Bluesky Airlines Network Revenue Management Case Series

1188 WordsMay 27, 20135 Pages
Vol. 9, No. 3, May 2009, pp. 145–147 issn 1532-0545 09 0903 0145 informs ® Additional information, including supplemental material and rights and permission policies, is available at http://ite.pubs.informs.org. I N F O R M S Transactions on Education doi 10.1287/ited.1090.0033cs2 © 2009 INFORMS Case Series BlueSky Airlines: Network Revenue Management Tuck School of Business, Dartmouth College, Hanover, New Hampshire 03755, robert.shumsky@dartmouth.edu Robert A. Shumsky BlueSky flies three airplanes between Houston and three cities, Chicago, Miami, and Phoenix. These three cities are the spokes connected by the Houston hub. A few times each day the three airplanes fly from the spoke cities to Houston. They arrive…show more content…
Air France offers to pay $104 per seat. Should BlueSky accept the offer? (2) In addition to the offer in (1), Air France offers BlueSky $285 per seat to reserve 10 seats for passengers traveling from Miami to Chicago. Should BlueSky accept this offer? Shumsky: Case Series: BlueSky Airlines: Network Revenue Management INFORMS Transactions on Education 9(3), pp. 145–147, © 2009 INFORMS 147 (1) Assume that BlueSky purchases three identical aircraft. How many coach seats should BlueSky order for the three new aircraft? (2) Now suppose that the three aircraft can be different sizes, between 240 and 380 coach seats. (a) How do you think the three aircraft should be allocated among the six routes? In other words, should the same aircraft always fly the same routes? Why or why not? (Hint: You do not need an optimization model to answer this question). (b) How many coach seats should BlueSky order for each of the three new aircraft? (3) Because it is cheaper to manufacture three identical planes, Airbus is offering BlueSky a one-time, $5 million discount if it will order three identical aircraft. Should BlueSky take the discount? In deciding this, you may assume that BlueSky operates 3 banks per weekday through Houston, and that the revenues and demands for every bank on every weekday are equal to the demands in Tables 1 and 2 of the (A) Case. Additional information, including supplemental material and

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