially in the past few years. Many pilots regardless of their status were forced to leave as airline either faced bankruptcy or staff reductions. The dramatic increase of fuel, has forced flight schools to increase their tuition fee by multiple factors. 


Fewer Services:

     Sounds strange, no food service on a airplane ? Yes, its true. Despite this sounding like a nightmare, only a few companies have taken this step to reduce the ever rising cost of operations. Passengers are required to bring their own lunch with few restrictions. Though it is highly impractical, most airports would face this as an act of breaching national security. Though this method is not recommended by many airports, only few countries allow this procedure to be practiced. 

In conclusion:

The main goal of a Airline company is to maintain a balance between the pricing a services, in order to make deals more appealing to both the customers and the corporation. in theory benefits must out weight the liabilities to make a business more profitable.




Now we move on to the following questions that will be answered in the 7 secrets of Success in Airlines:

3. How the South Airlines have been this successful? & 4. How do they generate more revenue?

The seven secrets of Success in Airlines

1. One plane fits all 

 All the other network carriers fly many different types of regional jets, turboprops, narrow-body and wide-body aircrafts. On the other hand, Southwest flies just one plane type, the Boeing 737 series. 

First of all this saves millions of dollars that would have went towards maintenance costs—spare-parts inventories, mechanic training and other nuts-and-bolts airline issues.  Next, It also gives the airline a unique flexibility to move  throughout the assigned route  without  disruptions and reconfigurations.







2. Point-to-Point Flying
Network carriers rely on a hub-and-spoke system, which painfully collects passengers from "spoke" cities, flies them to a central "hub" airport, and then redistributes them to other spokes.

On the other hand, South west flys  non-stop mostly between two points. What does this do? It  minimizes the time that planes sit on the ground at crowded hubs. Furthermore, it allows the aircraft to be in the air for more time which is about an hour longer each day. 

To add on, this helps to pay dividends in on time for specific operations.  According to FlightStats, In June 2012 South west Airlines scored a 78 percent on-time performance which was 8 percentage points higher than the industry average, and also higher than any of its major competitors.








3. Simple In-Flight Service

Although Business travellers have not always liked South west's simple service, because of the airlines amazing strategy, that does not matter as much any more as other airlines in competition have also been cutting back. 

There are no assigned seats, no meals just beverages and snacks, and lots of space. Keeping it simple allows South west to unload a flight, clean and restock the plane, and also board another flight full of passengers in an outstanding time of 20 minutes. On the other hand, other airlines take around 90 minutes on a network airline. Airline efficiency experts have also said that the time savings allow each South west jet to fly an extra flight per day. Obviously we know that extra flights mean extra revenue.






4. No Frills, No Fees
South west has always kept its customer proposition streamlined and transparent as other carriers have rushed to remove perks on fees and restrictions. Only one-way fares are sold by this airline.  What does this do? This keeps costs down because complex fare structures are very expensive to manage. Further more, the prices are all-inclusive. South west does not have fuel surcharges. This means that doesn't charge for standby travel or ticket changes. 
5. Strong Management
South west has been known to be very disciplined  throughout its history. The airline has always avoided any sort of increased costs or anything that complicates the basic travel plan. Management ranks are well compensated and productive. Joe, the author said he calculated that the top executives of South west generated 10 times more revenue (per dollar) than the C-suite types at some of the network carriers. This also shows how successful the airline is individually. 


6. A Relatively Happy Workforce

Network carriers have criticized for decades about the power of their employee unions. Not South West of course. The airline says that 87 percent of its employees belong to a union. It is indeed very impressive to know that the airline has never had a strike. South west staffers are known to be the highest paid in the industry. At the same time, it has about 30 percent fewer employees per aircraft as compared to the network competitors. Furthermore, the airline has the lowest non-fuel C.A.S.M. (cost per available seat mile) of any of the major carriers. 

7. Aggressive Fuel Hedging

Storming fuel prices now signify around 40 percent of an airline's costs. Although, South west Airlines has obviously been ahead of the curve which may not come as a surprise to you any more.  Since 1999, the airline has saved it an estimated $3.5 billion because of its aggressive fuel-hedging program. It paid approximately a dollar less than its network competitors.

In a world where a barrel of oil costs $140,  suggesting that any airline is a guaranteed winner is beyond comprehension, but what can be said is this: South west Airlines is “sitting on a pile of cash” has proven to be very reliable and a service model which is extremely easily adaptable.
Its history fully shows that South west has easily passed through and dodged every  airline industry recession/problem, and then it has even developed and grown swiftly, profited hugely and stood out from the competition. 

Overview

Basically, What does Southwest know that other airlines fail to realise ?
It keeps everything simple and consistent. That drives costs down, helps to maximize productive assets, and also helps to manage customer expectations.











2) Which Airline is the most successful ?

According to an Airlines article published by Joe Brancatelli in the WEIRD magazine, We have found out that the South West Airlines have been one of the most successful Airlines. Even though 100 billion in capital have been consumed during the past decade by the country’s major carriers, the South West Airlines still continue to make profit. While the other airlines in competition have reduced their passenger capacity by more than 10 percent, South West now carries more passengers on an annual basis which totals up to be 101 million (last year) This amount of total passengers travelled on an annual basis is more than any other U.S airline

Oil prices Effecting The Financial Markets for Airlines

The share prices of the top 5 airlines in competition (American, United, Delta, Continental, Northwest and US Airways) declined as the oil prices doubled last year in 2012. The drop offs ranged from 76 to 94 percent. On the other hand, South Airlines also had a decline but the drop off ranged from 21 percent in 52 weeks. Because of this, the market capital of South Airlines sky rocketed from 5.7 billion to 9.7 billion.





1) What exactly are airlines?

For air transport services, airlines are companies that provide the services. These services are for the passengers and freight. Some airlines own their specific aircraft, but most of them lease it. It is very beneficial for different airlines to form partnerships for mutual benefit.
Official airlines are recognized by a specific air operating certificate issued by the governmental authorities of the area.

There are allot different types of Airlines. From single aircrafts carrying mail/cargo, to full-service international airlines working with hundreds of aircrafts. The different services can be categorized as: intercontinental, intra-continental, regional, domestic, or international. They are operated as either scheduled services or charters. 

Sunday, March 24, 2013


What is a dashboard?
A dashboard is basically a real time user interface. It shows the performance of an organization through graphical presentations, historical trends and current statuses about key performances. It assists in making immediate and informed decisions. Some products that aim to integrate information from many different components into a single display refer to themselves as dashboards.
An example is the car dashboard. It displays the basic information that the driver needs to know about the car while driving such as speed, fuel consumption, and so on. Another example is the local operating device product Hewlett Packard first developed. From one or more applications that are running in a computer, it obtained information and formed one or more remote sites on the Web to display and present as if the information was from the same source.
Benefits
Digital dashboards help managers to monitor the contribution of the several departments in their organization. Digital dashboards allow you to capture and report specific data points from each department within the organization, to measure exactly how well an organization is performing, proving a "snapshot" of the performance.
Some of the Benefits include:
• Saves time compared to running multiple reports
• Gain total visibility of all systems instantly
• Quick identification of data outliers and correlations
• Visual presentation of performance measures
• Ability to identify and correct negative trends
• Measure efficiencies/inefficiencies
• Ability to generate detailed reports showing new trends
• Ability to make more informed decisions based on collected business intelligence

What is the role of a dashboard in business intelligence?

The word dashboard in business intelligence was made to represent the dashboard of an automobile. The instruments on the dash of an automobile help the driver to put key aspects of driving into the perspective of the driver. Similarly, the dashboard in a business, helps visualize and represent the businesses performance and certain key attributes. Humans are better able to put large numbers into perspective when they are represented through visual content. To bridge the gap, we have to use dashboards to illustrate those massive amounts of data.

Dashboard also provide a quick and easy way to generally see an over view of a businesses performance. Usually business representatives are bombarded with massive amount of information; as a result illustrations help make information more organized and visually appealing to business owners.

Dashboard also help illustrate massive amount of information to others who do not work for the company. To simplify and display the information, dashboards are a key component of a presentation of a business modle.



How can dashboards help with Big Data?

Fundamentally, Big Data is a revolution that essentially changes how information is collected, stored, managed and consumed. Big Data has three defining attributes; it includes a vendor’s ability to provide support for data volumes, variety, and velocity in order to handle an organization’s effective management of large data. As noted above, altogether these attributes compose an inclusive understanding of Big Data.
Data warehousing technology, data integration techniques, and analytics capabilities have advanced substantially. With columnar databases, in-memory analytics, and easy-to-use self-service data visualization solutions, organizations can store and analyze more data in less time. In addition, the lower cost of storage, software, licensing, and support, has made BI accessible to more organizations. Organizations with large data sets and complex analytics requirements can now easily create something valuable for their organization that meets their ROI requirements
Regardless of the data type or size, BI technologies are slowly moving towards enabling businesses to get the information they need. The use of big data and dashboards to create broader analytics will increase the overall value of BI to the organization as data warehousing technologies and data visualization solutions continue to advance, as well as provide better access points to analytics.