Abstract
The paper is about assessing the feasibility of scheduled service flight and On-Demand methods that focus on the best economic practices that will enable the organization to be economically viable. The paper is divided into several sections, which include introduction, purpose, literature review as well as the summary section. Each section discusses a particular issue that relates to the topic mentioned before. The introduction part gives a brief overview of what the paper will discuss. This is followed by the purpose section that attempts to explain the purpose of the paper. The literature review section analyses literature from a number of sources, this helps in explaining the topic of the paper in detail. Lastly, there is the summary part which briefly explains various aspects that have been discussed in the paper.
Key word: Scheduled Service (SS), On-Demand, dial-a-flight, operations, airline, flight
Introduction
The citadel intent of this paper is to elucidate the feasibility of how a medium-large size company can transport its employees using scheduled airline or consider the on-demand methods with a focus on the best economical practices. Presently, many organizations are faced with the question of determining the best type of flight service to use. Therefore, this prompted me to conduct a research on this topic so that I can illustrate the best type of method for organization considering the financial capabilities, frequency competition, time factor as well as convenience. Purpose
The purpose of this paper is to verify the best method that can be used by organizations when choosing the type of flight that they want to use, that is, between scheduled services or the various on-demand methods.
Literature review
Scheduled airline service is a public transport method whose business model is entirely based on published schedules, common carriage as well as published fares (Rossmore, 2000). According to their definition, the airline is associated with delays. In case an organization uses this transport method it should be ready to experience delays which result in loss of man-hours since the passengers may have to change flights before reaching their destination. Loss of man-hour is very costly and can result in losses in the organization. Loss of man hours can about as a result of changing flights. Apart from having delays, scheduled airline services departure time for the airline does not coincide with for passengers. This implies that passengers have to work with the existing schedule. The delays become worse when there is low frequency of service in the desired origin.
When there is a lot of delay, it is likely to result in the introduction of unscheduled service this becomes unfavorable to the firm that needs the airline services. In some cases, there is a high individual value of delay, and passengers flying in groups will result in high delay value owing to accumulation. Nonetheless, with developments in regional jets, communication technology as well as the introduction of very light jets; “on-demand” air travel is likely to be very profitable. Recently, a number of studies have been conducted on various models of on-demand air travel, for instance, dial-a-flight service (Doganis, 2001).
Organizations can also consider using dial-a-flight services since it can result in both price and frequency competition with the scheduled service provider. The fierce competition is likely to take place at a network level (Morrell, 2013). The competition will benefit the organization since it will have to pay less amount of money compared to when there is no competition among airlines. As mentioned previously, this type of competition can either affect the price or frequency or both (Pryke, 1987). To the organization in need of flight services, this type of competition can be blessing since the organization is likely to consider this approach over the scheduled service that is coupled with delays as well as high operating costs. At this point the organization will consider the dial-a-flight since it be economical on their side.
When the mid-large organization is analyzing the cost function between scheduled service and charted service a linear cost function that comprise of fixed cost of operating flight as well as a variable cost for flight based on passengers on the flight. Cost functions can approximate cost of an “elastic” aircraft based on passengers that have been served or used to model the use of a single aircraft size only, with an assumption that the aircraft is large enough to serve any increase in the number of passengers, and the variable cost show the cost of handling passengers (Holloway, 2008). This can be beneficial to the organization that needs the airline services since it have cut on its cost.
The organization requiring the flight services can approximate the cost of operating an airline by both variable and fixed cost. The model can approximate cost of “elastic” aircraft basing on the passengers it serves or can model the single aircraft. For scheduled service, the elastic aircraft model is used because the passengers per flight vary in different scenarios. When a large aircraft is used that can hold all the passengers can be simplistic and in most scenarios overestimate the scheduled service costs, and using a small aircraft can give the passengers loads that are beyond capacity (Proquest, 2005). This can be beneficial to the organization that requires flight services since it will cut on its expenditures.
Summary
In a nutshell, introduction of dial-a-flight can result in both price and frequency competition with the scheduled service. When analyzing the cost function between scheduled service and charted service a linear cost function that comprise of fixed cost of operating flight, as well as a variable cost for flight based on passengers on the flight. In the market scheduled service is a variable for competition. Organization that require airline services need to findout the best method that can be help it achieve its objective as well as ensure that it remains economically viable amidst its competitors.
References
Doganis, R. (2001). The Airline Business in the Twenty- first Century. London: Routledge.
Holloway, S. (2008). Straight and level : practical airline economics. Burlington: Ashgate Pub.
Morrell, P. S. (2013). Airline Finance. Burlington: Ashgate.
Proquest. (2005, January 5). Business conditions. Retrieved November 17 , 2013, from Singapore industry: Challenges for airline industry: http://search.proquest.com.ezproxy.libproxy.db.erau.edu/docview/466258812?accountid=27203
Pryke, R. (1987). Competition among international airlines. London: Gower for the Trade Policy Research Centre.
Rossmore, A. (2000). Airline operations : an inside view . Miami: Kellmark Aeronautics.
Wei, W. a. (2005). Impact of aircraft and seat availability on airline demand and market share in duopoly market. Transportation research part E logistics, 315-327.
