Managing Demand & Supply

in Airline Industry…
Team Member-
Umesh Patre-14
Mahesh Rajput-15
Himanshu Sawant-16
Shrutika Kalghatgi-17
Neha Khandare-18
Kunal Shah-38
 Cycle of Service for an Airline
Customer requests
schedule
Leaves information Makes
Airport reservation

Receive
Arrives at
Baggage
airport

Plane Departs
Checks
baggage and
Receives checks in for
in-flight flight
service

Proceeds to gate
Boards and security check
aircraft
Receives
boarding pass
 Objectives :

I. Present the implications of time, labor, equipment, and facilities

constraints combined with variations in demand patterns.

II. Lay out strategies for matching supply and demand through
(i) shifting demand to match capacity or
(ii) adjusting capacity to meet demand.

III. Demonstrate the benefits & risks of yield management strategies

in forging a balance among capacity utilization, pricing, market
segmentation, and financial return.

IV. Provide strategies for managing waiting lines for times when
capacity and demand cannot be aligned.
 Constraints on Capacity
NatureNature
of theof the Constraint Type on
Impact of Service
Airline
Time Legal
Constraint services
Consulting
Accounting
Time Medical
Flight delay during bad-
Labour weather
Law firm
Accounting firm
Consulting firm
Labor Stringent presence
Health clinic of union
labor
Equipment Delivery services
Telecommunication
Equipment Limited
Network amount
services of aircrafts
Utilities
Health club
Facilities Hotels
Facilities Due Restaurants
to recession in past
Hospitals
,all
complimentary
Airlines services
were/are
Schoolscalled off
Theaters
Churches
 Strategies for Shifting Demand to Match
Capacity
Demand Too High Shift Demand Demand Too Low
• Use signage to communicate • Use sales and advertising to
busy days and times.
increase business from current
• Offer incentives to customers
market segments.
for usage during nonpeak
times. • Modify the service offering to
• Take care of loyal or appeal to new market segments.
“regular” customers first. • Offer discounts or price
• Advertise peak usage times reductions.
and benefits of nonpeak use. • Modify hours of operation.
• Charge full price for the
• Bring the service to the
service—no discounts.
customer.
Strategies for Adjusting Capacity to Match
Demand

Demand Too High Adjust Capacity Demand Too Low

• Stretch time, labour, facilities and • Perform maintenance,
equipment.
renovations.
• Cross-train employees.
• Hire part-time employees. • Schedule vacations.
• Request overtime work from • Schedule employee training.
employees. • Lay off employees.
• Rent or share facilities.
• Rent or share equipment.
• Subcontract or outsource activities.
 Strategies for Matching Supply and
Demand for Services
Tie-up with
DEMAND corporates, Business SUPPLY
STRATEGIES and Econommic STRATEGIES Customers collecting
Food & Classes. Run-way, Security,
beverages,Hea Baggage Collection
their baggage,
dphones Partitioning Counter Increasing
demand customer
Developing participation
Sharing
complementary
capacity
services
Establishing
Pilot’s & Cabin Cr
price
Cross-
Developing incentives Scheduling working as per th
training
reservation work shifts Flight Schedule
systems employees
Promoting
off-peak Using
E-booking,i- Creating
demand part-time adjustable
booking,agents employees
Discounts capacity

Yield Selecting the Aircraft

Off-Peak Prices, Early management as per the Demand
booking benefits etc 7
 Addressing the Mismatch

• May be able to stretch capacity by…

• Extending time or labor
• Extending facilities or equipment
• Aligning capacity by using part-timers
• Renting or sharing equipment
 Failure to Deliver

• Capacity is often fixed - service perishability,

simultaneous production and consumption
• Demand often can’t be controlled or predicted
• Result: Lost business or wasted capacity
• Can’t ever be regained or resold
 Results of Mismatch
• Demand is either above or below capacity
• Excess demand - turn them away
• Demand above optimal capacity - resources
are stretched in the short term
• Excess capacity - resources underutilized,
often sends the wrong message