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Long Distance Carriers

Jason in the grad class can’t figure out the airlines or the A 380.  Well some airlines are quite different than others.  Take Singapore Air for example.  I logged on and here is a vidoe clip  promoting their business class in between economy and first class.  Go ahead, take a look, this big seat makes into a bed.  As you can see from SIA home page  their mission is to fly people from all over the world to Singapore, a considerably different mission than say SW Airlines.

Kuwait Air  apparently does some smaller runs and uses some smaller aircraft but I did not see a listing of the exact aircraft that SIA uses.  Now imagine you run one of these airlines.  You are an international carrier.  Kuwait to Frankfurt, not too bad, but to LA, now that’s along haul.  Click here for K A routes.
As you can see they are all over the world, their mission being to bring the world to oil rich Kuwait.  How would you use CVP and budgeting to make sure every flight made money?

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6 responses to “Long Distance Carriers”

  1. Jason Raper Avatar
    Jason Raper

    To answer your question I will say that you must first figure how many tickets must be sold to break even at your expenses. Once you hit break even then you can then you can follow thru and figure how to trim the fat off yor expenses. But you also must consider what it will cost you to get to the dollar revenue you need to break even…ie advertising and marketing. You would certainly entail the use of cross funstional teams in this analysis, and you must be prepared to lower fixed expenses and control variable expenses. Just a shot in the dark! And a very broad answer.

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  2. Jordan McClary Avatar
    Jordan McClary

    I think Jason’s got it… Although I could have miss understood CVP too…lol…Dr. Elam just to fill you in on which planes SIA uses, they use 4 versions of the Boeing 777, 1-747, the A-380, and the smaller A-340. I wonder if maybe they had a change in heart of boeing’s and decided to start purchasing Airbus’ planes. If they would have just stayed with boeing they would theoretically have been using the same cost advantage as SWA by lowering maintenance cost. Alot of parts are very similar and interchangeable on those as well which would help reduce maintence cost as well.

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  3. Dennis Elam Avatar
    Dennis Elam

    I suspect that these contracts for expensive planes that will last years and years and employ thousands of people in their manufacture are something probably about like Chevy Chase movie Deal of the Century, no telling all the perks and favors in volved. Just for the political sake of it, one might want to own both European and American planes.

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  4. Jason Raper Avatar
    Jason Raper

    Debate debate!!!!!!!!
    Let me rephrase: That was not my defintion of CVP, only what needs to be done. The airlines must find if there is economies of scale…..in increasing the amount of flights to increase revenue and profit. CVP will give you this in a nutshell. I think that with costs as high as they are and operating ratios so damn hard to deal with in the airlines, they must find alternative ways to operate.
    Lets look at the 80/20 rule: 80% of us dont have the money….20% of us do….CATER TOWARDS THE 80%….we don’t need the bells and whistles, just a cheaper rate! Give us what we want and we will fly!
    I hate to tell people this but analyze it all you want. The reason why Toyota is winnning, SWA is winning, is because they offer the same product at less expense to the consumer. THATS IT! AND THEY CONTINUE TO MAKE MONEY AT IT!—–Raper out!

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  5. Dennis Elam Avatar
    Dennis Elam

    I suspect that most fliers on SIA or Kuwait Air are on a company expense account. Getting there rested to enough to make a presentation after crossing 12 time zones is the challenge, not just a cheap ticket. LUV caters to low price, SIA is in a different market.

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  6. Jason Raper Avatar
    Jason Raper

    I yield and yes you are correct….ha ha. I think I am too much ingulfed in low cost and profit than luxury. Even small margins make me mad. Trim the fat!

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