Team D- Decision Quarters 1 & 2 Summary
Professor Scott Stevens
January 26, 2014
The decision for Quarter 1 was made from the practice round because we ranked first. A majority of our decision came from the practice round and we’ve inputted that towards our first quarter since we did well so no a lot was really changed. During our 2nd round, we aimed more towards the luxury fare structure so there were a few changes. These changes will be discussed as below.
We made the fare price at $.38 cent per mile during the 2nd quarter because we are trying to aim towards the luxury fare structure as this simulation proceeded. We provided the same cabin service such as free soft drinks, snacks, and a small meal for certain flights.
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However, going towards the 2nd quarter, we decided to lower our budget to $5k which was the average in the industry. The compensation was 1% prevailing wage for all employees.
We leased 1 Embraer Jet and 3 British Aero 31’s. We sold one Beechcraft 1900. In total that gave us 6 planes in our fleet. We had a level 3 maintenance and purchased fuel as 50% on open market and 50% on contract. We sold another one of the Beechcraft in round two as we made changes with rounding out our fleet in preparation for routes in foreign and resort markets and adjusting our alliance to a luxury airline.
We went into the resort and foreign markets with our Embraer Jet with our end goal turning our airline into more a luxurious airline than regional transportation.
$5000 budget for local community causes, we feel making a social responsibility move will help our company image moving forward.
Due to the early stages of the company we decided not to purchase any stock or dividend implications because we felt that that was just going to complicate our finance.
In the first quarter, we made the choice to hire a salesperson and a director of maintenance from competitors thinking that would improve our standing in those areas quickly. What we did not realize was that in poaching from competition our chief pilot got poached from us, causing huge problems like flight delays and fines. Going forward decisions need to be made with ramifications kept in mind.
In the second quarter, we were offered the opportunity to dual-designate with a major carrier at our regional hub. However, we decided to continue as an independent operation using computer-aided scheduling techniques to optimize our ability to connect with major carrier flights.
Overall, Blue Sky Air decisions were made with the intentions to shift our airline from being just a regional airline to being a luxury airline.