Harvard Case - United Airlines: More Out-and-Back Flying?
"United Airlines: More Out-and-Back Flying?" Harvard business case study is written by Ryan W. Buell, Willy Shih, Michael W. Toffel. It deals with the challenges in the field of Operations Management. The case study is 24 page(s) long and it was first published on : Sep 6, 2016
At Fern Fort University, we recommend that United Airlines implement a strategic shift towards a more balanced approach to flight operations, incorporating a mix of out-and-back flying and hub-and-spoke models. This strategy aims to optimize resource utilization, enhance operational efficiency, and improve customer satisfaction while addressing concerns about environmental sustainability.
2. Background
United Airlines, a major U.S. airline, faces a complex operational environment marked by fluctuating fuel prices, intense competition, and evolving customer preferences. The case study focuses on the company's decision to increase out-and-back flying, a strategy that involves aircraft returning to their origin airport after each flight. This approach aims to reduce empty leg flights and improve operational efficiency. However, it also raises concerns about potential drawbacks, such as reduced network connectivity and customer inconvenience.
The main protagonists of the case study are the executives at United Airlines who are grappling with the decision of whether to prioritize out-and-back flying as a primary operational strategy.
3. Analysis of the Case Study
To analyze the situation, we can apply the framework of Operations Strategy, focusing on the key elements of Capacity Planning, Inventory Management, and Network Optimization.
Capacity Planning: Out-and-back flying can potentially increase aircraft utilization by reducing empty legs. However, it can also lead to capacity constraints at certain airports, particularly during peak travel periods. United Airlines needs to carefully assess the capacity implications of this strategy and ensure that it can handle the increased demand at key hubs.
Inventory Management: Implementing out-and-back flying can impact inventory management strategies. United Airlines needs to ensure that it has adequate spare parts and maintenance resources at various locations to support the increased number of aircraft operating on this model.
Network Optimization: Out-and-back flying can affect network connectivity, potentially leading to fewer direct flights and longer travel times for passengers. United Airlines needs to carefully analyze the impact on its route network and ensure that it maintains adequate connectivity for its passengers.
Environmental Sustainability: While out-and-back flying can reduce empty legs, it can also lead to increased fuel consumption due to longer flight routes. United Airlines needs to consider the environmental impact of this strategy and explore alternative solutions, such as optimizing flight paths and investing in fuel-efficient aircraft.
4. Recommendations
Implement a Hybrid Model: Instead of solely relying on out-and-back flying, United Airlines should adopt a hybrid model that combines out-and-back flights with a hub-and-spoke system. This approach will allow the airline to leverage the benefits of both models while mitigating their respective drawbacks.
Optimize Network Connectivity: United Airlines should analyze its route network and adjust it to ensure adequate connectivity for passengers. This might involve adding new routes, adjusting flight schedules, or partnering with other airlines to provide seamless connections.
Invest in Technology and Analytics: United Airlines should invest in advanced technology and analytics to optimize its operations and improve decision-making. This includes implementing robust forecasting models, real-time data analysis, and advanced scheduling algorithms.
Focus on Customer Experience: United Airlines should prioritize customer experience by providing clear communication about flight schedules, potential delays, and alternative travel options. It should also invest in customer service initiatives to address concerns and ensure a positive travel experience.
Embrace Sustainability: United Airlines should actively pursue sustainability initiatives, including investing in fuel-efficient aircraft, optimizing flight paths, and reducing waste. The airline should also consider partnering with organizations focused on environmental sustainability to further its efforts.
5. Basis of Recommendations
These recommendations are based on the following considerations:
Core Competencies and Consistency with Mission: A hybrid model aligns with United Airlines' commitment to operational efficiency and customer satisfaction. It also allows the airline to leverage its existing hub-and-spoke network while exploring new opportunities for optimization.
External Customers and Internal Clients: The hybrid model addresses customer concerns about connectivity and travel time while improving operational efficiency for internal stakeholders.
Competitors: United Airlines needs to stay competitive in the airline industry by adopting innovative strategies and leveraging technology to enhance its operations.
Attractiveness - Quantitative Measures: The hybrid model is expected to yield positive returns by optimizing resource utilization, reducing fuel consumption, and improving customer satisfaction. The airline can use quantitative measures like Net Present Value (NPV) and Return on Investment (ROI) to assess the financial viability of this strategy.
Assumptions: These recommendations assume that United Airlines will invest in the necessary technology and infrastructure to support the hybrid model. It also assumes that the airline will prioritize customer experience and environmental sustainability in its decision-making process.
6. Conclusion
By implementing a hybrid model that combines out-and-back flying with a hub-and-spoke system, United Airlines can optimize its operations, enhance customer satisfaction, and improve its competitive position in the airline industry. This strategy will require careful planning, investment in technology, and a commitment to continuous improvement.
7. Discussion
Other alternatives not selected include:
- Solely focusing on out-and-back flying: This approach could potentially lead to reduced network connectivity and customer dissatisfaction.
- Maintaining the current hub-and-spoke model: This approach might not be as efficient or cost-effective as a hybrid model.
Risks and Key Assumptions:
- Implementation challenges: Transitioning to a hybrid model requires significant organizational change and investment in technology.
- Customer acceptance: Customers may not be receptive to changes in flight schedules or route options.
- Competition: Competitors may adopt similar strategies, leading to increased competition for passengers and resources.
8. Next Steps
- Form a task force: United Airlines should establish a task force to develop a detailed implementation plan for the hybrid model.
- Conduct a feasibility study: The task force should conduct a feasibility study to assess the financial viability and operational implications of the hybrid model.
- Pilot program: United Airlines should implement a pilot program to test the hybrid model on a limited scale before rolling it out across its entire network.
- Communication and training: United Airlines should communicate the changes to its employees and customers, providing clear explanations and training materials.
- Continuous monitoring and improvement: United Airlines should continuously monitor the performance of the hybrid model and make necessary adjustments to optimize its effectiveness.
By taking these steps, United Airlines can successfully implement a hybrid model that will improve its operational efficiency, enhance customer satisfaction, and strengthen its position in the competitive airline industry.
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Case Description
The case looks at United Airlines when it is facing a decision on whether to shift its aircraft routing to more "out-and-back" routing in order to try to improve its on time performance. As one of the world's largest airlines, United had a very large fleet and hub-and-spoke network that provided passengers with a wide range of destination choices, but as with any complex system unless everything ran perfectly all the time, it inevitably faced cascading delays and missed passenger connection problems. While out-and-back routing tended to isolate operational issues, more traditional linear routings tended to offer high equipment utilization. The case offers students an opportunity to examine the effects of variability on different routing strategies.
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