Management Consulting Case Study-Airline Company

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Case Scenario-
The client is a major airline company and the CEO wanted to put one more passenger on each of his company’s flights.

Key Questions-
The financial return of one more passenger per flight. Is it worthwhile to do so? What marketing strategy will work to attract these new passengers?

The company should look at the revenue and cost side of bringing one more passenger per flight, as well as the average cost of a ticket. They should also ask if there is enough capacity to put one extra passenger on board each flight from Heathrow to London Stansted.

Candidate should ask about the kind of routes, the market share, and then the price of each of them. In this case, we were talking about the Brazilian market and this airline has only domestic flights. You should adapt the numbers to US domestic airline market or any other you would like.

The company has 100 aeroplanes and estimates that 80% of their planes are used for 1-hour and 20% for 3-hour flights. Depending on the city, we could have more frequent flights than others, but he agreed that I could make this approximation.

We need to make an assumption to work out the number of flights per airplane per day and the interval of time in which an airplane stays on the ground. For this company, the first airplane departs at 6:00 am because the executives must arrive at its clients' offices at 8:00 am.

The idea is based on the assumption that an airline's executives must arrive at their clients' offices at 6:00 am and leave for the client's office at midnight.

The candidate should realize that the cost of one extra passenger is only the marginal cost, which can be ignored. Extra revenue in one month is $3,360,000.

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By Vandana Gaur



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