Reference no: EM131584421

Case Study Assignment

Kent Airlines are considering adding a newly discovered tropical island to their list of destinations. The island is 3,000 miles away in mid-Atlantic. The islanders have a potent drink called 'OROS' which they think will go down well in European markets and consequently are building a new international airport to expand the drinks and holiday business. The name of the island is Atlantis.

A group of eight managers has been gathered to decide whether the destination is viable, what type of aircraft to use and what profits might be expected.

You have 30 minutes to discuss the issue before the Marketing Director arrives to hear you put your case to him.

The team is:

- FUTURES AUDIT MANAGER
- MARKET RESEARCHER
- PRICING MANAGER MARKET
- CARGO MANAGER
- ENGINEERING MANAGER
- LOGISTICS MANAGER
- PLANNING MANAGER
- SCHEDULING MANAGER

CARGO MANAGER

We could probably make £10,000 profit per trip using a 747 for the transport of "OROS" (Soft Drink) or £8,000 using a Tristar in addition to passenger income.

ENGINEERING MANAGER

We would need to station one overseas engineer permanently on Atlantis. We would also need to have spare parts such as tyres and engine components available there. We have a 747 available for a Thursday flight only and no other days, or a Tristar Series 200 available for a Saturday flight.

LOGISTICS MANAGER

The costs of fuel, engineering, food for passengers, salaries, loading and unloading and refueling etc. would be £80,000 for a 747 and £65,000 for a Tristar.

FUTURES AUDIT MANAGER

The politics of island seem stable. The island will get enough money from selling "OROS" to pay for the building of the airport and hotels.

RESEARCHER

The island has an excellent climate and good beaches, but there is a lack of nightlife at present. There is great interest from both leisure and business customers in going to the island. A Saturday departure would give us sufficient demand for us to use a Boeing 747, but departures on other days would generate a much lower demand and make the Boeing unprofitable to use.

PRICING MANAGER

We would need to put on flights with special cheap rate tourist fares as well as the standard business fare, but using these we could probably generate £90,000 of income per trip using a 747 or £72,000 using a Tristar

MARKETING PLANNING MANAGER

This can be a profitable route looked at in both the short term and the long term.

SCHEDULING MANAGER

The flight could depart at 21.00 hours on Saturday if an aircraft is available: this would be convenient for passengers and would also fit in with loading, catering and engineering staff.

AVAILABLE AIRCRAFT

BOEING 747 (Jumbo Jet)

On long haul routes where traffic levels are heavy, the 747 continues to be the mainstay of the fleet. Its exceptionally low fuel-consumption gives it a very low seat/mile costs.

- Routes: Long haul, mainly to North America, Caribbean, Africa, the Orient and Australasia .

- Capacity: 22 First Class, 104 Business, 234 Economy (Total 360) passengers and approximately 16 tonnes of cargo on a 2,000 mile sector.

- Seating: First Class - Sleeper seats are in pairs, with a 62 ins pitch, Business - two rows of two abreast in upper deck and three rows of two abreast on the main deck, with a 36 ins pitch; Economy - mostly two rows of three abreast and one of four abreast, with a 31 ins pitch.

- Engines: Four Rolls-Royce R8211-524C2s, giving 51,600 lbs thrust each. Cruising speed: 600 mph, at 35,000 ft

- Range: 6,850 miles

- Auto land capacity: To Category IIIA limits Lengths: 70.7 m (231 ft 11 ins) Wingspan: 59.6 m (195 ft 9 ins)

- Height: 19.3 m (63 ft 4 ins) Fuselage width: 6.4 m (20 ft 11 ins)

- Fuel capacity: 203,860 litres (44,850 gallons)

- Fuel consumption: 10,445 kg per hour (2,901 gallons an hour)

- Maximum take-off weight: 371,940 kg (820,000 Ibs)

- Landing gear: 16 main and two nose wheels

- Flight crew: Captain, one co-pilot and one flight engineer Cabin crew: 15.

TRISTAR SERIES 200

Routes: The Series 200 flies medium haul routes with heavy traffic.

- Seating: (Series 200) First Class - three rows of two abreast sleeper seats, with a 62 ins pitch; Business - three rows of two abreast with a 36 ins pitch; Economy - mostly two rows of three abreast and one of four abreast with a pitch generally of 34 ins.

- Engines: Three Rolls-Royce RB211-228s (-5248s on Series 200s and 500s), giving 42,000 !bs of thrust.
- Cruising speed: 550 mph, at 35,000 ft.
- Range: Series 200 - 4,362 miles;
- Auto land capability: To Category IIIB limits length: 54.2 m (117 ft 8 ins)
- Wingspan: 47.3 m ;155ft 4 ins) Height: 16.0 m (55 ft 4 ins) Fuselage width: 6 m (19 ft 8 ins)
- Fuel capacity: 90,150 litres (19,830 gallons)
- Fuel consumption: 7,424 kg an hour (2,062 gallons an hour)
- Maximum take-off weight: 195,000 kg (429,902 lbs)
- Landing gear 8 main wheels and 2 nose wheels
- Flight crew: Captain, one co-pilot and one flight engineer

Cabin crew: 8-12

PRESENTING YOUR CONCLUSIONS
Present your findings (30 MINUTES /MAXIMUM OF 6 SLIDES), as well as completing the recommendation sheet.

RECOMMENDATION

Is the destination viable? YES/NO

Motivation

What type of aircraft should be used?

What are the key cost elements (Category Strategies) OROS should develop, and what are the levers/opportunities? Lever 1 Lever 2 Lever 3

Cost element 1
Cost element 2
Cost element 3
Cost element 4
Cost element 5

What is the forecasted profit per aircraft type?

Jumbo JetSeries 200 Fares
Cargo
Costs
Profit

What sort of customers would you try to attract?

How would you market the destination?

How would you deal with competitors (other airlines)?

What are the critical success factors (CSF) ABC should consider?