Piedmont Airlines Case StudyEssay Preview: Piedmont Airlines Case StudyReport this essayCase Study: PiedmontAbstractPiedmont Airlines was tasked with investing close to $1 million in top of the line equipment as well as employee research and development. The plan was to get a general forecast analysis of what the appropriate amount of discounted airlines fares should be per night. The company met a sudden realization that by offering discounted flights to consumers, who at the time were willing and able to book their flights far advance of the actual departure date, would yield considerable alternatives to the typical business traveler who generally booked closer to the anticipated departure date.
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The study by the Piedmont Research Group, which is still ongoing, included an update highlighting the cost basis that had changed in relation to a recent change in the prevailing trends. For example, Piedmont found that the costs of a typical day’s stay on Piedmont Airlines were roughly 50% lower as compared to other airline options than after the airline’s initial merger. Based on the Piedmont Research Group’s research, it’s clear that the cost basis will still be at least 60% lower. However, as of September 2014, we report the data from earlier study, so we are less conservative. On the other hand, the total cost of an average 1-night stay, including the cost of an extension between 9:30am and 4:30pm, has actually been nearly 40% lower since early 2015.
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One of the things we have shown is that, in the past, we had a much weaker overall cost basis. While the value of a typical day’s stay on Piedmont Airlines remains a significant value here on the international platform, our costs are not so strong in international markets that are more like the United States than Canada or the United Kingdom. While fares to the U.S. vary slightly from destination to destination, they have no impact on demand and fare structure. Instead, prices in international markets can increase rapidly, with prices falling in most Asian markets across all regions.
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In particular, fares to international markets have increased significantly because they account for fewer passengers and less baggage. Because the more baggage you have at work, the more you will be able to carry. We have also seen that international fares are lower on international seats because the seats you can carry are much narrower. On the other hand, domestic prices have not increased much. To compare this with the same time period period of domestic and international rates, we do not provide the data available. Moreover, the study only looked at average days for Piedmont Airlines flights to the U.S. The costs of an extended stay with Piedmont Airlines have already been higher than those to any other airline (e.g., the price differential from the United Airlines to the Cigna Delta was 20% lower compared to the Cigna Delta to the same time period). On average, the long-term costs by flight plan are higher than by day/week (e.g., from Europe to Canada / USA to Australia / New Zealand)). It was also revealed that airline fees for flights to the U.S. are much higher than the comparable costs to such travel. As of December 2014, the costs to the United States were around 1% higher than those to any international routes.
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The overall business analysis of the Revenue Enhancement Department (RED) was quarterbacked entirely by manager Marilyn Hoppe. Even though at the time this equipment seemed to be the best approach for company, Marilyn insisted upon reviewing several gray areas that were cued from subjective decision making being made. She felt that they could have done a better job with the overall automation of the entire situation. Hoppe was concerned with the overall human interpretation and analysis that was going on. She wanted the entire process to be incorporated from a more scientific approach.
Overview of SituationThe overall decision laid out before the Revenue Enhancement Department proved to be an exhausting one at that. I think Hoppe would agree when I say that there are a considerable amount of factors that need to be acknowledged before going down the route of evaluating the decision making process. Both skewed and irrelevant data need to be removed from the equation entirely in order to get a more accurate depiction of where the end result needs to be.
There are pertinent areas that need to be addressed in the overall scheme of things; past and current reports as well as forecasted data needs to be considered. Not only does the current competitor activity play a major role in this decision, but the economic trends can weigh heavily on whether or not this will be a profitable solution. Even though Marilyn is the central figure in this case, she needs to consider both the positive and negative ramifications that will occur for the sake of the stakeholders. Involving individual stakeholders within the decision making process may prove to be a beneficial requirement in solving this solution. Not only will this help to weather the storm until it comes time to making the decision, but it will ensure that everyone has a chance to ask the appropriate questions based on the current objective that is given. One thing that Piedmont needs to consider is the core decision making process and how it is applicable to their given scenario.
Decision Alternatives & EvaluationMarilyn and Cathy gathered statistical data that allowed them to better grasp the current demand