Here is a case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY 1

Business intelligence in aviation industry

A Case of Business Intelligence in Aviation- the entire matrix of India’s aviation industry has been challenged ever since no-frills airlines made air travel affordable for the country’s growing middle class. Given that Low Cost Carriers (LCC) is the future of air travels in India. LCC are practically non-existent in now-a-days. What is the reason behind such sorry state of affairs among airlines? The answer lies in ‘pricing’. Experts say that Indian LCC have not been able to price their tickets right and at one point even brought their fares close to that of Full Service Carriers (FSC).

According to global standards, the average cost per passenger for LCCs should be $ 35 lower than that of FSCs. But this is contingent on better utilization of aircraft through faster turnarounds i.e. the time taken between landing and the next flight. This is where technology initiatives such as Corporate Performance Management using Business Intelligence (BI) tools can come very handy.

(i) What is ‘Business Intelligence’?

(ii) How to create a ‘Business Intelligence Strategy’ in aviation industry?

(iii)How ‘Business Intelligence’can  enhance the overall decision-making process in Low Cost Airlines Carriers.

Answers:

(i) The term “Business Intelligence (BI)” represents the tools and systems that play a key role in the strategic planning process of the corporation. These systems allow a company to gather, store access and analyze corporate data to aid in decision-making. Generally these systems will illustrate BI in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis and inventory and distribution analysis to make a few.

(ii)BI can help here on two counts by utilizing the data held within the organization, trusting that it is reasonably clean and accurate:

(a)   Establishing early warning systems and detection of trends

(b)   Finding relevant patterns and insight

So a BI strategy needs to:

(a)   Be aligned to support the business strategy and goals

(b)   Provide the information the business needs to be an effective job

(c)   Make best and cost effective use of the BI technology and best practices available in terms of implementation speed and development.

(iii)The BI tools can serve to provide self-service querying and reporting facilities, dashboards and like to analyze the performance of the airlines in depth and enhance the overall decision making process in the organization. BI can help capture information such as:

(a)    Average landing per day in each serviced location.

(b)    Average flight duration between two destinations

(c)    Average seat capacity utilization during different times of the day

(d)   Average turnaround time of aircraft.

Source: Suggested Answers - December 2013 by ICAI.